Nonprofit Board Crisis

Too Little Conflict #NonprofitBoards

Dr. Fram has offered in his blog some thinking about boards having meaningful conversations.  I concur that this is a sorely lacking reality for nonprofit boards.  The lack of meaningful conversations results I believe in decisions that have limited thought to back them; limited information around the table by all; and/or no thought or conversation.  This is a formula for an unengaged board - a board that fumbles through its existence with little merit or glory and more importantly, limited focus on mission.  It's just a job 😒.

Anyway, do take a look at Dr. Fram's thoughts.  I've also inserted a couple of my own.

NONPROFIT BOARD DISCOURSE: A MEETING OF THE MINDS??

Nonprofit Board Discourse: a Meeting of the Minds??

By: Eugene Fram      

Several years ago, a nonprofit board member complained to me that there was too little “conflict” at board meetings. Too few hands were raised to challenge or simply question the efficacy of certain important agenda items. Having participated in hundreds of nonprofit meetings, I have observed that this laissez-faire response still typifies a significant number of board member’s attitudes, especially for items that deserve vigorous discussion. Why is that? And why can the term conflict be  perceived as an asset to an organization that is determined to move forward?

Below are some answers based on my own experience in the nonprofit environment.

• Major Focus is on Operations: As I have commented in other posts, focusing on operations seems to be a default option for many nonprofits. Unlike members of business boards who have substantial financial investments in their organizations, nonprofit board members are volunteers with little personal risk and with insufficient motivation to challenge the status quo. Since the median nonprofit director’s term of service is seldom greater than 6 years, a board member can lack significant interest in the nonprofit’s long-term future. In addition operational items are more concrete and inherently more interesting because many center on people related decisions. Then there’s the “nice guy” impulse—directors’ meetings are usually brief (1 to 1.5 hours) and board member are often reluctant to voice dissenting views that may offend colleagues and extend meeting times.  I absolutely agree - operations are the purview of management, not the board - that's why they hire an exect to ensure the desired outcomes result.  As a focus of  board meetings, totally a waste of time.  This is where dashboards come in if there is a desire to understand how the "cheese" is made.

Encouraging “Constructive Conflict”

• Preparation Is Critical: Review of governance agenda materials leads the way to more rigorous discussions.   This requires nonprofits to provide meeting materials at least one week in advance to facilitate fact- based discussions. Some may argue that busy board members will ignore materials well in advance of the meetings. But isn’t it a solid advantage to have some of the most interested board members well briefed for the meeting?  YES!  And this means that there should be thought papers or expert witnesses or thought leaders who can build a board's capacity to understand and discuss.  Reports tend to only reflect on conclusions (and they should) but this does not help fully inform.
• The importance of mission: As much as possible, the board chair needs to frame each agenda item in light of its impact the nonprofit’s mission.   This helps eliminate frivolous comments and questions, e.g., voting on the color of the menu at the annual diner. These distractions, like responding to tweets, detract from discussing substantive issues. Chairs can diplomatically eliminate them by simply suggesting the distraction  issue can be handled “off line.”  YES, YES, YES
• Recruitment: Nominating candidates for the board who have the abilities to interact effectively at meetings are important to improving the quality and quantity of meeting discussions.   While nonprofits often need a diversity of board members from different fields and backgrounds, they also must have a core of directors who know the differences between governance and operational activities, who understand what is involved in critical thinking, have demonstrated leadership elsewhere and have broad understandings of what constitutes strategic planning.   Otherwise the board, like the one I encountered, had many very busy middle level managers types who did well on time-constrained specific projects, but they had no interest in governance or strategic planning.   The de facto result was that the Board Chair authoritatively operated the board. Otherwise known as succession planning let's though not forget that good ongoing training can compensate for limited skill and experience going into the game.  Training offsets the need to compromise diversity goals.
• Getting Together: Currently, most nonprofit board members live time-compressed lifestyles and only connect with others at formal board or committee meetings. To build an effective team decision-making, board members need to know each other personally and professionally.   Board chairs and CEOs must take steps to provide social or professional occasions for the board at which directors can interact.   Sometimes a simple 10-minute agenda item at a meeting asking each member to briefly review personal or professional events can help—as proven by organizations like Rotary.  Yes, the relational dimension is as critical as the transactional dimension.  The two dimensions make a whole and result in best governance.

Passion vs. Passivity: The nonprofit board member who lamented the absence of “conflict” in the boardroom recognizes that an engaged and often challenging governing body is in the best interest of a healthy and forward moving organization.

Nonprofit Response to Crises and COVID #NonprofitBoards

A recently released research paper has found that nonprofits are surprisingly (my word) resilient when it comes to crises while offering thoughts about how nonprofits might even improve their ability to pivot and that changing the threat or risk narrative to opportunities can be most effective.  Admittedly the non-academic reader may be a bit stymied by how academically framed is this paper but there are merits in the analyses and all are encouraged to slug through and otherwise weighty presentation.

What follows to save my blog readers time and energy is the final part of the paper that is focused on the "so what" of findings.  Do however feel free to read the previous sections if you are particularly interested in learning of other writers/researchers who have covered this topic.

By the way, the title of the paper: Nonprofit organization communication, crisis planning, and strategic responses to the COVID-19 pandemic.  Please do take a look and at minimum, review the analysis provided below.

 

4.3 Insights from qualitative data

At the end of the survey, we also asked an open-ended question: “Do you have anything else to share about your organization's response to the COVID-19 pandemic, and/or the use of social media to help respond to the crisis?” Of the 578 T2 organizations, 236 provided comments. We inspected the dataset for organizations that had maximally different values on retrenchment (0) and innovate (4), and also provided responses to the question. Here we provide a brief description of one illustrative NPO. This Human Services (NTEE high-level category P) NPO is very small (5 employees), though it used nearly all (9 of 11) external communication at both time periods, and used social media for diverse purposes (46.3% for information, 25.0% for community, 31.3% for action). Perhaps as one impact of COVID-19, while it had paid communication staff at T1, by T2 it did not. It had a few experiences with and concerns about crises at T1 (crises 1, 2, 4; and 2, respectively), yet had implemented a large number of crisis preparedness tactics (9), reported no crisis communication barriers, and assessed its readiness for renewal as somewhat above average (5.6). The organization had almost no liabilities (ratio of 0.01), and was efficient in administering programs (0.84). It also reported somewhat below-average crisis extent (4.5) and few impacts (2 out of 11). Clearly, this is an active and efficient organization, highly engaged in communicating with its stakeholders for a variety of purposes, aware of and well-prepared for crises, and not suffering much (at that time) from the COVID-19 pandemic. Its orientation toward innovating and collaborating, rather than retrenchment, is well represented in its comment: “We formed partnerships in ten parishes (counties) with agencies and congregations to identify families who lost jobs, and to deliver needed food and supplies. This network became important following Hurricane Laura also; we hope to continue its long-term in some form.”

5 DISCUSSION

5.1 Summary of results

The present study extends beyond recent COVID-19 and disaster-related research (Chen, 2022; Kim & Mason, 2020) by examining the communication capabilities and purposes that nonprofits apply, and also by not relying solely on economic explanations for their response strategies.

This study's guiding research question was: How do NPOs' communication resources, traditional and social media use, and crisis management experiences and practices influence their strategic responses to the COVID-19 pandemic? This project demonstrated that nonprofits experienced a range of operational crises and paracrises and had crisis and paracrisis concerns. Similar to other research (Orensten, & Buteau, 2020), the present research found nonprofits were dealing with the COVID-19 crisis in different ways, even though the pandemic had moderate to severe negative impacts for them.

The present study addresses a weakness in both survey and crisis management research (Fuller et al., 2019) by providing longitudinal rather than cross-sectional data alone. Comparing before and after measures, distinguishing among a variety of communication and crisis management influences, and central organizational resources, as well as among types of responses to COVID-19, helped identify subtleties in how NPOs responded to the early stages of the COVID-19 crisis.

This research extends recent research (Kim & Mason, 2020) by incorporating nonprofit responses and impacts to crises into a coherent framework of strategic choices (Wenzel et al., 2021). In turn, these strategic choices are associated with a variety of influences. Responding to the COVID-19 crisis by retrenching is driven solely by greater resource demands and the extent and impacts of the pandemic. External communication, and attention to paracrises, but not crisis preparation, along with the negative implications of COVID-19, fostered a greater perseverance response. Conversely, innovating response to this immense crisis was facilitated by an external, community, future, and operational focus, and, compared to the other two types of responses, less extent but more impacts. As other recent research has shown (Raeymaeckers & Van Puyvelde, 2021), here NPOs innovated during the COVID-19 crisis by taking on novel roles and collaborating with a range of stakeholders. Moreover, the study shows the applicability of the strategic response framework to nonprofits, where it has primarily focused on business, and contributes measures that could be further developed and tested in other types of crises that have widespread implications for organizations, such as natural disasters (Chen, 2022) or economic downturns (Besel et al., 2011).

The findings support the principle that communication is a fundamental capability for NPOs (Shumate et al., 2017). Engaging in external communication activities, with particular emphasis on using social media for community and action purposes (Lovejoy & Saxton, 2012), contributes to their ability to persevere and innovate. More specifically, our results support decades of case-based research on crisis renewal (Pyle et al., 2020; Ulmer et al., 2019) by demonstrating that organizations that communicate effectively and ethically before a crisis are more likely to be able to pivot in a crisis, that is, collaborate and find new ways to deliver on the mission, because they use their values to guide their actions, view crises as opportunities, and have developed positive stakeholder relations. The study and results suggest that attending to the organization's readiness for renewal (Fuller et al., 2019) can be more effective than traditional crisis communication preparedness tactics, especially for an innovating response.

5.2 Application of findings for practical purposes

Even before COVID-19, NPOs appear to have a range of experience with and concerns about crises that disrupt their operations as well as with non-operational crises. These findings suggest that leaders could consider thinking about how they would respond to crises in ways that support the maintenance of core activities and innovation. Consequently, scenario planning and response rehearsals (typical activities of crisis planning) could focus not only on strategic responses such as scaling back operations (i.e., retrenchment, such as what to cut), but also those that help maintain core services and stakeholder relationships (perseverance), as well as to seek out additional resources, collaborate with other NPOs and business and government sectors, and generate novel ways to deliver on the organization's mission (i.e., innovating).

Communication with external stakeholders at both T1 and T2 predicts organizations' abilities to maintain core activities (perseverance) during a crisis, unlike the other two responses, while using external communication channels at T2 is fairly strongly associated with an innovating response during the COVID-19 crisis. Therefore, nonprofits should engage with external stakeholders using a variety of channels. Social media (Facebook, Twitter, Instagram, YouTube) are important media for external engagement by nonprofits. Information sharing is important, and especially as details about a crisis become available. However, even though it was the most frequent purpose (twice as frequent as community or action), it had no influence on any of the three responses. Building community and encouraging action through social media, on the other hand, were more likely to contribute to the organization maintaining its core activities and innovating. In non-crisis times, NPOs should develop a network of friends, allies, stakeholders, and similar organizations (followers) on social media that they can call upon during a crisis to help it, as well as use to provide aid to other organizations and clients (Eriksson, 2018). As Seeger (2006) argues more generally, when organizations have positive stakeholder relations before a crisis, stakeholders may help the organization through the crisis.

In addition, how organizations communicate about their readiness for renewal (ethically and effectively) seems to influence their strategy for responding to the crisis. Extreme crises (such as COVID-19) may reasonably foster a retrenchment strategy, both as a rational approach as well as a traditional defense. It seems, however, that organizations that viewed crisis preparation in terms of developing and communicating a readiness for renewal were significantly more likely to innovate, and even less likely (though not significantly) to retrench.

There are two practical applications from these findings about the linkage between readiness for renewal and response to crises. First, nonprofit leaders could work to reframe their perspectives about potential crises to include not only threat but also opportunities. First, leaders could assess their own responses to items on readiness for renewal scale, such as “My organization views crises as turning points that have the potential for future positive outcomes” and “In my organization, we embrace failure as an opportunity to learn” to understand their dispositions. In the case that organizations have a threat bias, leaders could practice reframing, an approach to redefining the problem that offers a do-over or fundamentally transforms the meaning (Fairhurst, 2010). To reframe, they could ask “How does a/this crisis present a threat and an opportunity?” Opportunities could include learning, growth, and new competitive advantages as well as opportunities for collaboration (Meyers & Holusha, 2018), for example. Second, leaders could focus on their responses to questions about organizational values, which provide clarity for how, what, when, and with whom to communicate (Ulmer et al., 2019). For example, their disposition on questions such as “In general people in my organization live by our values” and “We have a process in place that helps to resolve competing values about what information to share” could stimulate conversations about what the organization's values are and how to communicate in ways that are both consistent with, and reinforce, those values. Leaders should consider these recommendations regarding readiness for renewal as ongoing activities that maintain areas of excellence or improve weaknesses (Fuller et al., 2019).

5.3 Limitations

While this project had a rare opportunity to collect a wide variety of measures from a panel of U.S. NPOs before and after the initiation of the COVID-19 pandemic, there are several limitations. Obviously, we were able to report on only a very small percent of the full list of 20,998 qualifying NPOs: 2005 at T1 and 578 of those at T2. So, the responses and analyses results are illustrative rather than representative of U.S. 501(c)(3) public charities. Some measures would benefit from extensions. For example, we asked organizations if they had paid communication staff or not. However, nonprofits can outsource such activities (Pope et al., 2015), either because they are too small to handle this function, or are large enough to afford such services, which respondents may have considered as not paid staff. It is also likely that some COVID-19 impacts and analysis results might vary by different sectors of NPOs (for example: arts and culture organizations, c.f. Kim et al., 2020). The National Taxonomy of Exempt Entities–Core Codes (NTEE-CC; National Center for Charitable Statistics, 2019) categorizes the nearly 400 specific codes into 26 major groups within 10 broad but very unevenly distributed categories; further, there is no clear theoretical justification for expecting distinctions among these. Impacts and analysis results might also vary by the phase of the COVID-19 pandemic in the regions where the NPO provided service during the T2 survey. So, one advanced approach would be to match the GPS coordinates of the headquarters with data on reported cases. However, many NPOs provide multi-region or national services, and early on there was very wide quality and prevalence of COVID-19 reporting.

6 CONCLUSION

This study provides a rare view into how a large number of U.S. NPOs prepared for, were affected by, and responded to, the COVID-19 pandemic during a one-year period before and after the pandemic took off in the U.S. Specifically, the study's results support attending to (1) external communication engagement, including more community-focused uses of social media, (2) ongoing pre-crisis activities, including devoting effort to preparation for renewal, and (3) response strategies, including retrenchment to perseverance to innovating. The study affirms that although the pandemic had in some cases quite substantial negative impacts on the sector, NPOs are drawing on their communication capabilities and crisis perspectives to maintain core activities and even innovate.

ACKNOWLEDGMENTS

The authors wish to thank the editor and anonymous reviewers for their comments on this manuscript. They are also grateful to Cameron Law, Stella Premo, and Tiffany Rosso for their feedback on an earlier draft of this manuscript.

A Clear Mission Statement Is Just One of the Problems Faced By This Nonprofit #NonprofitBoards

Kudos to the Pittsburgh Post-Gazette for giving attention to the small AND large nonprofits.  The space the paper gave to the nonprofit described below provides a number of "life lessons" worthy of note and consideration by not just arts organizations by all small nonprofits.  

And yes, this nonprofit has embraced all the issues a nonprofit can choose if it wants to demonstrate how not to pursue ultimate success.  Beginning with what effectively is a family board and correlating set of donors, lacking clarity in what is it's true mission and purpose (perhaps Theory of Change), having offerings that appear not to attract audiences that lend to sustainability, and just not having everything really together, this nonprofit is just an accident waiting to happen (although it certainly has had enough accidents at this point.  

If the board were to reorganize, find a different supporting role of its founder, develop offerings that would attract larger audiences and funders, clean-up who is actually in-charge and in-charge of "what" just then, maybe, might there be a shot of redemption.  

Great case study though!

Can a small arts group recover when its executive director abruptly quits?

JEREMY REYNOLDS

Pittsburgh Post-Gazette

[email protected]

 

 

MAR 24, 2022

 

8:05 AM

An executive director quitting within a couple of months of starting is bad news for any company.

For a small nonprofit, it’s a red flag that begs this question: How does a fledgling arts organization grow?

Resonance Works Pittsburgh is a performance organization that, in non-pandemic times, put on a few shows a year ranging from operas and musicals to chamber music and oratorios with contracted artists. It defies any particular programming niche. Next year is its 10th anniversary season.

According to tax documents from recent years, it blips along with an annual budget of around $130,000 a year, largely donated by founder and general director Maria Sensi Sellner and her family with some foundation funding.

Sellner, a former engineer turned conductor with engagements across the country, declined to comment for this article.

In 2021, the board met to outline new strategies to grow and settled on hiring an executive director. Enter Clare Longendyke, a Chicago-based pianist and the founder of a plucky arts festival and recital series.

Longendyke began working as a part time contractor on Sept. 1, but she said she quickly realized that the position would require more than full-time work and informed the board of her decision in December.

“I decided to leave because I couldn’t be successful in growing the organization under those circumstances,” she said.

Her final day was March 4.

So what went wrong? And what can other nonprofits in a similar situation learn from this situation?

Butts in seats

“The organization’s overriding goal is butts in seats,” said Doug McGill, current president of the board. “If we don't have butts in seats, that’s the clearest indicator that things aren't quite aligned between the organization and the community.”

For perspective, the organization’s last full pre-pandemic season, which ended in 2019, drew 1,447 total listeners, a slight increase over the previous year, according to its unsuccessful application for funding through the Regional Asset District.

That document also reveals that while the number of individual contributors is ticking up gradually, the top three funders during the 2019 season were the founder and her family members, who contributed a combined $57,285. Sellner and her husband, Brennan Sellner, vice president of the board as well as operations manager, personally hold the organization’s long-term debt.

Growth under these conditions is incredibly difficult, and of course the pandemic has thrown a giant monkey wrench in operations for nonprofits around the country, including Resonance Works. Where to begin?

“It’s certainly possible for a small org to grow, but the first thing to do is develop a compelling mission and programming plan to garner a larger share of the philanthropic pie,” said Joseph Kluger, a principal at WolfBrown, a nonprofit consulting firm.

WolfBrown customarily works with organizations with budgets in the millions or tens of millions of dollars, but Kruger had some advice for small groups looking to take the next step up the budget ladder:

“This is often something of a ‘chicken and the egg’ situation,” he said, explaining that it takes manpower to increase resources and resources to increase manpower.

“First, you need a mission statement,” Kluger said. “You need an elevator speech that, when you’re out at a cocktail party and someone says what do you do, ‘We’re an organization that does ‘X.’

“It needs to be inspiring and it needs to be compelling and it needs to meet a public need that isn’t served by other organizations. That’s the next step.”

Now in its ninth season, Resonance Works website, www.resonanceworks.org, doesn't have a clear, concise mission statement.

“In Pittsburgh, there are so many other groups and you don't want to directly compete,” McGill said. “What we really care about is representation, but it’s hard to build an audience when programming is going to change all the time.”

McGill also cited the never-ending wheel of single-year grant funding as a hurdle.

Longendyke said that, though she was only there briefly, the organization’s commitment to being artist-led could be a viable peg for its funding pitch, perhaps the start of such a statement.

“The flexibility that Resonance Works offers to its artists to pitch ideas and carry through ideas with organizational support is truly unique,” she said. “They're really willing to get behind what they call their family of artists. They’re willing to do anything to support the vision of the artist and they’re very capable of doing that."

She joined the organization in hopes of helping to craft a mission statement but simply wasn’t there long enough to do so, she said.

Collaborative growth

Siphoning funding into an executive directorship was Resonance Works’ gambit to increase staff to begin growing the organization. Unfortunately, it didn’t pay off.

“We will not be replacing the executive director role in the short term,” said McGill. “We’re rethinking what administrative help we’d need in such a role, and it’ll likely focus more on grant writing and production support. Marketing is a huge need for us, for example.”

The remainder of Longendyke's salary is now going to a marketing firm to consult and provide marketing services. The firm, Workhorse Collective, also declined a request for an interview.

Other local organizations with similar budget sizes, such as the Chamber Orchestra of Pittsburgh and the Pittsburgh Girls Choir and Pittsburgh Camerata have also created executive positions in recent years.

“Adding Andrew [Swensen, the organization’s executive director] to the team has absolutely helped us to grow and develop,” said Edward Leonard, founder and artistic director of the Chamber Orchestra.

“Having someone else to bounce ideas off of and to talk through decisions with has been really key.”

These positions are typically part-time, but in the case of the choir and Camerata, the two organizations secured funding to create a shared executive directorship to assist both organizations with fundraising and production through the Allegheny Regional Asset District’s Connection Grant, a program that provides three years of funding to promote “cost-saving connections” like mergers or shared staff.

They announced the hiring of Angela Goldberg for the position in January.

Growth requires additional manpower, and for each nonprofit, there comes a time when a founder isn’t able to keep up with the demands of running both the artistic and administrative side of the organization.

“Maria has poured blood, sweat and tears into this organization, and she’s not taking a salary,” said McGill, Resonance Works’ board president. “We have oversight but not directly.

“On certain kinds of decisions, what tempo, what dynamics, the conductor should have full authority,” said Kruger, the nonprofits consultant. “But almost everything else should be a byproduct of shared authority.”

He added that young organizations often populate boards with friends and family, which can make providing the appropriate checks and balances difficult.

“A lot of the boards and founders of nonprofits assume that because they’re in the business of losing money wisely they’re serving the public interest,” he said. “That's not necessarily the case.

“I have to say, most small organizations don’t develop beyond this. Maybe that’s OK."

Jeremy Reynolds: [email protected] or 412-263-1634; twitter: @Reynolds_PG. His work at the Post-Gazette is supported in part by a grant from the San Francisco Conservatory of Music, Getty Foundation and Rubin Institute.

First Published March 24, 2022, 6:00am

Out of Control Board Member #NonprofitBoards

The Supreme Court today determined that a board can indeed censure a member who, now my terms, in a way not consistent with the will of the board.  The court case involved a community college board member who was speaking contrary to the will of the board through a number of media and the board in-turn censured the member.  The member sued the college on freedom of speech grounds.  The Court decided as the headline notes that a board does indeed have "the right to censure a disruptive member".  The Court went further to say that while a board can't refuse to seat a "duly elected" member they can indeed exclude that member in participation or impose other consequences.

There is one important point to note here.  It has always been my understanding that, perhaps under the duty of obedience, once the board has made a decision, its members must abide by that decision until such point when they might sway members to change their mind.  Individual members do not have standing as individuals but as the collective.  A disagreeing member might also opt to no longer be a board member as well.  The Court also added that "argument and counterargument" are the weapons to be used for when a member or members disagree with the whole, not litigation - just to close a loop I presume.  All to say, disagreement around the board table is the nature of the beast that needs resolve around the table.  I a member does not care to participate in a civil fashion - they should go.  This type of discourse does nothing for mission.

A school board has the right to censure a disruptive member, the Supreme Court rules

By Nina Totenberg | NPR
Thursday, March 24, 2022

With schools boards all over the country finding themselves embroiled in controversy, the U.S. Supreme Court on Thursday upheld the right of a community college board to censure one of its own members.

The court's unanimous ruling came in the case of David Wilson, an elected trustee of the Houston Community College board who sued his fellow board members, charging that they violated his First Amendment right to free speech by censuring him.

Wilson was elected to a six-year term on board in 2013, but he soon found himself at odds with the other board members, blasting them on robocalls, on the radio, on his website, and filing four lawsuits against the board, which cost taxpayers close to $300,000 in legal fees. He even hired a private investigator to see if a fellow board member really lived in the district she represented.

When the board finally censured him for his behavior in 2018, Wilson went to court, contending that the censure violated his First Amendment Right to free speech. A federal district court dismissed the case, but the U.S. Court of Appeals for the Fifth Circuit reinstated the suit. On Thursday the Supreme Court unanimously reversed that judgment.

Writing for the court, Justice Neil Gorsuch said: "A reprimand, no matter how strongly worded, does not materially impair freedom of speech," especially when "the censure at issue before us was a form of speech" by the other elected representatives on the board.

Gorsuch noted that elected bodies in the U.S. have long exercised the power to censure their members. Members of Congress have long been censured by their fellow members for matters ranging from unethical conduct to "insulting...the Speaker."

In modern times, the Supreme Court has ruled that Congress, as well as state legislatures, may not refuse to seat a duly elected representative, but as the court noted on Thursday, "the power to exclude and the power to issue other, lesser forms of discipline are not fungible under our constitution."

Instead, as the court put it, "argument and counterargument, not litigation, are the weapons available for resolving this dispute."

Nonprofit Board Giving/Getting #NonprofitBoards

I am a huge fan of nonprofit boards having a conversation about whether to and how much members should give or get.  I am not a believer that the fundamental job of a board is about giving or giving.  The fundamental job of a board is governance - providing fiduciary and strategic oversight (that includes evaluation) toward the pursuit of mission.  

That said, the conversation about board giving and getting is regularly if not religiously introduced particularly by execs who then recruit fundraising instructors.  Ok, so that's the reality and I pose that as long as the board, wholly and severally has agreed that one of their obligations will be to give and/or get and all board members agree and new board members understand that this is what the board has agreed upon and expects of all members, fine.  At that point all members must determine the how much and how assuming that specific has not universally been agreed upon.

So, let's say indeed such an agreement has been reached.  Below is an interesting article on the topic which takes the idea of annual giving a step further.   Your thoughts on this welcome.

How Do You Get Your Board on Board With Monthly Giving? 

By Erica Waasdorp

FACEBOOKFACEBOOKTWITTERTWITTERLINKEDINLINKEDINEMAILEMAIL0 COMMENTSCOMMENTS

 

Someone from a nonprofit recently asked me to address one of its organization’s biggest challenges with monthly giving: How to get its board on board with monthly giving.

I’m baffled that board members still need to be convinced that monthly giving is a thing, and that monthly giving is a great way to provide ongoing sustainable revenue for the organization.

Frankly, if they’re not on board with monthly giving, maybe they should not be on your nonprofit’s board. Many board members are business folks.

What is not to like about the opportunity to get money in the door that you can plan on, that will keep your organization’s lights on and your mission going?

What’s not to like about the fact that monthly donors give more and keep giving much longer than one-time donors?

What’s not to like about the increased donor retention rate — double that of other donors?

What’s not to like about the fact that monthly donors are six times more likely to leave you in their will?

Gone are the days that monthly giving was expensive.  Gone are the days that monthly giving was complicated. Believe me, I know!

Now, you have the tools in place.

• You have a website.
• You have an email program.
• You have a donor base CRM.
• You have a payment processor that can handle recurring gifts. 
• You send emails.
• You do social media.
• You send appeals.
• You have stories.

The one thing missing: the mindset that you want to generate monthly donors because it’s the right thing to do.

It’s the right thing for your donors who want to help but may not be able to write bigger checks (especially not now) and for your donors who want to spread out their giving over the year.

And it’s the right thing for you, as the organization, that can plan better because you know the money will come in.

All you have to do is start asking donors to consider a monthly gift. It does not even take a lot of time or heavy lifting. You can add a button to every email. You can add a button to every email newsletter. Then step it up and do some more. You can add some special emails. You can add special appeals. You can add sustainer drives with all media and messaging. 

You have the tools. You have the messaging and the channels to reach your donors. All you need now is the right mindset and the focus to go after these wonderful little gems in your database who are willing to help you on an ongoing basis.

If your board is not interested in generating sustainable revenue for your organization, ask them “Why?”

Oh, by the way, if you have board members who cannot write the big checks themselves, ask them to consider a monthly gift. Even $85 a month is $1,000 a year! What a great way to get involved.

 

 

Nonprofit Corporate Governance Officer #NonprofitBoards

As promised in yesterday's blog, here's the solution to the nonprofit governance inconsistencies as offered in the Stanford Social Innovation Review.

I would argue though that this proposal does not really address the question of Governance Committees - a solution attempted by many nonprofits equally focused on addressing the inconsistencies described in the first half of this article.  Perhaps the Chair of the Committee is the CGO?  And whatever happened to parliamentarians? 

ll these issues require boards to be on the lookout for the next big issue or risk, which is where a CGO could help. We asked our panel of experienced directors whether appointing one board member as a CGO would result in a higher level of board attention to these and other important governance issues and thereby help boards lift their governance game. The overwhelming response was YES, with 97 percent believing a CGO would be helpful in all or in many situations.

Defining the CGO Role

The CGO role that emerged from our conversations was one of an internal governance quality advocate who helps the board comprehensively engage with its governance obligations. In this capacity, the CGO has two key areas of oversight:

1. Ensure compliance with legal and social expectations. The CGO should ask questions to ensure the board and organization comply with current and emerging legal and ethical standards to preserve the organization’s license to operate in the community. On behalf of the board, the CGO should manage and update the list of compliance expectations; collaborating with staff and the board to ensure all standards are met and accurately reported. The CGO should, by definition, have strong awareness of the organization’s bylaws and policies, which are the foundational documents informing board governance requirements.

2. Champion the adoption of proven governance practices that enable the board to help the organization fulfill its mission effectively and efficiently. To achieve exceptional governance, the CGO’s oversight must be complemented by a commitment to adopting board practices known to support organization performance and mission fulfillment. These practices and mindsets are an ever-evolving list, with BoardSource CEO Anne Wallestad’s 2021 SSIR article “The Four Principles of Purpose-Driven Board Leadership” as the latest contribution in this field. A critical aspect of the CGO’s responsibility is to ask: “What aren’t we doing that would help our nonprofit perform better?”

While the CGO cannot singlehandedly deliver high quality governance, as an advisor to the whole board and a thought partner to the busy board chair they can pose the right questions to stimulate thoughtful board discussion. Interviewees agreed that comparing board practices against an accepted list of good governance questions would be a strong starting point for a CGO. For example: Are our nonprofit’s articles, bylaws, and board-approved policies up-to-date and in compliance with legal obligations and societal expectations? Does the board annually review CEO performance and update their goals? Does the Board regularly review a set of key performance indicators to track organization impact, financial performance, and overall health? Using resources available in the sector, we assembled a working list of questions covering a wide range of topics that a CGO could use to prompt a board to recognize and address gaps. The full list is available here.

In addition to asking questions that prompt board reflection and action, the CGO should play a hands-on role in four activities:

• Leading a bi-annual review of governance effectiveness and monitoring initiatives to improve board performance.
• Driving new director governance training and shaping supplemental training and education over time.
• Monitoring external governance-related developments pertaining to the law, regulations, and social expectations on behalf of the board.
• Engaging with the CEO on how staff can best support high quality governance by, for example, ensuring appropriate board materials are prepared and/or framing board discussions to encourage engagement with genuine issues.

These primary responsibilities define a CGO role that will be of value to many boards by addressing the sources of inconsistent governance. The experienced directors we spoke with noted, for example, that a CGO driving regular board self-assessment and strengthening the governance focus of new director orientation could help build a stronger shared understanding of what good governance means and reduce confusion on the roles of the board and management. Likewise, a CGO working with the board chair and CEO to develop an annual board calendar and committee mandates would help ensure that the full range of governance responsibilities, particularly compliance oversight, are regularly addressed each year. In addition, a CGO participating in the nominating process could encourage an equal emphasis on recruiting for diversity and skill set as for individual fundraising capacity. Our interviewees were especially interested in the value a CGO might add to boards looking to anticipate, rather than react to, changing legal or societal expectations by actively monitoring external governance-related articles and forums.

One might question whether the responsibilities outlined above are the work of a good governance committee. Unfortunately, as many as half of nonprofit boards do not have a committee dedicated to governance. For those that do, they are often combined with nominating responsibilities into a single committee, with the reality that the challenges and urgency of filling empty board seats often means the nominating function frequently trumps the sometimes mundane aspects of governance assessment and improvement initiatives. The CGO role seeks to rebalance this natural bias.

Identifying the CGO

Who is best suited to serve as this good governance catalyst? This answer will vary by organization. Importantly, naming a CGO does not require a nonprofit to dismantle existing structures or committees. A CGO should be able to work within existing committee and leadership structures and remain effective despite inevitable board leadership transitions.

Skill set is the critical driver of an individual’s ability to fulfill the CGO role. First and foremost, mindset is key. An independent, objective, organization-first mindset and willingness to ask hard, sometimes uncomfortable questions is essential to this role. This may be challenging for existing board leaders already in the center of the governance process. Secondly, legal skills are nice to have, but not essential. Communication and persuasion skills are as important as technical knowledge. Specific legal expertise can be acquired pro bono or at a reasonable cost if a legal professional is not already on the board or staff. Finally, training is necessary. A CGO should be trained in board governance, ideally through a formal training or certification program, or via the experience of serving on multiple strong boards.

The CGO must be on the board. While a few interviewees suggested an external advisor or staff member could fill the role, most felt that the CGO needs to be a respected leader on the board able to credibly raise and address issues when they happen. So, who should this person be? There is tremendous variability in the ways nonprofits deploy leadership to oversee and support their activities. Whether a board creates a new position or repurposes an existing role, nonprofits have a rich set of options to implement the CGO model:

Board chair: The board chair has the greatest influence on governance quality in most nonprofits and could be a logical candidate for the CGO role. In fact, “Chair as CGO” was the initial hypothesis of our research. Recasting the board chair as a board governance expert, particularly in the face of a strong CEO/ED, could help underline the board’s role and reduce risk for the organization. We recognize, however, that the chair role is already a demanding volunteer job, and chairs are often selected for different strengths, like fundraising skills or a high-profile reputation. Not to mention that in certain situations, the chair can be part of the governance problem.

Vice chair: The vice chair is often an underutilized role in many nonprofits, and the CGO designation could reinvigorate the position with a well-defined purpose. Re-envisioning the vice chair as CGO could also serve as a development opportunity for future chairs. 

Chair of a standalone governance committee: Combined nominating and governance committees were commonly described as allocating their time to “90 percent nominating and 10 percent governance” issues. A CGO leading a refocused, standalone governance committee would add heft and capacity to support the board’s most critical role.

Executive committee: The CGO role could also be formalized as a responsibility of the executive committee or added to the responsibility of an existing executive committee member or board officer. Our discussions suggested that in high functioning boards, strong executive committees could be effective arbiters of good governance.

Independent director: Last and by no means least, an experienced director with the right skillset might take on the role, particularly on a smaller board or one with few committees.

It is clear that no one size fits all and that the tremendous variety of nonprofits makes the choice of who to fill the role a far more nuanced and localized one.

Implementing the CGO Role

Our hope is that boards do not allow these variables to get in the way of testing the concept. Allow local factors to shape how the CGO is selected and learn what works best for your organization. To implement the role effectively, we suggest the following actions:

Recruit the skill set and be prepared to waive other board expectations (i.e., give-get fundraising requirements, other committee memberships) to get and retain the right candidate. A CGO’s responsibilities will be time consuming and require a meaningful commitment outside of board meetings.

Make CGO an officer of the board and/or a member of the executive committee. The CGO must be seen as a real leadership role within the board with a two- or three-year term and a maximum of six years in the role.

Have the CGO report to the board, not the chair. The CGO should regularly report on governance topics, as part of regular committee chair reports. This approach reinforces the advisory role the CGO plays to the entire board and helps ensure that important perspectives are not stifled by the board chair.

Sponsor the CGO to receive governance training and certification. As a CGO is a new concept, there are not yet training programs that focus specifically on this role, but there are a variety of governance-oriented training programs and resources available in the nonprofit sector.

Support the CGO’s membership in good governance forums such as those provided by BoardSource, the National Association of Corporate Directors (NACD), or the Women Corporate Directors Foundation (WCD).

Arrange for access to outside counsel so the CGO can discuss issues and only bring forward those which deserve board consideration. Particularly for a CGO without legal training, access to pro bono counsel or a small budget for external legal advice (assuming no internal counsel) will give the CGO confidence and avoid wasting the full board’s time on issues where the law is clear.

Consider adopting the role on a temporary basis. Boards who wonder whether the CGO is valuable can adopt the role for a two-year trial. Preceding the adoption with a self-assessment and following up two or so years later with another self-assessment will enable the board to assess whether the role made a meaningful difference. 

Too many nonprofit boards are stuck in a rut of substandard governance and need a new way to break out. The majority of our interviewees felt that designating a CGO to help nonprofit boards lift their governance game is a new idea whose time has come. For boards struggling with governance, it is a low-cost, practical solution with significant upside. The best way to answer the question of whether appointing a CGO on your nonprofit board is a worthwhile exercise is to have an informed director answer our suggested CGO questions and see whether gaps in current practices merit an investment in catalyzing better governance. For many nonprofits, we believe the answer will be yes.

Organizations interested in implementing the CGO role are invited to contact the authors at [email protected] and [email protected] for further information.

Read more stories by Paul Jansen & Helen Hatch.

 

When Board Members Just Don't Get Along #NonprofitBoards

All the mishigas going on at the San Antonio School Board can only lead outsiders to be grateful that this is not a board where they sit.  These folks just aren't functioning and as a result, the decisions they are legally required to make aren't getting made. This is if nothing else a good lesson about how not to govern.  Getting along with each other is the basic minimum for board service.  Clearly these folks need to take time-out for some discussion about mission and core values as well as a review of what is the culture and norms they think will enhance pursuit of mission and fulfilling fiduciary duties.

From the San Antonio Report:

South San ISD board votes in new president after ‘deplorable’ discussion

by Brooke CrumMarch 23, 2022

In the first full meeting of the South San Antonio Independent School District board in two months, trustees voted 4-3 on Wednesday to replace board leaders in a meeting punctuated by barbs and accusations of wrongdoing.

The South San board of trustees elected a new board president, vice president and secretary, three months after trustees last selected new board officers. School boards typically name new officers after an election.

Trustee Connie Prado made the motion to nominate Ernesto Arrellano Jr. as board president, Shirley Ibarra as vice president and Gina Villagomez as secretary. Arrellano, who was ousted as president in December, seconded the motion.

 

Prado, Arrellano, Ibarra and Villagomez voted in favor of reorganizing board officers, and trustees Gilbert Rodriguez, Homer Flores and Stacey Alderete voted against the motion. Until the vote, Rodriguez served as president, Flores as vice president and Alderete as board secretary.

As board members traded places on the dais after the vote, someone in the audience muttered “musical chairs” under their breath.

Once the board rearranged their seats, state-appointed monitor Abelardo Saavedra told the board he had never seen more “deplorable” behavior by school board members in his 50 years in public education. The Texas Education Agency appointed Saavedra in September after it closed an investigation into problems between the board and superintendent.

“I’ve never seen more deplorable board action or activity than I just witnessed a little while ago,” he said.

Saavedra added that he hoped that the fact that all board members had shown up to the past two meetings in person meant the board would turn around the district and empower trustees to work together.

“At this point, it’s hard for me to imagine that right now,” he said. “Frankly, I think it’s hard for your community to imagine that right now.”

 

Saavedra pointed to South San’s most recent financial report as evidence. He said the report showed that the district’s population is growing while enrollment is declining.

“There’s a reason for that, and that reason could very well have been the behavior that this board demonstrated to this community a little while ago,” he said. “It’s very deplorable behavior that was demonstrated by this board.”

When the board took a break before reconvening in closed session, Rodriguez walked up to the Saavedra in the boardroom and told him that he was “disgusted” by Saavedra’s remarks to the board. Saavedra thanked Rodriguez for his comments.

In November, the TEA opened another investigation into South San ISD in response to complaints the agency had received, claiming the school board has interfered with the superintendent’s duties.

Before voting, board members traded barbs on the dais in front of dozens of audience members for almost 45 minutes. Alderete, Flores and Rodriguez criticized the four trustees who had not shown up to seven called meetings in person, preventing the board from having a quorum so it could legally meet. Those trustees were Prado, Arrellano, Ibarra and Villagomez.

Until March 10, South San’s school board had not met in seven weeks because too few board members attended the meetings in person to constitute a quorum, stalling district operations that are the board’s responsibility. At least four trustees must be present in person to meet.

Items trustees could not address during that time include the employment of Marc Puig, who was suspended as superintendent in December, and other staff hirings and firings. Ultimately, the board reached a quorum March 10, after interim superintendent Henry Yzaguirre authorized an insurance payment that was trustees’ responsibility, which was a possible violation of the Texas Education Code.

Arrellano defended his physical absence from board meetings and said it was the board president’s job to ensure there is a quorum at meetings. He attended some meetings virtually.

“We need to get to a position where we are not attacking each other anymore,” he said. “I’m tired of the personal attacks. That’s all that happens now at these meetings are personal attacks. The board is supposed to be working as one body corporate.”

At the beginning of the meeting, a mother of two South San students and two graduates, Ruth Reyes Rodriguez, told trustees that their refusal to attend meetings and not take care of district business was “embarrassing” and tarnished the district’s already dismal reputation.

“I think if you’re signed up to be a part of the board, there is a responsibility that you guys attend,” she said. “If not, resign.

The Chief Financial Officer #NonprofitBoards

OK, admittedly the 80% of nonprofits that have annual budgets of less than $1 million probably don't have someone who is their CFO.  They likely have a bookkeeper (and this is good) at best.  So one might think that the following advice from an experienced CFO is not really for them.  I pose they would be incorrect with this thinking.  Instead and because they, the execs from the small nonprofits are de facto the CFO, would do well to read and consider the advice offered.  Think instead that as CFO for your relatively small organization, your report is to the board and all that is described here is applicable.  So sit back and take a moment to read this Blue Avocado entry on the subject of the nonprofit CFO.

Role of the Nonprofit CFO in Executive Management: The CFO-ED Relationship

by Mary Diegert on March 19, 2022

Categories: Current Issue| Leadership and Management

 

 

In the capacity of CFO for the past 25 years, I have partnered with seven executive directors in four different nonprofits. I have worked with an athletic director, an artist, and a number of social workers, and I have found nothing more satisfying than the give and take of a mutually respectful relationship with my ED. The chemistry was different with each relationship, but I was always able to demonstrate that I had a lot to offer as an educator in the ways of GAAP (generally accepted accounting principles) and the IRS, as well as acting as a partner in executive level decision-making. A college degree in accounting is usually required by larger organizations, but most of the observations that I offer here come from my training on the job, often through painful trial and error.

The way to the executive director’s heart
Over time, I learned what the ED needed from me. Whether she admits it or not, the ED, first and foremost, needs peace of mind. Financial successes and failures are ultimately her responsibility. So how can the CFO lessen the ED’s burden?

• Safeguard agency assets

  The CFO is responsible for assuring that all transactions (both money-in and money-out) are carried out with an adequate system of authorization, approval, and account coding. This includes safeguards against fraudulent electronic withdrawals and counterfeit checks.

• Compliance with laws, regulations, and contracts

  Nothing will ease the ED’s mind more than a partner who is committed to keeping her out of jail. The CFO assures that IRS laws are followed, grant stipulations are met, and best practices are followed for capital purchasing.

• Clear financial reporting

  The ED and the board always ask, “How are we doing?” The CFO develops and maintains reporting systems that provide high-quality information to enable decision-making. This may include cash flow projections and year-end forecasts in addition to budget-to-actual reporting and special purpose reports.

• Clean audits

  The ED’s performance evaluation and compensation are often tied to the results of the annual audit. The audit is essentially a report card. The ED will always be grateful for an unqualified opinion, no internal control comments, and no complaints about the condition of the records or the competence of the finance department. By educating the ED on the more complex features of GAAP, the CFO can help the ED in communications with auditors.As CFO, you earn your ED’s trust by demonstrating your commitment to these critical priorities. I know that you have many competing demands on your time, which often include overseeing other functions. I recommend, however, that you always keep on top of mind that the core functions you perform happen to be the ones that enable the ED to sleep at night.

What does the CFO need?

In a perfect partnership, the ED will appreciate the CFO’s efforts and attempt to understand and meet her needs. The CFO can help the relationship along by identifying those needs and communicating them clearly.

• Priority access to the ED for regular meetings and emergencies If I were to boil this article down to two words they would be: Meet regularly! Frequent one-on-one meetings lead to strong relationships and mutual support. The ED and the CFO share the sense of the gravity of their financial responsibilities. It is worth the time and effort to develop a mutually supportive partnership. If your offices are next to each other and you talk every day, great. But if not, try to insist on weekly meetings, accept bi-weekly if you must, and keep a running list of agenda items so you can make the most of the meetings.

Regular contact allows you to keep each other informed. It may take time for the ED to realize that just about everything on her radar has a financial component that you can help with. Examples of conversation topics include:

• • Tax law relating to donations. Say donations are received to help a family who has lost everything in a fire. The ED might not be aware that these are not tax deductible to the donor.
  • Employee incentives. Say the ED plans to give out gift cards to recognize milestone anniversaries. She may not be aware that this violates IRS law.
  • Funding decisions. Say one of the programs is looking at a new grant funding opportunity. You may have information about the program’s funding structure that can help with the deliberations.
  • Communication between development and finance. Say the ED and development director are planning a fundraiser. You can ask some questions: How will cash be handled? Is the wording in the marketing materials clear as to whether the proceeds are restricted or unrestricted?
  • Programming decisions. Say the ED is considering closing a program that has been experiencing deficits. She may not realize that management and general costs will have to be spread to other programs. This may also be true for occupancy and program administration costs.
  • New initiatives. Say the ED is planning a new project that may require formation of an LLC. There is a whole host of discussions that the CFO needs to participate in from day one, including EIN number, general ledger architecture, management or general allocations, and program administration allocations (I could go on). The CFO should be given the opportunity to help steer the ED in these decisions.

• Interest in learning the essentials of the finance function Every time the CFO, an auditor, or a board member talks about current ratios, third-party liabilities, or capitalization of assets, many EDs think, “Why didn’t I take an accounting class before I took this job?!” The ED often finds herself in the uncomfortable position of being unqualified to supervise the CFO on a technical level. Some EDs will live with the discomfort and just glaze over when you get technical. Others will diligently try to broaden their financial horizons.

Regardless of the ED’s comfort level with the language of finance, you will have to use financial language on occasion. When things are going wrong, the ED needs to know, whether she’s able to understand your explanations or not. Over time, you can help a less-experienced ED learn the basics. Chances are she has a talent for administration and might even be grateful for the help. Your partnership will flourish if you can converse in the same language.

• Adequate resources The activities that the ED expects the CFO to carry out are no easy matter. Smooth operations, timely and useful reporting, and clean audits (among other things) require people and technology. The ED who works collaboratively with the CFO is sensitive to this.The public, staff, and board all count on the ED and CFO to lead in a manner that is ethically and fiscally responsible while maximizing the value of available resources. In the best-case scenario, the chemistry to achieve the perfect partnership will be there. Either way, the efforts you make to meet the ED’s needs and assert your needs will pay off for both the ED and the CFO as well as the community with which you’ve partnered.

In case you missed it…

What a Finance Committee Can Do for Your Board of Directors

---

Mary Diegert is a recently retired CFO with 25 years’ experience in the nonprofit human services sector. She earned a master’s degree in Accounting and her CPA license (now lapsed) in the 80’s. Her most recent experience is fifteen years with a $20 million Catholic Charities agency in upstate New York. Her focus is on sharing with nonprofit finance directors her lessons learned from 25 years of on-the-job training.

Nonprofit Governance Fails #NonprofitBoards

A recent Stanford Social Innovation Review article laid out the findings of research on what are recognized to be the common "fails" of nonprofit boards in terms of their governance duties.  Here's the list of "areas of inconsistent governance" and I'll post the next day one proposed solution which you can gather from the article's title.

Does Your Nonprofit Board Need a CGO?

How a new officer position could be a catalyst for better board performance.

By Paul Jansen & Helen Hatch Mar. 21, 2022

 

(Illustration by iStock/Flash vector)Nonprofit governance is tough and getting tougher. As a result, nonprofit boards are increasingly challenged to consistently deliver high-quality governance. Well-intentioned efforts to improve governance by reducing board size, restructuring standing committees, or identifying best practices have not resulted in demonstrably better governance quality across the nonprofit sector. BoardSource’s 2021 Leading with Intent: BoardSource Index of Nonprofit Board Practices survey shows that board performance, as rated by a diverse mix of nonprofit CEOs, receives middling grades for key responsibilities. Looking at results over time (Chart 1), these responsibilities appear stuck in a rut that is not as good as the nonprofit sector needs!

In research recently conducted for the Center for Social Sector Leadership at UC Berkeley's Haas School of Business we explored a new idea: Would designating one board member to serve as a Chief Governance Officer (CGO) improve nonprofit governance? Interviews with 30 experienced nonprofit directors representing over 100 nonprofit boards supported the hypothesis that a CGO could catalyze improved board performance.

While the CGO title itself was questioned by some, it is intended to convey both an aspiration and a position of importance. Drawing on the feedback of our interviewees, this article summarizes the common sources of inconsistent governance quality and outlines the expected benefits of appointing one director as a CGO.

Eight Sources of Inconsistent Governance

Why does nonprofit governance fall short of the ambitious goals of the sector? Our review of existing board leadership surveys—most helpfully BoardSource’s Leading with Intent: BoardSource Index of Nonprofit Board Practices and Stanford University’s 2015 Survey on Board of Directors of Nonprofit Organizations—and the experience of the directors we spoke with collectively highlighted eight sources of inconsistent governance.

1. Nonprofit directors often lack a shared understanding of what good governance means. Few of the directors we spoke with defined “governance” the same way. Whether due to the lack of a universally accepted definition of governance, or the lack of standardized training when joining a nonprofit board, too many directors bring only a partial sense of the commitments they have accepted upon taking a board seat. If held at all, nonprofit board orientation programs are often created and driven by staff members to introduce new directors to the organization, but rarely include a director-driven discussion of the board’s role, governance responsibilities, and how the board organizes itself to fulfill those responsibilities. Poor initial training and a lack of continuing director education perpetuates an underemphasis on governance and handicaps the board’s ability to be effective partners in driving organizational performance. One of our interviewees concluded: “We fail from the very beginning.”

 

2. Nonprofit boards do not always have the right voices in the boardroom. Most boards know they perform better when they have a strong, diverse set of directors sitting around the board table working effectively as a team. Driven by the need for fundraising help, however, many boards prioritize financial capacity and personal networks at the expense of community representation, professional skills in areas such as technology or social media, or other governance-relevant attributes. Many of the directors we spoke with noted that organizations were really “wrestling with Diversity, Equity, and Inclusion” (DEI), and that “DEI is really easy to screw up.” Finally, the time commitment necessary and fundraising obligations associated with board service were both commonly cited as barriers to recruiting both younger and more diverse candidates.

3. Pressure to help organizations meet annual fundraising targets shifts attention away from governance. Stanford’s 2015 Survey on Board of Directors of Nonprofit Organizations reported that almost half of nonprofit boards require board members to fundraise, and on those boards “90 percent of respondents believe that fundraising is as or more important than their other obligations as directors.” Indeed, fundraising obligations often pull board attention from other governance responsibilities and encourage boards to grow, but at the cost of reduced ability for the board to work generatively and strategically as an effective team.

4. Boards fail to regularly assess governance performance and develop improvement plans. BoardSource’s 2021 Leading with Intent survey notes that only 47 percent of boards have completed a self-assessment in the last two years, and almost one-third of responding organizations have never completed a self-assessment. BoardSource surveys over the years show that boards that regularly self-assess perform better against key governance responsibilities than boards that do not.

5. Poor governance processes push boards to underinvest in critical issues and governance activities. Weak governance processes contribute significantly to inconsistent governance. Inefficient meetings, poor facilitation, and unwieldy agendas pull time from critical topics. Outdated committee structures, underperforming committee leadership, or lack of annually updated plans fails to ensure that committees are focused and accountable. A bias towards consensus too often leads boards to rubber stamp decisions, and inadequate preparatory materials coupled with tight timelines leave boards struggling to debate complex issues, explore strategic choices, or act with confidence. Finally, a lack of accurate key performance indicators leaves boards wondering about the real performance of the organization and whether they know enough to provide well-informed direction.

6. A low-accountability board culture leads to inconsistent effort by individual directors. Experts agree and our interviewees confirmed that a strong board culture “has a significant influence on the way [a] board carries out its work.” Often, however, voluntary board work takes a back seat to directors’ day jobs, leading to poor preparation for board participation and decision-making. A weak board culture often manifests itself in “nonprofit nice” communication and fails to hold underperforming directors accountable for quality engagement. Unlike public corporate boards, nonprofit self-assessment processes rarely ask directors to evaluate the performance of their fellow board members, which can contribute to a low-accountability culture. The Stanford survey cites that “almost half of respondents do not believe that their fellow board members are very engaged in their work, based on the time they dedicate to their organization and their reliability in fulfilling their obligations.” 

7. Confusion between the board’s role and that of management. As passionate volunteers, nonprofit directors can overstep boundaries and get too involved in the day-to-day activities of the organization, frustrating nonprofit managers and diverting time from more appropriate governance topics. Leading with Intent notes that “the board’s understanding of roles and responsibilities is fundamental to the board’s performance,” and supports the argument with assessment data that shows “boards that have a strong understanding of roles also tend to have stronger performance across all other [board] performance areas.” 

8. Governance has gotten tougher. The world is changing in ways that expose weak governance practices. The overwhelming majority of our interviewees agreed that governance is getting tougher, which has multiplied the risks facing the reputation and finances of nonprofits. Commonly cited challenges that boards now grapple with include:

• Financial complexity: The fiscal impact of the pandemic and increasingly complex business models have resulted in financial oversight that is “wider and deeper than it used to be.”
• Technology: Digital tools enable nonprofits to digitize records, access new audiences, reimagine programs, and assess impact with better data than ever before. However, these opportunities often require significant investments and can expose nonprofits to data theft and privacy issues.  
• Sociocultural shifts: Societal reckoning with systemic racism has prompted many nonprofits to rethink assumptions and renew commitments to Diversity, Equity, and Inclusion (DEI) in their programming, staffing, and board composition.
• Increased public scrutiny: Rating agencies have established new standards for transparency that make the impact of board decisions available for all to see. Meanwhile, social media has created a new level of exposure and risk for a nonprofit’s public reputation while elevating expectations for rapid responses to unfavorable news items. Partnerships with both for-profit companies and other nonprofits further complicate nonprofit governance as public controversies surrounding partners can create new reputation management dilemmas.
• Evolving legal duties: Recent legal decisions are raising expectations for how boards fulfill their duty of care and loyalty. Changes in corporate compliance law suggest that nonprofit boards, like their for-profit counterparts, are increasingly liable for their organization’s activity, even in the absence of information.

Rules of Engagement #NonprofitBoards

I'm today thinking about hiring processes. 

It has generally been demonstrated that effective boards generally use a standard set of hiring principles when considering seating new members who generally have been recruited by board members, execs, and/or for larger organizations. 

Whether the organization is huge or tiny, the screening rules apply consistently.  Some of these rules include developing a set of questions that will be used universally by the "hiring" team.  There is usually space for clarifying questions that arise from an answer to a question.  Mission-focused civility and respect and of course, complying with a the rules of law that ensure non-discrimination (i.e. hate and prejudice) generally frame and operated the processes.  In the end, candidates with promise are forwarded to the board for its action as individuals who have indicated a passion for mission and have demonstrated their potential to meet the needs of the board and organization.

But for some reason, what I have described about hiring processes (be it to fill a board seat, an executive director position or anywhere in-between) does not apply to all sectors in this so-called democracy.  Clearly as we have all just witnessed, politics permits a change in rules when it comes to selecting public "employees" be they Justices, Legislators or Presidents (and their people). In these particular situations it appears that the "screeners" are not obliged by the same standards that would apply if even they were applying for one of these positions.   As a result what should have been a screening on behalf of the public becomes a circus for those doing the screening.  How embarrassing then to claim that democracy lives and breathes civility and respect when it simply does not.  And the public can or chooses only to stand by and watch. But this behavior would not be permitted in any other forum.