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Is it Bored or Board Governance? Staph or Staff? Serious or All a Joke?Creating a productive, effective and enjoyable for all board environment and organizational culture
Barry Silverberg, Director, ACC Center for Nonprofit Studieswww.nonprofitaustin.org
Is it Bored
or Governance?
or ?
Serious …. or All a Joke?
Bored
Board
Staph
Barry Silverberg, Director, Center for Nonprofit [email protected] --- www.nonprofitaustin.org
Principal, Silverberg Associates
Not about roles, responsibilities, authority
Creating an engaging, productive, effective and enjoyable board environment and organizational culture
Bored of Directors What does nonprofit board service mean to you?
Self - Actualization Perception of Nonprofit Board
The fanciest dive that ever was dove Was done by Melissa of Coconut Grove. She bounced on the board and flew into the air With a twist of her head and a twirl of her hair. She did thirty-four jackknives, backflipped and spun,” Quadruple gainered, and reached for the sun.” And then somersaulted nine times And a quarter—And looked down and saw that the pool had no water.
- Shel Silverstein
Is it Bored or Board Governance? Staph or Staff? Serious or All a Joke?Creating a productive, effective and enjoyable for all board environment and organizational culture
Barry Silverberg, Director, ACC Center for Nonprofit Studieswww.nonprofitaustin.org
Coming together to make a difference
Information
+ Engagement
__________________
= Effectiveness
+ Impact
It’s about Relationships and ….
Empathy
Understanding other perspectives
Cultural Competence & Diversity
Underlying Principles
• Organizations ‘R People– Organizations are social constructions born of collective
imaginations.
• Expectations– Frustration is the result of expectations– So clarifying expectations, reduces frustration
• Role Delineation– Role delineation is critical for creating an environment which
fosters trust, mutual respect, effective operations and a spirit of partnership.
• Purpose
– Excessive emphasis on the disciplines can mean the triumph of technique over purpose
– Focus on “the heart”
Mount Rushmore – The Familiar View
Is it Bored or Board Governance? Staph or Staff? Serious or All a Joke?Creating a productive, effective and enjoyable for all board environment and organizational culture
Barry Silverberg, Director, ACC Center for Nonprofit Studieswww.nonprofitaustin.org
Mount Rushmore – from Canadian SideOh, the places you’ll go: The Waiting Place ….
We might as well go home. It’s obvious that this meeting isn’t going to settle anything.
The Challenge The Response
A New Direction
Some problems are so difficult that we cannot solve them in a million years …
Overwhelmed by the Present
Unless we take 5 minutes to think about them
Is it Bored or Board Governance? Staph or Staff? Serious or All a Joke?Creating a productive, effective and enjoyable for all board environment and organizational culture
Barry Silverberg, Director, ACC Center for Nonprofit Studieswww.nonprofitaustin.org
Know thyself … and promote Board self-understanding as individuals & collectivity Be patient and open to all information …
“Now stay calm … Let’s hear what they said to him.”
Use what you learn today carefully ….
Choice
Critical Insights Avoid Mission Creep ….
Is it Bored or Board Governance? Staph or Staff? Serious or All a Joke?Creating a productive, effective and enjoyable for all board environment and organizational culture
Barry Silverberg, Director, ACC Center for Nonprofit Studieswww.nonprofitaustin.org
Information + Engagement
__________________
= Effectiveness
+ Impact
boardsource.org
Information
Sign up for our bi-weekly newsletter at nonprofitaustin.org
Board Development
In your handouts for further reading …
Is it Bored or Board Governance? Staph or Staff? Serious or All a Joke?Creating a productive, effective and enjoyable for all board environment and organizational culture
Barry Silverberg, Director, ACC Center for Nonprofit Studieswww.nonprofitaustin.org
Governance & Management
GOVERNANCEBoard of Directors
• the responsibility of monitoring, overseeing and providing direction for the organizations pursuit of its mission.
MANAGEMENTExecutive Director/ Staff
• Ensuring mission is accomplished & all administrative, operational & service functions in place to achieve the strategic directions sought.
• Also serve as experts on the agency purpose, work, clients and community needs.
“A nonprofit cannot be effective long-term without good governance since governance is “the process of making decisions and how those decisions are implemented.”
Governance not only how board governs itself:• Obeying the bylaws• Recognizing and
managing conflicts of interest
• Identifying and cultivating effective board members
Good Governance1
Organization ensures mission fulfillment:• Policies that hold
leadership & organization accountable
• Communications that articulate the organization’s values
• Behavior that results in trust
Most common governance weaknesses are:• Failure to follow bylaws• Lack of awareness of
legal and IRS requirements, especially conflicts of interest
• Ineffective board meetings
• Disengaged boards
Good Governance2
• State law - Business Organization Code - Title 2: Chapter 22. Nonprofit Corporations– Defines Legal Duties
• Internal Revenue Service– Determines Tax Exempt Status
• The Organization Itself– Organizational Governing Documents
– Policies established by Board
– Board & Organizational Behavior over time
Who/ What Defines Good Governance
• Size & Composition
• Common sense of purpose
• Clear roles & responsibilities
• Access to information & knowledge
• Strong Sense of Trust/ Teamwork
• Establish, know & follow policies
• Ongoing Board Development
• Effective Board meetings
• Effective use of committees, task forces, working groups
Elements of Well Functioning Board
• Boards normally govern by establishing policies– guidelines for how the
Board members can best work together
• A policy is any written statement approved by the board or by the membership that:– Articulates and defines
important objectives, principles or values
– Limits or prescribes what kind of action will be taken in different situations
– Defines roles, responsibilities and authority
Policies and Procedures
Is it Bored or Board Governance? Staph or Staff? Serious or All a Joke?Creating a productive, effective and enjoyable for all board environment and organizational culture
Barry Silverberg, Director, ACC Center for Nonprofit Studieswww.nonprofitaustin.org
Easy Policy Development
http://www.myriskmanagementpolicies.org
Information
+ Engagement__________________
= Effectiveness + Impact
Engagement is Key! Effective, Committed, Engaged Leadership
How Adults Learn
+ Effective Groups
+ Motivations to Serve
= Unleash Human Potential
Focused on achieving your organizational mission
Adults will learn
1. what they want to.2. when they feel they need to.3. by doing. 4. by solving problems they can associate with
their reality5. Experience interferes in adult education. 6. Best in an informal environment.7. Adults need feedback. 8. Adults require a variety of learning methods.
Unleash Human Potential
Human potential remains a mystery, expressed in more ways than you or I could list. We also know that human potential is often stifled – a great and common tragedy.Leading Without Power: Finding Hope in Serving Community
– Max De Pree
8 Principles of Adult Educationextracted from Calloway, Maxwell, The Eight Principles of Adult Education. www.associatedcontent.com/article/1750014/the-eight-principles
1. Adults will only learn what they want to.
2. Adults will only learn when they feel they need to.
3. Adults learn by doing. No adult enjoys being fed vast amounts oftheory with little or no practice.
4. Adults will only learn by solving problems they can associatewith their reality.
5. Experience will interfere in adult education. No person likes to be toldthat their “tried and tested” way of doing things is “wrong”.
6. Adults learn better in an informal environment.
7. Adults need feedback. If one thing is preserved from their childhooddays, it’s the constant need to know how well they are doing.
8. Adults require a variety of teaching methods. It’s important thatdifferent approaches be used when trying to pass on knowledge toadults,
Facilitated by Silverberg Associates - Barry Silverberg - [email protected]
Adults are self-oriented and expect to maketheir own decisions. As Calloway notes:“Adults don't learn in the same way as childrendo because their personality structure isalmost fully developed at that stage in theirlives, along with a series of habits andpractices that have been acquired during theirlifetime.”
“Therefore, the learning process must takeinto account how an adult perceives notonly what is being taught, but alsothemselves; this includes, but is not limitedto: considering their previous learningexperiences, considering their temporalperspective - especially when it comes toshort term application of what is beingtaught, and matching education to theirproblems, needs, interests andexpectations.”
How Adults Learn.mmap - 3/6/2017 - Mindjet
Is it Bored or Board Governance? Staph or Staff? Serious or All a Joke?Creating a productive, effective and enjoyable for all board environment and organizational culture
Barry Silverberg, Director, ACC Center for Nonprofit Studieswww.nonprofitaustin.org
The driving force in our organizations, both for-profit and not-for-profit, ought not to be goal achievement or asset management or quantifiable growth, important as these are. Rather our society badly needs organizations and people that move relentlessly toward realizing their potential.
Realized Potential Motivations to Serve on Boards
• To “get in there and get things done”• Desire for power• Desire for meaning in one’s life• Prestige - affiliation adds stature• Desire to learn• Counter other people’s perceptions of one’s self• Community status &/ or public visibility & recognition• Pressure from others & reluctance to say no for fear of
negative repercussions• Altruism & concern for the public good• Altruistic business interests
Balancing Governance & Management:Optimizing Your Organizational Assets Professional Volunteer Partnership
Tool: Who has primary responsibility?
Information
+ Engagement__________________
= Effectiveness + Impact
Who Has Primary Responsibility?
Board
Chief
Volunteer
Officer
(e.g., Bd
Chair, Pres)
Chief
Profess‐
ional
Officer
(e.g., CEO,
ED)
1 Hires, evaluates and terminates Executive Director
2 Implements policy
3 Approves a salary range for key positions
4 Meets all legal requirements
5 Direct programs
6 Proposes the budget
7 Hires, disciplines and terminates staff
8 Develops a strategic plan
9 Adopts the budget
10 Produces budget status reports
11 Adopts a fundraising plan
12 Authorizes capital expenditures
13 Provides reports and materials for board meetings
14 Secures adequate funding
15 Ensures an annual financial audit is conducted
16 Appoints members to committees
17 Keeps and organizes service‐related data
18 Recommends policy to the Board
19 Sets policy for the organization
20 Makes determination to phase out particular program
21 Determines when staff takes a vacation
22 Coordinates Board operations
23 Accounts for expenditures of funds
24 Recommends where expense gets charged
25 Sets agenda for Board meeting
26 Prepares backup material for Board deliberation
27 Solicits major gifts (financial)
28 Serves as an arbiter of inter‐organizational conflicts
29 "Chairs" Board meetings
30 Serves on the Board of Directors
31 Makes final policy decisions
32 Extends recognition for doing good volunteer jobs
33 Responsible for day to day management
34 Spreads the good word about organization throughout community
35 Helps bring about consensus on divisive issues
36 Represents organization throughout the community
37 Seeks out new leadership
prepared by Barry Silverberg
Who Has Primary Responsibility?
38 Alerts Board to potential crisis issues/areas
39 Deals with angry members of the community
40 Deals with angry members of the Board
41 Helps organize the fundraising effort
42 Recruits new Board members
43 Orients new Board members
44 Accountable for operating budget
45 Develops leadership program to build leadership base
46 Insures that all points of view are adequately aired at appropriate times
47 Determines what meetings staff should/will attend
48 Articulates goals and objectives for activities
49 Defines and clarifies issues that need policy clarification
50 Has the legal responsibility for the organization
51 Implements policies of the Board
52 Takes abuse with a smile
53 Walks on water when not feeling overburdened
Others?
prepared by Barry Silverberg
Is it Bored or Board Governance? Staph or Staff? Serious or All a Joke?Creating a productive, effective and enjoyable for all board environment and organizational culture
Barry Silverberg, Director, ACC Center for Nonprofit Studieswww.nonprofitaustin.org
GOAL: An Effective & Credible Nonprofit
• Has clear values, vision and mission and effectively communicates these;
• Plans for the future;• Achieves and measures results;• Manages an active, informed, and
accountable governance structure;• Secures resources appropriate and
necessary for its needs;• Engages and serves its
stakeholders/ community.
Strategic Direction?
If you do not know where you are going, any road will get you there!
Mark Twain
Effective Groups
Conditions necessary for effective engagement and development
Valid Information
Free & Informed Choice
Internal Commitment
• Make things happen. – There is no future in
believing it can’t be done.
• Test prevailing wisdom.
• Link goals to plans for success.
• Make big plans. Plan small steps.
• Involve others.
– People support what they build.
• Use what you know,
Six Guidelines to Effect Real Change
Information+ Engagement
__________________
= Effectiveness
+ Impact
Creating the Future
Ground Rules
Many effective groups have explicit ground rules that guide their behavior.When group members use these ground rules, they:
Improve working relationships;
improve group member satisfaction,
improve the quality of their decisions,
increase the commitment of members to follow through on those decisions, and
decrease the time needed to effectively implement the decisions
Core Values
Valid information
Free and informed consent
Internal commitment
Compassion
Assumptions
I have some relevant information, and other people also have relevant information;
Each of us may see things the others do not;
Differences are opportunities for learning; and
People are trying to act with integrity given their situation
Ground Rules
1 - TEST Assumptions & Inferences
2 - Share ALL relevant information
3 - Use SPECIFIC examples and agree on what IMPORTANT words mean
4 - Explain your REASONING and INTENT
5 - Focus on INTERESTS not POSITIONS
6 - Combine ADVOCACY and INQUIRY
7 - Jointly DESIGN next steps and ways to TEST disagreements
8 - Discuss UNDISCUSSABLE issues
#9 - Use DECISION-MAKING RULE that generates the level of COMMITMENT needed
excerpted Roger Schwarz, The Skilled Facilitator (San Francisco, Jossey=-Bass 2002)
Ground Rules.mmap - 3/6/2017 - Mindjet
Is it Bored or Board Governance? Staph or Staff? Serious or All a Joke?Creating a productive, effective and enjoyable for all board environment and organizational culture
Barry Silverberg, Director, ACC Center for Nonprofit Studieswww.nonprofitaustin.org
Vision
+ Communication = Shared Purpose
Shared Purpose + Empowered People + Appropriate Organizational Changes
+ Strategic Thinking = Successful Visionary Leadership
Visionary Leadership Success!
If your life works you influence your family.If your family works, your family influences the community.
You Influence the Cosmos
If your community works, your community influences the nation.If your nation works, your nation influences the world.If your world works, the ripple effect spreads throughout the cosmos.
Lao Tzu
Take Action!
Call on us at CNS when you need help!
Barry Silverberg, [email protected]
When I became the acting president of Hamilton College in 1999, I already knew a lot about the college. I am a 1996 Hamilton graduate, the parent of a former student, and I have served for 12 years on the college’s governing board. Still, when Hamilton President Eugene Tobin took a much-deserved sabbatical, I learned more about Hamilton during my six months in the presidency than in all my previous time associated with the college. Much of what I learned will make me — and, I expect, my fellow board members — better in the future.
An unusual level of alumni involvement distinguishes Hamilton. Typically, more than 55 percent of alumni contribute every year to the annual fund, and more than a third volunteer to recruit students, raise funds, counsel undergraduates about careers, provide internships, conduct alumni events, and participate in other activities. As is the case at other colleges, Hamilton’s board sets the tone for financial and volunteer support.
Yet despite this high level of alumni involvement and my own active participation with my alma mater, I had a superficial understanding about many important facets of the college and wondered whether my fellow board members did as well. Naturally, I recognize it is unrealistic to expect that board members who typically visit the campus just three or four times a year will ever have the same breadth and depth of knowledge as the president and senior administrators who are charged with the daily operations of the institution.
A New Understanding of the CollegeSoon after I became president, the impact of policy decisions became clear to me — much more so than when I was a board member. For example, deciding to admit an additional 20 to 30 students from the waiting list or planning for a larger class, though attractive from a financial point of view, had significant ramifications in the day-to-day life of the campus. Admitting more students means hiring more staff members. Where would we find additional housing? And if the new hires were adjuncts, how could we be certain they would be as qualified and as committed to the institution as full-time faculty members? This level of detail rarely makes it to the boardroom, but as president, I could see how a tempting financial solution might create an irritant in campus life.
My experience as a college president has made me much more aware of the nuances of board decision making. Many issues that boards are asked to consider require much broader scrutiny. Switching roles for six months taught me five fundamental lessons that may help boards and board members become more effective.
1. Balance the membership of board member committees.Hamilton’s board of directors, like many governing boards, consists disproportionately of business executives, investors, and successful entrepreneurs. Their acumen is in finance and in running a business, so they tend to be most interested in the issues — fund-raising, endowment performance, and investments — with which they are most familiar and where results are tangible. They tend not to be so comfortable with the other components that make a college successful such as its staff, programs, and facilities.
The tendency among board members to gravitate toward finance is understandable. After all, board members have a fiduciary responsibility to the college, and given today’s fiscal pressures, no board can be blamed for being preoccupied with an organization’s assets. But a balanced budget and a growing endowment are only two measures of an organization’s health.
It is equally important that all board committees have the appropriate firepower if the mission of the institution is to be fulfilled. The committee on board members should look carefully at the distribution of talent and influence among the various standing committees to ensure that every function has an important voice at the boardroom table.
2. Seek, within limits, close encounters with leaders of the organization. In my six months as president, I met and spent time with most of the faculty, the swimming coach, the chair of the chemistry department, the director of the career center - people board members typically would not encounter. Yet the insights and opinions of such individuals can give board members a much broader understanding of an institution.
Recognizing this untapped resource, we restructured board weekends at Hamilton to facilitate even greater informal interaction between the board and various college
1A Board Member’s Stint in the Chief Executive’s Chair
BOARD RESPONSIBILITIES AND STRUCTURES – FAQs
What are the basic responsibilities of nonprofit boards?1. Determine mission and purpose. It is the board’s responsibility to create and review a statement of mission and purpose that articulates the organization’s goals, means, and primary constituents served. 2. Select the chief executive. Boards must reach consensus on the chief executive’s responsibilities and undertake a careful search to find the most qualified individual for the position.3. Support and evaluate the chief executive. The board should ensure that the chief executive has the moral and professional support he or she needs to further the goals of the organization.4. Ensure effective planning. Boards must actively participate in an overall planning process and assist in implementing and monitoring the plan’s goals.5. Monitor, and strengthen programs and services. The board’s responsibility is to determine which programs are consistent with the organization’s mission and monitor their effectiveness.6. Ensure adequate financial resources. One of the board’s foremost responsibilities is to secure adequate resources for the organization to fulfill its mission.7. Protect assets and provide proper financial oversight. The board must assist in developing the annual budget and ensuring that proper financial controls are in place.8. Build a competent board. All boards have a responsibility to articulate prerequisites for candidates, orient new members, and periodically and comprehensively evaluate their own performance.9. Ensure legal and ethical integrity. The board is ultimately responsible for adherence to legal standards and ethical norms.10. Enhance the organization’s public standing. The board should clearly articulate the organization’s mission, accomplishments, and goals to the public and garner support from the community.
What are the legal responsibilities of nonprofit boards?Under well-established principles of nonprofit corporation law, a board member must meet certain standards of conduct and attention in carrying out his or her responsibilities to the organization. Several states have statutes adopting some variation of these duties which would be used in court to determine whether a board member acted improperly. These standards are usually
described as the duty of care, the duty of loyalty and the duty of obedience.
Duty of Care The duty of care describes the level of competence that is expected of a board member, and is commonly expressed as the duty of “care that an ordinarily prudent person would exercise in a like position and under similar circumstances.” This means that a board member owes the duty to exercise reasonable care when he or she makes a decision as a steward of the organization.
Duty of Loyalty The duty of loyalty is a standard of faithfulness; a board member must give undivided allegiance when making decisions affecting the organization. This means that a board member can never use information obtained as a member for personal gain, but must act in the best interests of the organization.
Duty of ObedienceThe duty of obedience requires board members to be faithful to the organization’s mission. They are not permitted to act in a way that is inconsistent with the central goals of the organization. A basis for this rule lies in the public’s trust that the organization will manage donated funds to fulfill the organization’s mission.
What are the responsibilities of individual board members? • Attend all board and committee meetings and functions, such as special events. • Be informed about the organization’s mission, services, policies, and programs. • Review agenda and supporting materials prior to board and committee meetings. • Serve on committees or task forces and offer to take on special assignments. • Make a personal financial contribution to the organization. • Inform others about the organization. • Suggest possible nominees to the board who can make significant contributions to the work of the board and the organization. • Keep up-to-date on developments in the organization’s field. • Follow conflict-of-interest and confidentiality policies. • Refrain from making special requests of the staff.
2Board Responsibilities and Structures – FAQs
• Assist the board in carrying out its fiduciary responsibilities, such as reviewing the organization’s annual financial statements.
Personal characteristics to consider • Ability to: listen, analyze, think clearly and creatively, work well with people individually and in a group. • Willing to: prepare for and attend board and committee meetings, ask questions, take responsibility and follow through on a given assignment, contribute personal and financial resources in a generous way according to circumstances, open doors in the community, evaluate oneself. • Develop certain skills if you do not already possess them, such as to: cultivate and solicit funds, cultivate and recruit board members and other volunteers, read and understand financial statements, learn more about the substantive program area of the organization. • Possess: honesty, sensitivity to and tolerance of differing views, a friendly, responsive, and patient approach, community-building skills, personal integrity, a developed sense of values, concern for your nonprofit’s development, a sense of humor.
What is the job description of a board chair? • Oversees board and executive committee meetings • Works in partnership with the chief executive to make sure board resolutions are carried out • Calls special meetings if necessary • Appoints all committee chairs and with the chief executive, recommend who will serve on committees • Assists chief executive in preparing agenda for board meetings • Assists chief executive in conducting new board member orientation • Oversees searches for a new chief executive • Coordinates chief executive’s annual performance evaluation • Works with the governance committee to recruit new board members • Acts as an alternate spokesperson for the organization • Periodically consults with board members on their roles and help them assess their performance
What is the job description of a board secretary? • Attend all board meetings • Serve on the executive committee if one exists • Ensure the safety and accuracy of all board records
• Review board minutes • Assume responsibilities of the chair in the absence of the board chair, chair-elect, and vice chair • Provide notice of meetings of the board and/or of a committee when such notice is required
What is the job description of a board treasurer? • Attend all board meetings • Maintain knowledge of the organization and personal commitment to its goals and objectives • Understand financial accounting for nonprofit organizations • Serve as the chair of the finance committee • Manage, with the finance committee, the board’s review of and action related to the board’s financial responsibilities • Work with the chief executive and the chief financial officer to ensure that appropriate financial reports are made available to the board on a timely basis • Present the annual budget to the board for approval • Review the annual audit and answer board members’ questions about the audit (if there is no audit committee)
What is the job description of a board vice chair? • Attend all board meetings • Serve on the executive committee if one exists • Carry out special assignments as requested by the board chair • Understand the responsibilities of the board chair and be able to perform these duties in the chair’s absence • Participate as a vital part of the board leadership
Is there a difference between a board of governors, a board of directors, and a board of trustees?Legally and in practice, all of these definitions describe the same governing body of a nonprofit. The term “trustee” originally refers to the person who has the fiduciary duty for a charitable trust or a foundation. By tradition, the higher education institutions also tend to refer to their board members as trustees.
How are board members elected?New board members can be selected by current board members, by members, chapters or affiliates, or by other related groups such as religious bodies or government agencies. By far, the most common method of board recruitment among public charities is election by peers.
3Board Responsibilities and Structures – FAQs
Board members can re-elect their colleagues and/or others to the board position. This type of a board is called self-perpetuating. A board that elects its own members has the advantage of determining its needs based on the profile of the present board. It can stress group dynamics as well as missing skills as the key focal point for the search of new candidates. It can stress the need for diversity among board members. This process clearly is labor-intensive for the current board, but it provides an opportunity to bring together a group of committed people who have had a chance to define their mutual goals.
Should we send out board member applications to recruit new board members?Sending applications indiscriminately is a haphazard way to find good board members.
Boards shouldn’t get too excited about a candidate who responds positively to a recruitment letter as the first communication. Serious cultivation and information sharing is necessary before inviting a person to serve on your board.
An application form, however, can help gather information on the interests, background, and skills of a prospective board member with whom the governance committee has already communicated and established a mutual interest.
If an interested person contacts the organization and asks for an application form to join the board, this is an excellent moment to start serious communication. Willing bodies do not always make good board members, but genuine interest should not be ignored. Ultimately, if the candidate and the board find themselves on the same wavelength, it is time to extend an application form with a welcome letter.
What information should we collect from present and potential board members?Information forms used to gather data on your present and potential board members allow you to concentrate your cultivation activities in the right direction. This information also allows you to direct your board members to activities that interest them and serve the board’s needs in the best possible manner. Your form could collect information on the following topics: • Name, address, contact information • Special skills or expertise: fundraising, HR, finances, business, PR, technology, legal, industry or mission
specific • Professional background • Level of education • Other professional affiliations • Other board service • Expected level of gift or possible in-kind donations • Special interests or hobbies
What questions should we ask our potential board members?The objective of board recruitment is to find willing, able, and committed board members. How do you know if a candidate is going to be the right person for your board? You can never be 100 percent sure, but if you ask direct questions you can get pretty close. Here are some examples: • Why are you interested in our organization? • Why are you interested in serving on a board? • Do you have any previous board service, leadership, or volunteer experience? Are you presently serving on any boards? • What kinds of skills or expertise can you offer? How will the organization benefit from your participation? How do you think we could best take advantage of your expertise? • What do you expect us to do for you so that your experience is satisfying? • What kind of time and financial commitment will you be able to make? Are you willing to serve on committees and task forces? Can we expect you to come to board meetings regularly? Would you be able to make a personal contribution?
What should I know before joining a nonprofit board?Serving as a board member is one of the most challenging and rewarding of volunteer assignments. While appointment or election to a board is an honor, board members have important legal and fiduciary responsibilities that require a commitment of time, skill, and resources. Prospective board members do themselves a service and show that they are serious about the commitments they make by asking some basic questions before joining an organization’s board. You can find the answers from the board member who issues the invitation to join; the chief executive of the organization; the board chairperson; other board members, current and former; or written materials. Long-time board members might also benefit from an organization review that answers these questions.
4Board Responsibilities and Structures – FAQs
Ask questions about the organization’s programs • What is the organization’s mission? • How do its current programs relate to the mission? • Can I visit the organization to observe a program firsthand? • Does the organization have a strategic plan that is reviewed and evaluated on a regular basis?
Ask questions about the organization’s financial status • Is the financial condition of the organization sound? • Does the board discuss and approve the annual budget? • How often do board members receive financial reports?
Ask questions about the organization’s clients or constituencies • Whom does the organization serve? • Are the organization’s clients or constituencies satisfied with the organization?
Ask questions about the structure of the board • How is the board structured? • Are there descriptions of the responsibilities of the board as a whole and of individual board members? • Are there descriptions of board committee functions and responsibilities? • Who are the other board members? • Is there a system of checks and balances to prevent conflicts of interest between board members and the organization? • Does the organization have directors and officers liability coverage?
Ask questions about individual board members’ responsibilities • What are the ways that you think I can contribute as a board member? • How much of my time will be required for meetings and special events? • How are committee assignments made? • What orientation will I receive to the organization and to the responsibilities of board service? • Does the organization provide opportunities for board development and education? • What is the board’s role in fundraising? • Will I be expected to make a specific annual financial contribution? • What role will I play in soliciting donors?
Ask questions about the board’s relationship to the staff • Is the board satisfied with the performance of the executive staff? • How do board members and senior staff typically work with each other?
Evaluate your interest in serving on the boardOnce you are satisfied with the information you have received, it is time to evaluate your own interest in serving on the board. Ask yourself the following questions: • Am I committed to the mission of the organization? • Can I contribute the time necessary to be an effective board member? • Am I comfortable with the approach and tone of the organization’s fundraising efforts? • Can I contribute financial support consistent with the organization’s expectations of board members and with my own means and priorities? • Can I place the organization’s purposes and interests above my own professional and personal interests when making decisions as a board member?
Background MaterialsSelected background information can provide a useful overview of the organization, the board’s work, and the responsibilities of board members. Helpful material includes: • the organization’s annual report • the most recent audited financial statement • the long-range program and financial plan • a list of current board members, titles, and all affiliations • a description of board members’ responsibilities • a board organization chart • a staff organization chart • the organization’s newsletter, brochure, or other publications • newspaper or magazine articles about the organization • a brief biography of the chief executive
What is a board of directors profile matrix?Effective board recruitment follows the principles of matching available resources with existing needs. How does a board know what it needs? It must first clarify what it already has. It relies on a board profile matrix — a tool that allows it to map out the composition of the present board. This map reveals the missing ingredients and allows the board to focus its search in the right direction.
5Board Responsibilities and Structures – FAQs
A board profile matrix forces the board to articulate the kinds of qualities, characteristics, skills, expertise, backgrounds, and various perspectives that make a good board. After becoming sensitive to these attributes and verifying which of them are already there, the board’s governance committee is one step closer to meeting the needs of the board.
What are the benefits of serving on a nonprofit board? Most individuals who already serve on a nonprofit board need no outside justification for being a board member; they know perfectly well what they are doing and why they want to continue doing it. However, there are others who are too shy to join a board or who need someone else to tell them why it makes sense. Here are some reasons why people join nonprofit boards: • They know their skills are needed. • A nonprofit is going to improve and will benefit from their contributions. • There is a possibility to effect change in an organization. • They will feel good by doing good. • They enjoy collaborating with interesting people who have the same interests and values. • They want to learn new skills. • They enjoy being recognized for their efforts. • They want to give back to the community. • They have found a new reason to live productively. • They want to have an impact. • It can be fun.
How do we keep board members informed?Designing a Board Information System Good governance depends on enlightened decision making. Board members in turn need to be knowledgeable about the organization’s status and needs if they are to make sound decisions that advance its mission. But boards often say that the information they receive hinders rather than facilitates good governance and strong leadership. They protest that they are overwhelmed with large quantities of irrelevant information, that they don’t get enough information, or that they receive material too late to devote serious attention to it. An effective board information system should focus on decision making, stimulate participation, and support an appropriate balance of responsibility between board and staff.
Types of board informationManagement consultant John Carver describes three types of board information: • Decision information is used to make decisions, such as establishing selection criteria for the chief executive. I t looks to the future and is not designed to measure performance. • Monitoring information enables the board to assess whether its policy directions are being met. It looks to the past and provides a specific survey of performance against criteria. An example is an annual review of an organization’s strategic plan. • Incidental information is for the general information of the board and not related to board action. Committee reports are frequently in this category.
Too often, board information is primarily incidental information. Although such material is useful for maintaining an overall impression of the administration of the organization, it is not usually specific or substantive enough to help board members make decisions or monitor the organization’s success at carrying out its mission.
Establishing a systemEstablishing and maintaining a board information system is the joint responsibility of the board chair, board members, the chief executive, and staff members who work with the board. The board should discuss • what information it needs to do its job • how often it wants this information • in what form it needs the information
Given this board feedback, the staff can establish the content, format, and frequency of information they will provide the board.
Characteristics of good board informationBarry S. Bader, a consultant and author specializing in hospital governance, identifies seven guidelines for developing effective board information: 1. Concise: Is the information communicated as quickly or as briefly as possible? 2. Meaningful: Is the information presented in relationship to a significant factor, such as a goal set by the board, past performance, or comparative data? 3. Timely: Is the information relevant to the current agenda?
6Board Responsibilities and Structures – FAQs
4. Relevant to responsibilities: Does the information help the board or board committee discharge its responsibilities? 5. Best available: Is the information the best available indicator of the situation or condition being described? Can better information be provided? 6. Context: Is it clear why this information is important? 7. Graphic presentation: Could the information be presented better graphically than in words?
Basic ingredients of a board information systemEvery board must decide for itself exactly what information it needs. For most organizations, however, the following checklist is a starting point.
At least two weeks before each board meeting: • Agenda • Information about issues for discussion, when appropriate • Financial information • Committee reports
At least two weeks before the board meeting at which it is discussed: • Annual budget • Audit report • Strategic plan
After each board meeting: • Minutes • Notice of next meeting
Monthly: • Financial report • Significant published articles about the organization
Quarterly: • Financial report
Regularly, when appropriate: • Memo from chief executive summarizing current activities, accomplishments, and needs • Updated material for board handbook • Advance copies of publications, brochures, or promotional material • Annual report How should a nonprofit board of directors be structured?
Every board has a fundamental responsibility for self management: for creating a structure, policies, and procedures that support good governance. The term “board organization” encompasses a variety of tasks, from routine matters such as preparing a schedule of board meetings to actions with broader consequences such as developing a policy about terms of service. Here are some of the most frequent questions board members ask about board organization:
How can we contribute to effective board organization? To set the stage for efficient board and committee work: • Prepare a written job description for individual board members. • Develop an annual schedule of meetings, determined a year in advance. • Circulate clear and thorough information materials, including an agenda, to all members two to three weeks before each meeting. • Maintain complete and accurate minutes of all meetings. • Keep meetings brief and well focused. Stimulate the broadest possible participation by members. • Ask each board member to serve on at least one board committee or task force. (For new members, one committee assignment is sufficient.) • Acknowledge members’ accomplishments and contributions in a variety of ways in the organization’s newsletter, at meetings, in minutes.
To encourage smooth functioning committees, follow these additional steps: • Prepare written statements of committee and task force responsibilities, guidelines and goals. These organizational documents should be reviewed every one to two years and revised if necessary. • Make work assignments according to the background, expertise, and schedule of each member. • Distribute tasks among members so that everyone participates but no one is overloaded. • Create a system of checks and balances to monitor committee members’ work and assure that tasks are completed on schedule. • Assign an appropriate staff member to work with each committee.
How large should our board be?The organization’s structure and needs are among the factors that determine board size. In considering the size of
7Board Responsibilities and Structures – FAQs
the board, keep these points in mind: Every board needs a sufficient range of expertise to accomplish the organization’s mission. If a board is too small, its members may be overworked and unproductive. If a board is too large, every member may not have the opportunity to participate actively.
What should be the length of a board member’s term?There are no hard and fast rules for determining board members’ tenure. Many organizations do, however, limit members to two consecutive terms and might require a hiatus of one year before a board member may be reappointed. Many organizations also stagger terms of service so that one half or one third of the board is elected every one or two years for terms of two to four years. Such policies encourage institutional renewal because a board can profit from the experience of veteran board members while welcoming the fresh perspective that new members offer.
What committees should our board have?Much of the work that a board does is accomplished through its committees and task forces. With the exception of the executive committee, which acts on the board’s behalf, committees recommend action to the full board for discussion and action. Most boards need only a few standing committees — the rest of the work can be accomplished by task forces created for a specific purpose. Common standing committees include • Governance Committee • Audit Committee • Finance Committee • Executive Committee (if needed)
How should committee members be chosen?Every board member should serve on at least one but preferably no more than two committees or task forces. Members are appointed by the chair in consultation with the governance committee and the chief executive. Committee size depends on the needs of the board and the organization and a common sense assessment of how many people are needed to carry out the committee’s work.Make committee assignments are based on the experience, skills, interests, and available time of board members. Each member must make a serious commitment to participate actively in the work of the committee. If a committee is too large, a small group of members may have a disproportionate amount of responsibility. If a committee
is too small, there may not be enough people to get the job done. Board committees may include people who are not board members.
Should the chief staff executive be a member of the board?Some nonprofits decide to make the chief staff executive an ex officio member of the board, sometimes voting and sometimes nonvoting. This decision should be made carefully. Some believe that board membership is a good idea because it enhances the executive’s position of authority within the organization and strengthens the working partnership between the board and the executive. On the other hand, many feel that board membership blurs the distinction between the board’s responsibilities and the executive’s responsibilities and makes it difficult for the board to assess the executive’s performance objectively. Whatever the executive’s official status, his or her insights into the daily operations of the organization are essential to decision making by the board.
What goes in the board of directors manual?The foundation of a committed, knowledgeable, and effective board is orientation and education. As an essential companion to orientation and education, every organization should have a thorough, easy-to-use manual that board members can use throughout their terms.
A board manual serves two functions. For the new board member, it is an orientation handbook that provides useful information about the organization, board structure and operations, and fellow board members and staff. For the balance of a member’s board service, the manual then becomes an indispensable working tool and a central resource about the organization and the board. Materials can be added and removed to create an up-to-date reference. The board manual is developed by staff in consultation with the board chair and other officers.
Today, the most effective way to share the manual with all board members is to post it on a board member accessible Web site or Intranet. Include a table of contents and clearly divided and labeled sections. Date every item and replace material when necessary. To develop a working manual that board members use and rely on: • Don’t overwhelm new board members with too much information. When several examples are available (e.g., current press clippings/links), include only one.
8Board Responsibilities and Structures – FAQs
• Keep each item brief. A two-paragraph biography of the chief executive is preferable to a four-page resume, for example. • Use the handbook as a “textbook” during board orientation. • Encourage board members to read and ask questions about the material. • Ask board members to evaluate the usefulness of the manual each year. • Revise the contents or format based on their comments.
Board manual contents checklistA thorough board manual can include the following materials. (Remember to keep each item as concise as possible.)
The board • Board members’ listing and bios • Board members’ terms • Board statement of responsibilities • Committee and task force job and descriptions
Historical references of the organization • Brief written history and/or fact sheet • Articles of Incorporation • Bylaws • IRS determination letter • Listing of past board members
Strategic framework • Mission and vision statement • Strategic framework or plan • Current annual operating plan
Minutes from some recent board meetings
Policies pertaining to the board • Policy on potential conflicts of interest • Insurance policy coverage • Travel/meeting expense reimbursements
Finance and fundraising • Prior-year annual report • Most recent audit report • Current annual budget • Form 990 • Banking resolutions • Investment policy • Current funder list
Staff • Staff listing • Organization/team chart
Other information • Annual calendar
Web site information • Promotional material (membership brochure, information brochure, advertisements, etc.)
ReferencesTen Basic Responsibilities of Nonprofit BoardsLegal Responsibilities of Nonprofit BoardsGovernance Committee The Board Building Cycle: Nine Steps to Finding, Recruiting, and Engaging Nonprofit Board Members
All available at www.boardsource.org or by calling 202-349-2500.
9Board Responsibilities and Structures – FAQs
BoardSource © 2013. Text may not be reproduced without written permission from BoardSource. For more information, call 1-877-892-6273 or e-mail [email protected].
Notes
Page 1 of 4
Enforcing Board Member Responsibilities By Melanie Lockwood Herman, NRMC
http://www.nonprofitrisk.org/library/articles/Enforcing_Board_Member_Responsibilities.shtml
It’s impossible to be too grateful to a member of a nonprofit board. Volunteer board members donate
countless hours to the causes and organizations they love. And many of the tasks for which the
board’s attention is required seem distant from the compelling mission at the heart of the
organization. Yet most board members willingly contribute the time and intellectual capacity the
nonprofits they serve require.
The generous contributions of nonprofit board members make the ambitious missions and innovative
programs of nonprofit organizations possible. Even when the talents and energies of individual board
members differ, the contributions of a diverse board often come together in a mosaic of service and
good governance.
From time to time, however, individual members of a nonprofit board may shirk from their
responsibilities; or worse, board members may behave in a manner that is unbecoming or destructive.
Many nonprofit leaders are surprised, if not stunned, to witness the damage that a “bad actor” on a
board can cause. And when a nonprofit board includes more than one member behaving badly, the
situation can quickly move from unhealthy to dire.
My colleague Eileen Morgan Johnson of Whiteford, Taylor and Preston, LLP has authored a humorous
piece on dysfunctional board “characters” who often appear at nonprofit and association board
meetings. Her musings on the “cast of board characters” offers a lighthearted look at board roles as a
helpful reminder about both the consequences of bad behavior and the need for action.
When board members fail to meet their responsibilities or behave badly the negative consequences
include:
Discomfort. Although it may be obvious that "someone needs to do something," a period of
discomfort and awkwardness will ensue and continue until that "something" gets done.
Resource and focus drain. In the wake of inappropriate action or misconduct the board's mission-
driven focus will be diverted, if not drained. Instead of moving forward with ambitious plans for new
programs and improved governance, energy must be redirected away from mission to getting the bad
actor back on board or in a worst case scenario, off the board.
Collateral damage. The actions or inaction of bad actors may hasten the departure of effective board
members. It is not unusual for one or more board members to become discouraged when they witness
fellow board members behaving badly. Tolerance levels differ, and one or more members may decide
they no longer have the patience and enthusiasm required for board service.
This short list of the damage that bad actors can cause is just a beginning. Damage assessments
range from short-term "fixable" issues to lasting harm that is hard or impossible to repair. In all cases
the solution is preventing bad behavior or poor performance wherever possible, and addressing it in a
Page 2 of 4
timely and effective manner when it occurs. In the paragraphs that follow we explore practical
approaches to enforcing board member responsibilities.
BEGIN BEFORE THE TROUBLE STARTS
The first lesson in enforcing board member responsibilities is to set the stage for accountable and
appropriate board conduct. Countless board chairs and CEOs have learned the hard way that most
board members do not have innate governance skills, nor are they able to intuitively understand the
organization's culture, operating rules, and its expectations of board leaders. To get the board off on a
solid footing:
Provide a board job description that clearly and plainly describes the expectations of board
members. If board members are expected to raise funds, say so. If meeting attendance is required,
be clear that this is the case. If questions to staff members must go through the executive director,
describe the chain of command in explicit terms.
Schedule a board orientation and leadership training session. Many leaders report that board
training is best received when the "messenger" is from the outside, rather than a peer who serves on
the board or a senior staff member. Also, make certain that the messenger is equipped to talk about
governance responsibilities in general (e.g., the duties of care, obedience and loyalty) as well as
nuances pertaining to your nonprofit (e.g., the board's job description, the division of labor between
the board and staff, implications of the organization's recent merger or expansion, etc.).
Provide coaching for the chair. The board chair is not simply a member of the board who sits at
the head of the meeting table and "runs" the meeting. The chair position requires leadership ability,
effective listening skills, and a stomach for tough issues, including disputes involving fellow board
members. Consider ways to "position" your board chair for an effective term of service by providing
the information, resources and support s/he will need to serve with distinction.
Establish a communications protocol. Choose methods that work for staying in touch with the
board and make certain that newly elected members understand how to stay inside the
communication loop. Board portals, password-protected board Web pages and email groups offer
options, but they are only effective when used consistently.
DEFINE AND REINFORCE YOUR NORMS
While the word "unique" may be a bit extreme when describing a nonprofit board, every board has
one or more elements of its organizational DNA that distinguish it from others. “Normal” practice at
one board table may be unacceptable at another. To keep the peace and empower board members to
perform, take the time to define and reinforce the "norms" for the board and the nonprofit. For
example:
Page 3 of 4
Develop a set of protocols for in-person and telephone meetings. What steps and techniques
will you use to encourage candid participation, keep meetings on schedule, and prevent one or more
members from sidetracking or sabotaging discussion? What do board members need to know to
contribute effectively to meetings? When should members expect to receive background materials and
how will they be transmitted (e.g., four days prior to the meeting delivered via email)?
Define the relationship between the board as a whole and its committees. Nonprofit board
structures vary to a large degree, and your board members may find the structure that works for your
organization to be unusual or confusing. For example, does the executive committee tackle key issues
on a regular basis, or only when critical matters arise in between meetings? Is committee membership
or participation at committee meetings open to all board members?
Explore ways to maximize board engagement and participation. While the leadership style of
your chair will differ as the occupants of that position change, there are common practices that
encourage or discourage engagement and active participation. For example, a chair who arrives at
every board meeting with her mind made up and "ducks in a line" is likely to garner resentment by
board members who see their involvement as limited to rubberstamping the chair's plans (see the
description of "the Playwright" board member in the sidebar). This unfortunate leadership style can be
countered by incorporating key discussion questions into the board agenda. Inviting the board to
discuss "is this the right strategy?" before proceeding to vote on any important issue is one
approach.
ANTICIPATE TROUBLE AND PLAN ACCORDINGLY
Even the nicest group of dedicated volunteers will, on occasion, sail into troubled waters. Pretending
that "it couldn't happen here" or looking up and away at the distant horizon will not keep the nonprofit
and its board from drifting into the Bermuda Triangle. A better approach is to anticipate difficulty
related to: (1) the inability or failure of board members to perform as required or requested; or (2)
unacceptable conduct. Next, consider action that will be triggered if either form of drift occurs. For
example:
Timely follow-up concerning minimum commitments. The Board Chair (or another board
member tapped as the "enforcer") should act without delay to inform a board member when their
participation is close to falling below the nonprofit's requirements. A phone call to the member who
has missed successive meetings and is subject to automatic removal is a professional and appropriate
form of intervention. The leader making the call should use the opportunity to solicit the absent
member's feedback to determine whether absences are due to unavoidable schedule conflicts or
another matter, such as the member's discomfort with discord between factions on the board. The
twin purposes of the call are to gather information and determine a mutually agreeable path forward.
Page 4 of 4
Board "interventions" to stop bad behavior before it escalates. The Board Chair should
understand and appreciate the occasional need to point out inappropriate behavior and request
compliance with the nonprofit's norms. The conversation between the chair (or the Governance
Committee Chair or other designee) may involve reminding a member about the nonprofit's norms
and protocols and identifying how the bad behavior is in conflict with the norms.
Disclosure and formal action. In a worst case scenario, the actions or behavior of one board
member may need to be disclosed to the members of the executive committee or to the full board. An
example would be when a board member is found to have violated the duty or loyalty. Consider the
nonprofit whose board member compromised the organization's negotiating position with a third-
party. When the matter was discussed with the board member at the executive committee level he
expressed sincere regret and provided a credible explanation for the chain of events. The executive
committee was able to close the matter in a timely fashion and the board member was invited and
encouraged to remain.
Addressing inappropriate conduct or the failure to live up to commitments is often difficult, even for
the most experienced chair or savvy board leader. Understanding that doing so is necessary to keep
the nonprofit's compelling mission at the forefront may help ease the chair's reluctance to "get
involved."
The chair should also recognize the importance of using the right tools for the job. Email is an "easy,"
but sometimes ineffective and inappropriate way of communicating. The old fashioned method of
picking up the phone is preferable when conveying difficult information to a board member. Another
example of using the right tool is the importance of sending the right emissary. In some cases it may
be preferable to "send" or deploy a board member who is an ally of the bad actor rather than the
chair.
While there are no magic bullets for ensuring that board members do as they promise and conform to
your nonprofit's norms, there are practical steps that you can take at all stages of board service.
Beginning long before trouble occurs, anticipating some of the difficulties that are common within
nonprofit boards, and taking timely and appropriate action are essential elements of playing the game
of governance with success in mind.
Melanie Lockwood Herman is Executive Director of the Nonprofit Risk Management Center. She
welcomes your feedback on this article and questions about the Center’s resources at
"All those in favor say 'Aye.' " "Aye."
Silence= Bad Strategy
"Aye.''
How failing to speak up leads nonprofit boards to persist with mislaid plans
In the rnid-1990s, Mary Seawell and a small group of public health activists were battling to legalize safe needle exchange in Denver. Needle exchange can prevent the spread of HN among intravenous drug users and, ultimately, save lives.
But the Denver City Council voted against decriminalization. Frustrated, one outspoken board member suggested that Seawell's organization, People Engaged in Reduction Strategies (PEERS), break Denver's laws and go ahead and provide needle exchange services.
"We weren't getting anywhere with the city, and this guy had really compelling arguments," says Seawell, who was PEERS' vice president at the time. But she and the remaining seven board members didn't feel comfortable with breaking the law. "On the one hand, we wanted to do what it took to promote harm reduction through nee-
w ww.ssireview.com
"Aye.'' "Aye.'' "Aye.''
dle exchange. But on the other hand, if we lost credibility in the community, we knew we'd never make any changes," she explains.
Despite their concerns, the board members sat through months of meetings about how to enact an illegal needle exchange program without voicing their opinions. "I didn't think anyone else felt the same way I did," says Seawell. 'T d look around and no one was saying, 'We can't do that,"' she adds.
Finally, she spoke her mind. Several others quickly followed, agreeing that they were uncomfortable with behaving unlawfully. Unfortunately, though, the ensuing turmoil between the outspoken board member and the other members marked the beginning of the end of PEERS.
The PEERS group experienced what psychologists call "pluralistic ignorance": when a group of people does or contemplates doing something that virtually no individual in the group endorses. Because no one speaks up, everyone believes that everyone else supports the deed, and so goes along with the presumed group consensus.
According to james Westphal and Michael Bednar of the University of Texas at Austin, pluralistic ignorance is one reason why corporate and nonprofit boards may persist with poor strategies. As reported in their June
2005 article in the Administrative Science Quarterly, the researchers surveyed outside directors of more than 200 rnidsized public corporations. They found that when corporations are not performing well, outside directors -whose role, in theory; is to provide an objective, independent assessment of corporate strategy- are likely to keep their doubts to themselves if other members of the board are also not expressing concerns. In the absence of the outside directors' dissent, other directors also hold their tongues, proceeding down a "spiral of silence" while persisting with a suboptimal strategy.
"There is an ingrained tendency for people to look around before they speak up, to see that other people share their concerns," says Westphal. "Each individual doesn't want to be the first to speak up, and so nobody speaks up, and the group continues with practices that each person may have concerns about," he says.
The authors further show that pluralistic ignorance "is most likely to occur when there are demographic differences and few friendships amongst board members," says Westphal. Demographic differences include diversity in gender, education, and work background, and, like weak interpersonal ties, may make it less likely for directors to share their true opinions.
It is this discovery that Benoit Monin, a social psychologist at Stanford University who also studies pluralistic ignorance, fmds most "thoughtprovoking." Silence on boards "is thought to be the result of group cohesiveness," Monin wrote in an e-mail. Yet these authors fmd the opposite: Social cohesion helps break the silence. Both Monin and the authors conclude that social ties can either amplify or
STA N FO RD SOC IA L INN O VAT ION RE V IE W 17.,
In the aftermath of every “nonprofit mismanagement”
news story is the question: Why didn’t the board do
something? Yet the boards of the nonprofits recently head-
lined with scandals such as outlandish compensation for
executive directors, the use of organizational funds for
personal luxuries, or nepotism did not do any less than
most nonprofit boards. The reality is that most nonprofit
boards are ineffective in their governing function. Only
when gross mismanagement is discovered does a failure at
governance come to the fore. Sometimes the failure does
not involve personal scandal but reveals organizational
laxity, such as an organization using funds raised for one
purpose for other program areas.
Nothing can dampen donors’ interest more quickly
than an organization that does not seem to be taking
responsibility for itself — and that responsibility lies in
those who govern.
WHAT IS GOVERNANCE? The two roles of support and governance encompass
different tasks. In the role of supporters, board members
seek to raise money, bring clout to the organization,
provide special skills, such as in law or accounting, and act
as ambassadors to the com-
munity. The many books
and seminars on the subject
testify to the emphasis on
helping boards help — on
strengthening organizations
by means of board assistance.
The governance role, in
contrast, has a different goal:
protection of the public interest. Governance responsibili-
ties for boards include selecting the top executive (the chief
executive officer or executive director) and assessing his or
her performance, reviewing and authorizing plans and
commitments, ensuring compliance with legal and contract
requirements, and evaluating the organization’s work.
Both of these board roles are distinguished from that of
management, which is the province of the executive director.
WHAT’S WRONG WITH THE “IDEAL” BOARD MEMBER?
When most board members and executive directors
dream of their ideal board member they envision
someone who contributes money, obtains contributions
from others, helps the organization get media coverage
and political contacts, brings specialized expertise, and
helps diversify the board’s composition. This ideal board
member also identifies with the organization, is liked
and admired by staff and other board members, and
“fits in.” These characteristics describe a board member
who can help provide the critical support agencies need
to succeed.
But the very qualities that make board members good
supporters are often qualities that limit them as governors.
The reason boards don’t govern is less because they are
uneducated or uninterested than because of some crucial,
material, inherent reasons:
• Board members rely on staff for information. Because
board members are often recruited to bring assistance and
skills from other sectors of society, they often rely on staff
for information about both the field and the organization.
Unless they are themselves part of the people served
(patrons of the commu-
nity theater, adult
children of Alzheimers
patients, tenants of
affordable housing),
they typically have no
independent informa-
tion about the organiza-
tion on which to draw.
• Board members are often unfamiliar with nonprofit
management. Nonprofits are fundamentally different from
either large corporations or small businesses. For example,
a manufacturer can drop an unprofitable product line
without the ill social consequences of an after-school
program closing. In particular, people from business are
often unacquainted with volunteer management, indirect
cost rates, and fundraising strategies.
9WWW.GRASSROOTSFUNDRAISING.ORG • 1-888-458-8588 • 3781 BROADWAY, OAKLAND, CA 94611
WHY BOARDS
DON’T GOVERNBY JAN MASAOKA AND MIKE ALLISON
NOTHING CAN DAMPEN DONORS’
INTEREST MORE QUICKLY
THAN AN ORGANIZATION THAT
DOES NOT SEEM TO BE TAKING
RESPONSIBILITY FOR ITSELF.
• A crucial limitation on board effectiveness is the
simple lack of time. Board members are usually achievers
with many responsibilities and find it difficult to attend
meetings, study materials, and attend functions. In
response, organizations try to keep meetings short and
have fewer of them per year, or simply demand more time
than most people can give.
• At least narrowly speaking, it is not in the interest of
executive staff to have an active, governing board. Support-
ers help the manager get the job done; governors often
make the job harder. The
governance role is an out-
sider’s role, holding the orga-
nization, and specifically the
executive staff, to high stan-
dards of performance. While
most nonprofit managers
work hard to do a good job, it
is not in any manager’s per-
sonal interest to make her
own job harder.
• Finally, the consequences for inadequate governance
have rarely been borne by nonprofit leaders as individuals.
Even when an organization fails, board members are
unlikely to have their careers or reputations affected, and
the executive director can usually find another job. The
big losers are the people or community purpose the orga-
nization was designed to serve.
BOARDS GOVERN IN CRISIS, SO WHY DON’TTHEY GOVERN ALL THE TIME?
Despite the obstacles and uncertainty, boards strive to
perform their governance roles well. They make valiant
efforts to read and understand financial statements. They
listen attentively to reports about client-centered method-
ologies and new x-ray machines. They give up Saturdays
for board retreats.
When agencies are in crisis, boards go further. They
give up weekends to attend emergency meetings where
hard questions are asked; they sort out financial problems,
and meet with disgruntled funders and clients. They seek
out a wide range of informants: funders, staff, colleagues
in the field, and members or other boards. When serious
charges are brought to boards about CEOs, boards often
hire independent investigators or analysts to report on
charges of sexual harassment, racial or gender discrimina-
tion, alcohol or drug abuse, or misuse of funds. In crisis,
boards realize that while they can’t manage, they must govern.
And to do so they need information sources that are
independent of executive staff; they need their own,
diverse channels of information.
If boards can act to overcome some of their limita-
tions and act effectively as governors in time of crisis, why
don’t they act that way in normal times?
Some reasons that boards don’t govern all the time
have been noted: lack of time, lack of independent infor-
mation, and lack of familiarity with the “business.” But in
addition, another important factor is at work: a desire to
avoid tension and conflict.
When boards act in their governance and oversight
roles, uncomfortable questions may be asked; tensions
may enter the room. It takes
a lot of nerve for a board
member to challenge a staff
recommendation in a board
meeting. New board mem-
bers are often quiet, waiting
until they know more before
speaking up. But long-time
board members too are
reluctant to appear adversar-
ial, not “with the team.”
In fact, when asking probing, “tough” questions,
board members may feel guilty. Is it fair to question staff
competency in fundraising when I’ve only made an aver-
age contribution myself ? Is it being distrustful to ask for a
list of salaries and comparable salaries in similar organiza-
tions? Does my admiration for a competing organization’s
programs reflect a lack of loyalty to my own organization?
A subtle cause of this avoidance of conflict is the emphasis
on a smooth working partnership. Boards often view
tension as a symptom of an illness that everyone must try
to avoid catching. Conflicts should be smoothed over. Staff
frequently see board members with serious questions as
obstacles at best, enemies at worst. (This is exacerbated
when board members who don’t do much as supporters
still want to ask questions.) As a result, some boards
neglect this responsibility altogether and act as a rubber
stamp for the director. Just as often, boards will allow one
or two members to be the chronic complainers without
permitting them any real influence.
The wider nonprofit community has colluded with this
avoidance through the scant attention given to the gover-
nance role in books, academic papers, and other manage-
ment literature. A small industry has grown up around
board training and consulting. While consultants and train-
ers have done a great deal to help boards raise more money,
they have done little to help boards be more effective as
governors. One reason is that they have been hired to help
the board support the organization, not to help it govern.
In crisis, the emphasis on a smooth working relation-
ship takes a back seat to the need for action and straight
10 MAY / JUNE 2005 • GRASSROOTS FUNDRAISING JOURNAL
STAFF FREQUENTLY SEE
BOARD MEMBERS WITH
SERIOUS QUESTIONS AS
OBSTACLES AT BEST,
ENEMIES AT WORST.
answers. It is “okay” in a crisis to ask tough questions. In
normal times, boards need to learn how to use the author-
ity they are willing to assert in times of crisis.
THE PARADOX AND THE CHALLENGE The board-staff relationship is a paradoxical one.
When acting in their governing role, the board must stand
above staff and be the “boss.” But when acting in their
supporting role, board members act to support and assist
staff-led work.
Some boards become so excited about their roles as
governors that they mistake governance for close supervi-
sion of management and begin meddling in minor
management affairs. In other cases, as boards govern
more, they shirk their supporting role. The challenge is to
fulfill both roles, not simply switch from one to the other.
In short, boards have some inherent limitations in their
ability to govern, including lack of time, lack of familiarity
with the field, and lack of material stake. These limitations
have been supplemented by the sector’s nearly exclusive
emphasis on the board’s supporting role and by a human
tendency to avoid conflict. A first step toward an effective
board is acknowledgment of the paradox and an under-
standing of the need to perform both functions equally
well. A failure to govern as well as support is a transgres-
sion both against clients and against the wider community.
STRENGTHENING GOVERNANCEHere are some practical ways to strengthen governance:
1. Make sure that, as a board member, you have informa-
tion about the financial and
program performance of the
organization that comes
from independent sources.
Too often boards get all
their information from the
executive director; they
may not realize that the
organization is having
financial difficulties until
too late, or that the organi-
zation’s programs are not keeping up with changes in the
world. To obtain independent financial information, make
sure that the board (or its audit/finance committee)
selects the external auditor, hears the auditor’s report, and
has at least one meeting per year with the auditor and
without staff present. Periodically the board should simi-
larly work with independent program evaluators and out-
side experts who make their reports directly to the board
and the staff jointly. Organizations that are too small to
need an audit should make sure that someone outside of
staff periodically looks over the financial situation.
2. Use independent management evaluators. In addition
to auditors and program evaluators, boards need unbiased
sources of information about management as well. One of
the most difficult tasks for boards is the evaluation of the
executive director. On one hand, a board can’t interview
staff about their opinions; but on the other hand, prob-
lems are created when a board obtains all its information
from the person being evaluated. An independent evalua-
tor might interview staff, and, for example, if there were
several allegations of sexual harassment, would report to
the board that such charges exist.
3. Make governance an explicit part of meetings.
Boards should affirm their responsibilities in both support
and governance. Board agendas should be clearly marked
“Governance Items,” and “Supporting Items.” Among the
qualities we should seek and reward in board members are
critical thought, discernment, and a questioning attitude.
When someone raises an objection or concern, or votes
against the majority, the board president should make a
point of expressing appreciation for the seriousness and
courage to make the point.
4. Board chairs should encourage dissent, debate, and
questions. The board chair should make comments such as
the following at each meeting: “Marc, thank you for bring-
ing up the risks involved with this idea,” or “Well, we may all
be in agreement… but Crystal, could you serve as our devil’s
advocate and give a strong argument for the other side?”
5. Recruit governors. When recruiting, boards should
seek members who are good governors as well as those
who are good supporters: people who know clients as well
as people who know phil-
anthropists; people famil-
iar with nonprofit man-
agement as well as those
familiar with business;
operational volunteers as
well as fundraising vol-
unteers; people who ask
critical questions as well
as people who cheer. A
diverse board such as this
will keep the agency rooted in the world it serves as well
as in the world in which it raises funds. In many cases,
governors and supporters may turn out to be the same
people once governing responsibilities are recognized and
valued as much as supporting responsibilities.
JAN MASAOKA IS EXECUTIVE DIRECTOR AND MIKE ALLISON IS FORMERASSOCIATE DIRECTOR OF COMPASSPOINT NONPROFIT SERVICES, A BAY AREA TRAINING, RESEARCH, AND CONSULTING ORGANIZATIONTO NONPROFITS. THIS ARTICLE IS REPRINTED WITH PERMISSIONFROM THE ONLINE NEWSLETTER, BOARD CAFÉ. FOR A FREE SUBSCRIPTION, GO TO COMPASSPOINT.ORG.
GFJ
11WWW.GRASSROOTSFUNDRAISING.ORG • 1-888-458-8588 • 3781 BROADWAY, OAKLAND, CA 94611
AMONG THE QUALITIES WE
SHOULD SEEK AND REWARD IN
BOARD MEMBERS ARE CRITICAL
THOUGHT, DISCERNMENT,
AND A QUESTIONING ATTITUDE.
Ten Fatal Flawsthat Derail Leaders
Copyright 2009 Harvard Business SchoolPublishing corporation
June, 2009
Lack energy and enthusiasm
They see new initiatives as a burden,rarely volunteer, ad fear beingoverwhelmed. One such leader wasdescribed as having the ability to“suck all the energy out of any room.”
Accept their own mediocre performance
They overstate the difficulty ofreaching targets so that they lookgood when they achieve them. Theylive by the mantra “Underpromiseand overdeliver.”
Lack clear vision and direction
They believe their only job is toexecute. Like a hiker who sticks closeto the trail, they’re fine until theycome to a fork.
Have poor judgment
They made decisions that colleaguesand subordinates consider to be notin the organization’s best interests.
Don’t collaborate
They avoid peers, act independently,and view other leaders ascompetitors. As a result, they are setadrift by the very people whoseinsights and support they need.
Fail to develop others
They focus on themselves to theexclusion of developing subordinates,causing individuals and teams todisengage.
Lack interpersonal skills
They make sins of both commission(they’re abrasive and bullying) andomission (they’re aloof, unavailable,and reluctant to praise).
Don’t learn from mistakes
They may make no more mistakesthan their peers, but they fail to usesetbacks as opportunities forimprovement, hiding their errors andbrooding about them instead.
Resist new ideas
They reject suggestions fromsubordinates and peers. Good ideasaren’t implemented, and theorganization gets stuck.
Don’t walk the talk
They set standards of behavior orexpectations of performance andthen violate them. They’re perceivedas lacking integrity.
Ten Fatal Flaws that Derail Leaders.mmap - 9/11/2012 - Mindjet