I'm one of those few governance consultants who do not believe that nonprofit boards are singularly or at least first about raising money. I believe that nonprofit boards are first and foremost about fulfilling the fiduciary, strategic and generative duties cited by by Richard Chait et al in Governance as Leadership. For me this means that developing policy, plans and evaluation is the "big" job.
I acknowledge however that boards, as "owners" of their nonprofit may create bad consequences for their nonprofit when they don't "give or get" (it's what donors appreciate) but giving or getting is an added value and a commitment board members must make formally, individually and collectively, at the time they consider joining the board and then annually,. This means to me that a nonprofit board must be quite clear about this added expectation.
Meanwhile, should a board decide it does indeed want to be in the role of getting/giving, as many do, it will likely need members who have capacity to do one or the other or board. Most consultants and foundations in particular discuss this composition matter quite stringently as they do about a giving/getting policy with the position: nonprofit boards must and they must have the "right" people.
With this understanding it is quite interesting that an Ohio State University study has identified what they are calling a "Wall Street Takeover" of "charity boards". The author of the study views the consequence of this takeover not in the best interest of nonprofits citing the rising interest in accountability (my shorthand) as negative. I can't agree at all with this conclusion and recognize these changes as actually positive recognizing first that even though there are more Wall Street types joining boards, there still remain the folks who's passion for mission dominates. And, I think its presumptive to suggest that Wall Street types can't have passion for mission themselves. The Robin Hood Foundation is cited as one example of this takeover but a close examination of Robin Hood's work will show that only amazingly great outcomes have resulted from their support.
Anyway, I think the study authors reached the wrong conclusions but the study is definitely worth a reading and discussion among board members.
Wall Street's latest takeover: Charity boards
21 Hours AgoCNBC.comFinanciers and Wall Streeters like to tout their charitable giving. From the Robin Hood Foundation to the Goldman Sachs' charitable ventures, the titans of finance represent one of the most potent forces in philanthropy and give away billions every year.
Yet a new study says financiers may be growing too dominant in the nonprofit world, bringing values and priorities that may not be in the best interests of charity.
The paper, "The Wall Street Takeover of Nonprofit Boards," by Garry W. Jenkins at Ohio State University's Moritz College of Law, found that the percentage of nonprofit board members in the study who come from finance has doubled since 1989. They hold an even larger percentage of leadership positions on nonprofit boards.
At liberal arts colleges and New York City nonprofits, financiers hold 44 percent of board leadership positions and 56 percent of leadership positions at private universities, both up dramatically since 1989, according to Jenkins, is a former chief operating officer of the Goldman Sachs Foundation.
That concentration has changed the face and values of nonprofits, according to the report.
"Practices such as data-driven decision-making, an emphasis on metrics, prioritizing impact and competition, managing with three- to five-year horizons and plans, and advocating executive-style leadership and compensation have all become an essential part of the nonprofit lexicon," the report said.
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Put simply, Wall Streeters are running nonprofits more like Wall Street, aiming for greater returns on their charitable dollars.
While this discipline is often beneficial, it can also become a "pathology" that can "distort" and "dilute" the purpose of charity, the report said. Applying market measures to charity can sacrifice long-term programs for short-term targets and create a "false promise" that complex social problems like poverty can be solved with metrics and quarterly targets.
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Filling boards with Wall Streeters also crowds out representatives of other racial, economic and educational backgrounds who better represent broader society, which can lead to group think and an "uncritical adoption of financial concepts approaches and values," it continued.
The study said nonprofits need to mitigate this "Wall Street takeover" by appointing more diverse board members to balance the finance types.
"For those who do not believe the status quo presents a problem, a reasonable question to consider is this: Where is the reasonable line? If 40 percent from the finance industry is acceptable, what about 50 percent? Sixty percent? Is there a tipping point?" it said.
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To be sure, charities need money to survive. And if Wall Streeters are giving the money, they should also be able to help direct how its spent. Nonprofits no doubt benefit from thinking more about efficiency, effectiveness, accountability, data and measurement.
Yet as the study makes clear, simply "following the money" may not be the best long-term strategy for today's most important charities