In my last blog post, I told you the story of an organization that decided to apply for PPP funding, secured the approval of the executive committee, and then the full board balked and insisted that the monies be returned.
Today’s blog post is an update and a diagnosis – or Joan’s game of “Coulda Woulda Shoulda”. In order to fully appreciate this diagnosis, it might be a good idea for you to have a quick read and then come back.
I’ll wait for you.
OK, glad you’re back.
I asked readers to review the situation – perhaps as a case study with your board – and to look at two pieces of the puzzle.
For sure, I was interested in folks’ observations about the decision itself – should they have applied for the funding, should they have accepted it, and now, based on board sentiment, should they have returned it?
But even more than that, I was interested in the decision making process itself. Was it spot on or should they have done something differently?
Comments on the post and emails I received were overwhelmingly in favor of accepting the money. One writer wondered why there was any fuss at all.
I actually get the fuss and believe it was a function of the decision making process.
Time for me to offer you my two cents. I’ll also tell you what this organization ultimately decided.
You may not agree. That’s why blogs invented comments. So you can tell me why I’m wrong. I hope you will.
WHY ALL THE FUSS?
There was no fuss at all until the full board became aware of the decision the executive committee had made to give the staff the green light to apply for the funds. But then the item was brought up and it’s clear to me that a few things were at play.
- The executive committee’s decisions were not communicated to the full board in a timely fashion.
- The decision was put before the executive committee in the heat of the crisis in NYC (where this organization is). It was a particularly tense time.
- The decision was made in writing and voting was remote. Any opportunity to discuss was limited.
- I cannot say for sure, but I do find myself wondering if it was amplified in writing that the loan was forgivable, thus minimizing the risk to the board.
NONPROFIT DECISION MAKING CAN GET MESSY
Nonprofit leaders are in charge, but the power comes from around them.
Staff expect to have a voice and of course bring unique expertise.
Board members, even those clueless about specific responsibilities, understand fiduciary responsibilities and they pay attention during a potential fiscal crisis. They really pay attention to the word “loan” and the phrase ‘forgivable loan” triggers a lot of skepticism.
FIVE KEY STEPS TO MAKING A GOOD BIG DECISION
The keys to making a big decision are anticipation and education.
The work you do up front makes all the difference.
And while it’s true that an unfathomable crisis can cause you to move too quickly and miss important steps, a poorly made decision can suck you into a vortex, eating up more time that you don’t have.
But let’s dig a little deeper. How can we anticipate and educate? What are the steps?
- Check Your Gut. Is this a significant decision that you want / need input / buy-in on? (This is a place that nonprofit leaders can stumble – they feel equipped to decide and during a crisis, need to decide quickly. But some decisions require a pause.)
- Assess. Determine the speed at which the decision needs to be made.
- Think Calmly. Take a minute or two or three. Who needs to be involved in making the best possible decision (and are all those folks in house or do you need to get expertise you don’t have)?
- Put Yourself in the Shoes of the Deciders. What do they need to know? What preconceived notions might you have to shift?
- Prime the Pump. Are there conversations you can have with folks of influence to prime the pump or to solicit objection questions that can be addressed in the education / proposal?
I want to be clear. This is not for every decision. Just big ones.
And if you’re not sure if it’s a big one, please surround yourself with folks who offer you that peripheral vision and who might help you see something you would otherwise miss.
SO WHAT DID THEY DECIDE?
The board was adamant about returning the funds. Regardless of how the CEO and team felt personally, it seemed that attempting to change the board’s mind was not an option and the CEO was not willing to expend political capital to push.
The CEO met with his team and talked it through. The accountant and lawyer were frustrated – didn’t entirely understand why this was an issue. That said, they had a great conversation as a team, talked it through and realized that their budget process would be complete before the deadline for requesting forgiveness. Also, by that time, they would have very good intel about a sizable grant. Already looking very promising, they would know more. And the size of this grant was huge by any standards.
This info afforded the communications team to have a narrative about returning the money. New information and a very detailed budget process led the organization to an understanding that their finances were solid and that with this new grant, they saw a strong financial forecast without the PPP money. In this context, the organization would return the funds prior to the “forgiveness deadline.”
THE ARMCHAIR QUARTERBACK VERSION
Time to play the game called “Coulda Woulda Shoulda” – but in this situation as an object lesson – to illustrate the two keys to solid nonprofit decision making – anticipation and education and then the five steps
Is this a big decision? I say yes. Lots of zeroes. Buzz out there that the money ran out the first time and that organizations who really needed money came up short. The second pot of money was large, but still. There were optics out there that reflected poorly on companies and organizations who accepted the funds. Lastly, regardless of the modifiers, the PPP funding is called a loan. Loans make boards nervous.
Yes, we could get the money. But should we? It’s worth a conversation. First stop… the accountant. Are we eligible? Is a legal voice even important at this juncture? Assuming we can get the money, I should discuss the pros and cons with the executive team. I want a robust decision to shape my thinking. I’m especially interested in what my communications lead has to say. After all, getting caught in any kind of negative storm about this would be a time bandit that we’d better be ready for.
When in crisis this is just plain hard. No doubt there was a deadline and the CEO was clear that the board chair was distracted and not easily available. Here’s a big place where the process could have been different.
I really need my board chair as a thought partner. We need some real time to talk through the pros and cons here. I can see that the board may balk. If my board chair is in the same boat, this could be a nonstarter. But it’s a lot of money and a big decision. How my board chair thinks, his point of view, and how he facilitates a conversation with either the executive committee or the full board will define how the process turns out. I need to get my board chair’s attention to help me think it through.
The other part of thinking calmly might have led the CEO to a better discussion process with the executive committee. If the executive committee was going to exert its decision making, the CEO and the board chair should have asked for the time for the committee to meet and discuss rather than secure approval via email.
Put Yourself In The Shoes Of The Deciders:
In this case the CEO saw the executive committee as the deciders. My take is that this was a bigger decision that needed full board buy in.
My board chair is really busy so I need the exec committee to really kick the tires with me and determine if they are comfortable voting or if they feel a full board discussion is necessary. I also need to realize that regardless of the forgivable nature of the PPP loan, boards are risk averse. I can imagine board members thinking that if we need a loan, there could be trouble and what if we can’t pay it back.
Oh and speaking of risk averse, I bet they have been reading about companies and organizations getting bad press and being pressured to return funds. Maybe when I make this case I should be armed with lists of big orgs that have secured the loans and big orgs that have returned the loans so the group has what it needs to make an informed decision.
Prime the Pump:
In surveying the group of deciders, there will be standouts – allies and negative influencers. Knowing where folks stand before a meeting allows you to preempt objection questions and shape the conversation. Done thoughtfully, big surprises should be uncommon at board meetings.
I need to identify the key voices on either side of this and hear the fervor behind their positions. Are they moveable? What would they need to hear or see that would lead them to champion this idea to move it through to a yes vote. And who should I call and who should the board chair call?
How did the CEO feel?
Probably that it was his decision to make, the executive committee voted, and that should have been that. Maybe he felt that the board chair did not fully have his back. The executive team may have felt they reached a good decision but wondered why they were not included up front. The accountant is still shaking her head.
And did the whole affair taint the board’s involvement in this decision in some way? The board second guessed us and overrode a decision that was a no-brainer!
Not sure, but I hope our CEO engages in some kind of debrief about the process with both the senior team and with the board.
There are lots of treasures of lessons in this messy one.
So, there you have it. My thinking about the ideal process for this decision. Now it’s your turn. If you did in fact use part 1 for a staff or board conversation, share this part 2 and see what the conversation reveals.
And I’m ready for your comments. I might be right and if you think I’m not, I trust you’ll share below.
And please stay safe.