Brown Bag Lunch Roundtable Event: September 21, 2006

Presented by: Marla J. Bobowick, Vice President of Products, BoardSource

"What Makes a Nonprofit Board Exceptional?" asked Marla J. Bobowick in her stimulating and thorough presentation at the September 21st, 2006 Brown Bag Lunch Roundtable Event that was hosted by Governance Matters located at United Way of NYC. Her answer, based upon research and personal experience as a Vice President of Boardsource, a Washington-based organization dedicated to strengthening nonprofit boards, covered every aspect of board behavior from partnership with the organization's CEO to continuous learning and revitalization.

Compliance is the bare minimum for a board; responsibility with a focus on mission and money (raising it and spending it) only merits a B grade. Absolutely essential to excellence is the human interaction between the Board and CEO, along with the group dynamics of the Board. This first, of her twelve principles of governance, Marla calls constructive partnership with equal and complementary strength on both sides. It is a passionate alliance in pursuit of a mission with a board that does not micromanage, but rather sets goals and holds the CEO accountable via an annual performance and compensation review. It is also an honest and trusting relationship, where the CEO and Board can informally discuss the CEO's KPAWN (Keep the President Awake at Night) issues, resulting in "no surprise management" for everyone.

These basics replicate a study from the NonProfit Times cited by Marla in which donors said that the two most important considerations when giving are that the organization is well managed and the money well spent and that they had a passion for the cause. Building upon this foundation, Marla went on to discuss the importance of being mission driven that is reflected in everything the organization does, including its materials, program and services (one example was not serving unhealthy fast food in a children's museum).

Strategic thinking needs to occur, not only at retreats, but imbedded in every Board discussion. The board needs to understand the industry in which the nonprofit operates and the various business models possible. The board also needs its own action plan or agenda for the year. Strategic thinking requires the next principle, culture of inquiry. Real dialogue is as important as decision-making when illuminating key organizational issues. Marla suggests inviting outsiders to some discussions because their lack of investment and different perspective can enrich the dialogue, which also promotes the fifth principle, independent-mindedness. Under this heading Marla also includes a rigorous conflict of interest policy to be reviewed and renewed annually by the board and senior staff.

Marla proposes that organizations use the Form 990 as a public relations document reporting to progress and accomplishments along with the legally required basics, since it is available online to anyone who wants to read it. And she recommends that the board review the Form 990 before it is released publicly. The Form 990 and a whistleblower policy are part of the ethos of transparency and reinforce compliance with integrity. A code of ethics and an independent audit and audit committee are other elements of the compliance principle. She also recommends that the auditors meet with the board alone so that the board can ask questions about their own organization and what is happening in the industry with other nonprofits.

Under sustaining resources, boards should examine all their sources of revenue, both long- and short-term, as well as the budget. This principle also addresses the board's role in fundraising board members need to get actively involved and use their networks to open doors to the community. Similarly, boards need to be results oriented, ensuring that programs have real impact and that the organization's financials are in good order. Appropriate benchmarks need to be defined.

Finally, the board needs to be intentional about its own practices, setting up conditions of continuous learning to educate board members. The board must take ownership of board revitalization by paying attention to composition, term limits, diversity, recruitment, and engaging past board members fruitfully. As Marla summarizes, "Exceptional boards advance the common good with uncommonly good work."

For more information, please see The Source: Twelve Principles of Governance That Power Exceptional Boards.

Sponsored by MSG/Merrill Lynch Private Client Group