Nonprofit CEOs: Should you always have to ask your board before making an investment?
That’s a common (and often debated) question within nonprofit organizations.
Who better to get a thoughtful answer from than Mary Hiland, Founder and President of Hiland Consulting. Mary is MORE than qualified to weigh in, having worked in the nonprofit sector for more than 40 years.
In a robust conversation we had, she provided some interesting advice.
[This part of our conversation starts at about minute 16:21]
Perhaps most importantly is to try to anticipate, as much as you can, the things you want to invest in from the very start when planning your budget. Or, make sure you have a reserve fund or research and development fund you can tap into—based on pre-approved criteria.
“As an executive, your relationship with the board is really, really important. Board members, like everybody else, are going to have issues with money; everybody has a money thing. The more you know your board members, the more you understand about their personal perspectives and issues with money, the more you can craft agreements with the board proactively about what flexibility you have, as an executive. I do strongly recommend you need a spending policy. What is your spending authority, so you know you can spend up to X amount of money without having to come back to the board.”
Mary also reinforced that just because you have a budget, and a plan, doesn’t mean that is set in stone. Each budget item might vary by up to 10%, and you want your board to fully understand that so no one “freaks out” if something does change.
This is why regular assessments, ideally quarterly reviews, are so important for determining if the budget needs to be adapted to changing needs.
Ultimately, there needs to be clarity between the ED and board members on discretionary spending.
“I think you do need to know what you have discretion to spend. If you need more than you have discretion to spend, I do think a conversation with the board is important. But it needs to be tied to your goals to help them see [that spending] is necessary.”
Such great wisdom, Mary!! And there’s much more . . .
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