Reframing the Work of Nonprofit Boards - LeadingAge · PDF fileReframing the Work of Nonprofit...

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Leading Age Oregon

October 2014

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Reframing the Work of Nonprofit Boards

Best Practices & Case Studies

Dennis Russell, President/CEO MHS Consulting

Building Organizational Strength

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Mission: Strengthening faithfulness and

effectiveness of nonprofit organizations

A National Faith-based

Nonprofit Network

ConsultingFormed in 1998

Ave. 250+ Clients

Annually

Alliance74 Members

(14 Sponsored)

Internationalpartnerships

emerging

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Alliance

Development and delivery of services

that transform member organizations

• Sustaining core identities and relationships

with community of faith

• Governance development

• Collective business/product development

• Alliance and affiliation formation

• Building coalitions internationally

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• Strategic and Operational Enhancement

• Strategic Positioning/Planning

• Due Diligence/Prospect Consideration

• Organizational Performance Assessment

• Market Intelligence

• Financial Analysis/Feasibility

• Leadership Transition, Executive Recruitment

and Interim Placement

• Governance Support & Development

Consulting

Serving nonprofits beyond the network

for over 15 years

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Broad Trends in NFP Governance

Smaller boards

Fewer standing committees

Greater delegation to management

Fewer meetings

Board monitoring of key performance indicators (dashboards)

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Broad Trends in NFP Governance, cont’d.

Greater attention to strategic/generative work

Greater diversification on boards

Greater sophistication in structures to support fundraising

Increased social accountability

More rigorous board-driven evaluation and growth

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“Nonprofit Governancein the United States”

(Representing 5,000 NFPs)

Source: Francie Ostrower, “Nonprofit Governance

in the United States: Findings on Performance

and Accountability from the First National

Representative Study,”

Some interesting Tidbitsfrom the study:

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(minimalist approach) (Sarbanes-Oxley 2002)

1. Having an external audit

2. Having an independent audit committee

3. Rotating audit firms/lead partners every 5 years

4. Having a written conflict of interest policy

5. Filing an annual 990

6. Having a formal process for employee complaints

7. Having a document destruction and retention policy”

Standards of Good Governance

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Source: Ostrower, “Nonprofit Governance in

the United States,” The Urban Institute, 2007

Key Findings

• Corporate (business)

individuals on board

• Higher racial/ethnic diversity

• Reliance on government

funding

• Larger organization size

Correlation to good governance…

Positive:

• CEO as board member

Negative:

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Source: Ostrower, “Nonprofit Governance in

the United States,” The Urban Institute, 2007

Board Activity Levels (representing 5,000 NFPs)

12BoardSource Nonprofit Governance Index 2012

Report Card for 10 Basic Board Responsibilities

Mission

Financial Oversight

Legal/Ethical Oversight

CEO Support

CEO Evaluation

CommunityRelations

Recruitment

Fundraising

MonitorPerformance

Strategy

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Assembling Your Model of Governance

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Approaches to Governance

• Roles and

Responsibilities

• Policy Governance®

• Governance as

Leadership

• Hybrid Models

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Ten Basic Responsibilities

1. Determine mission and purposes

2. Select the chief executive

3. Support and evaluate the chief executive

4. Ensure effective planning

5. Monitor and strengthen program and

services

Richard T. Ingram, Ten Basic Responsibilities of Nonprofit Boards, BoardSource, 2010

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Ten Basic Responsibilities, cont’d.

Richard T. Ingram, Ten Basic Responsibilities of Nonprofit Boards, BoardSource, 2010

6. Ensure adequate financial resources

7. Protect assets and provide financial oversight

8. Build a competent board

9. Ensure legal and ethical integrity

10.Enhance the organization’s public standing

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Policy Governance ®

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Governance as Leadership

Generative“Why are we doing this?”

“What are the possibilities?”

Fiduciary“How are we doing?”

Strategic“What are we doing?”

“Where are we going?”

Adapted from Governance as Leadership, Chait, Ryan, Taylor

Context of

Mission/Values

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Fiduciary Work

• Keep the organization faithful to its commitments

• Hire, supervise (and evaluate) CEO

• Assure compliance with laws and regulations

• Assure that all resources are utilized well

• Duties of care, loyalty and obedience

• Rear View Mirror Focus

Adapted from Jill Schumann (2014), based on

Chait, Ryan, and Taylor, Governance as Leadership,

(Hoboken, New Jersey: John Wiley & Sons, Inc., 2004)

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Strategic Work

• Study trends, do strategic analysis, consider alternative strategies/pathways

• Set strategic direction and approve a strategic plan

• Make decisions that have significance for future well-being of organization

Adapted from Chait, Ryan, and Taylor, Governance as Leadership,

(Hoboken, New Jersey: John Wiley & Sons, Inc., 2004)

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Generative Work

• Learn and discern about what is going on in the environment

• Interpret history

• Explore issues before a decision is required

• Reflect on meaning in ambiguous circumstances

• Define mission and deepest held convictions

• Focus critical questions: ask why or why not

Adapted from Chait, Ryan, and Taylor, Governance as Leadership,

(Hoboken, New Jersey: John Wiley & Sons, Inc., 2004)

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“Generative Work” Defined

“Generative” can be

understood as work

that focuses on an

organization’s “roots”—

its mission and

deepest held

convictions, as well as

its work on “wings”—

the possibilities ahead.

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A Few Promising Practices

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Be intentionalBoard

recruitment

Board structure/ policy

Board culture

Ongoing education

Evaluation of performance

Ongoing improvement

Leadership succession

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• Any approach has strengths and weaknesses

• Habits (some bad) are hard to change

• Choose an approach that gives you a way of

thinking concretely about what you are doing.

Choose an approach to governance

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• Recruit intentionally

• Orient with vigor

• Use mentors

• Indoctrinate in culture

quickly

• Build group cohesion

Own your own work

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• Board member’s job description

• Code of covenant or conduct

Clarify Expectations

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Build wise agendas—get

to the important stuff!

Use agendas and time as tools

Time is a precious

resource—use it wisely.

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Sample of a Consent Agenda

1. Consent Agenda

a. Board meeting minutes

b. Contract to retain HR

Consultant

c. Marketing Committee

meeting minutes and report

d. Executive Director’s report

2. Finance Report

3. Discussion Item

• Change recommendation

for XYZ Program

and so on…

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Insist on well-focused executive reports

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Develop very good dashboards

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• Meeting evaluation

• Regular board assessment

• Peer reviews at time of

reappointment

• Ongoing learning

• Growth/development

Evaluate Your Work

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Design meetings thoughtfully

• Processes that fit results

• Processes that engage all

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Develop a Policy Framework

• Develop board policies to guide work

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Create or re-charter a Governance Committee

2.11.1 Ensures periodic review of the bylaws at least

every five years and board policies at least every

three years.

2.11.2 Ensures that effective mechanisms are in place for

the nomination and election of individuals to the

board.

2.11.3 Ensures that effective mechanisms are in place for

dialogue with members and with relating

denominations.

2.11 Governance committee:

Source: MHS Board Policy Manual

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2.11.4 In consultation with the President/CEO, develops

a profile reflecting desired perspectives and skills

for appointments or elections to the board and

maintains a roster of individuals who would bring

such perspectives and skills to the governing

board. The committee makes this information

available to the relating denominations and to the

members' nominating committee.

2.11.5 Takes responsibility for ongoing growth and

development of the board, including annual

board and individual assessments.

Create or re-charter a Governance Committee

Source: MHS Board Policy Manual

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2.11.6 Ensures that peer assessment of board members

are conducted prior to re-election or

reappointment to the board.

2.11.7 Chair of the Governance committee annually

reviews Conflict of Interest forms completed and

signed by board members and reports any

questionable disclosures to the committee.

2.11.8 Ensures that a board member orientation process

is in place and reviews the process at least once

every three years.

Create or re-charter a Governance Committee

Source: MHS Board Policy Manual

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Beginning to work more generatively and strategically

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Then…

Development

Time

How do we manage “compression”?

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Now…

Development

Time

How do we manage “compression”?

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41Adapted from: Navigating the Organizational Lifecycle (BoardSource)

The Nonprofit OrganizationalThe Nonprofit OrganizationalThe Nonprofit OrganizationalThe Nonprofit Organizational

LifecycleLifecycleLifecycleLifecycle

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Market responsiveness

Faithfulness to

mission/core convictions

Leadership wisdom requires integrationHigh

Low High

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Strategic Work

Adapted by Rick Stiffney from “Thinking Strategically” by Dan Beckham

A Continuum of Persistence and Flexibility

“Experience teaches that detailed forecasts “Experience teaches that detailed forecasts are regularly defeated by realityare regularly defeated by reality.. -Dan Beckham

unchangeable fluid

Mission Values Vision Strategies Tactics

Nonnegotiable(Persistent)

Minimum Specs(Flexible)

Multiple affiliation models

Governance / Administrative

Integration

Low High

Loose

web

Network

Loose

Federation

Strong

Federation

Reserved

Powers

Subsidiary

High

Leveraging Opportunities / Resources44

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Dennis RussellPresident/CEO

MHS Consulting

(503) 539-0921

dennis@mhsonline.org

www.mhsonline.org