Solutions Matters Event: 07/27/2006
The Need to Address Board Effectiveness
Although many organizations have been able to do good work with weak governance or management systems, there is a growing expectation that nonprofits be able to demonstrate accountability and effectiveness. The fallout from corporate (and nonprofit) scandals has resulted in federal and state government demands for greater nonprofit accountability and transparency, especially in governance.
In addition to legal board obligations the duty of care, loyalty and mission obedience boards are now faced with additional duties, including transparency, efficiency, diversity, etc. (Board Liability:Guide for Nonprofit Directors by Daniel L. Kurtz, referenced by Michael Clark)
This has been reinforced by increasing expectations in the funding community, including the new generation of venture philanthropists, for outcome measurement as well as effective governance.
In this environment, increased competition for funding may help drive nonprofits towards greater accountability. Rising expectations for board accountability may have salutary effects. Research has shown that board involvement is a significant factor in organizational effectiveness.*
*Governance As Leadership: Reframing the Work Of Nonprofit Boards, by Richard P. Chait, William P. Ryan, and Barbara E. Taylor; John Wiley & Sons, 2005
"The Effectiveness of Nonprofit Boards", by Douglas K. Jackson and Thomas P. Holland, Nonprofit and Voluntary Sector Quarterly, Volume 27, no 2, June 1998.
Engaging the Board
The most significant factor in whether a board member is fully engaged and contributing in all ways is a personal commitment to the mission of the organization.
The second most important factor is the extent to which the work of the board engages the skills of its members. Interestingly, factors such as prestige, social and business contacts, etc., do not correlate with board performance.
ACCORDING TO WHOM?
The challenge for boards is to maintain an ongoing process that develops and reinforces an organization's commitment to its mission and provides meaningful and demanding opportunities for board members to utilize their skills in furtherance of that mission. This process is the responsibility of the Executive Director, the Board Chair, and Committee chairs.
Michael Washburn presented a chart which described the work towards meeting these goals at every stage of the board engagement cycle (see above chart).
Some organizations have adopted strict limits to the number of terms that a board member can serve (though often with the "loophole" of one year off after two or three terms on). This approach recognizes that there is a limit to how long a board member can realistically provide a high level of commitment and engagement. It also recognizes the importance of engaging new perspectives, and offers a graceful way of transitioning ineffective board members.
This approach need not lead to a loss of connection. Organizations have created a variety of meaningful structures, such as honorary councils, to maintain the involvement and support of former board members.
An alternative view on term limits, offered by Michael Clark, is that an annual board member evaluation can replace the need for limits. An honest discussion with each board member prior to renomination about expectations, performance, and interest can lead to a clear view of whether they should be asked to serve for another term.
According to the panelists, the Executive Director must accept the responsibility, in partnership with the Board Chair, to manage the practices that will result in an effective board.
The ED and Board Chair should have a vision of what a well-functioning board would look like and communicate that vision to the board. A well-functioning board would be, in Michael Clark's terms, "low maintenance and high impact," one which focuses on achieving that vision, rather than on the impediments to it. The ED and Board Chair must also regularly acknowledge and thank members for their service.
Although not the conventional wisdom, Michael Clark believes that it is the job of the ED to assure regular evaluation of the effectiveness of the Board. He cited Peter Drucker's belief that any well-run nonprofit is staff driven. The board is, of course, a partner in this process, but because the board has very little time and should focus available energies on specific assignments, staff must take the lead in managing and supporting their efforts.
- Outline the skills, resources and perspectives needed on the board to meet its functional responsibilities
- Develop a recruitment strategy based on a comparison between the current composition of the board and its needs
- Create a Governance Committee to lead the implementation of this vision. The Governance Committee should be responsible for developing clear job descriptions for board members, proposing both minimal and aspirational expectations, and assessing board members against these standards. Some boards require a signed board service agreement. The Chair of the Governance Committee, Board Chair, and ED should drive the process of annual board member evaluations.
- Establish staggered terms to make this manageable, especially on larger boards, so that only 1/3 of the board is reviewed for re-election each year. This facilitates detailed evaluation conversations with each board member, including helping some board members to understand why they should not be nominated for an additional term.
Be patient. Board transformation is a long-term process and can take as long as five years of consistent work. It needs to be linked to the overall plan for the organization. And remember, no "one size fits all' when it comes to nonprofit boards, and they shouldn't be modeled after the corporate structure.
How can a board create new leadership when a dominating founder continues as board chair?
- The ED needs to directly address the need to develop future leadership for the long term strength of the organization. The ED can also talk to the chair about how the current situation is creating specific challenges for the organization.
What should the role of staff on board committees be? Should the ED be a member of every committee?
- The board should have some connection with staff. The staff role on committees is to provide operational information and perspectives. The extent of staff involvement should be governed by the other demands on staff time.
- The ED should be sufficiently involved to assure the functioning of key committees but should not be a member of every committee.
- It might be helpful to clarify the staff role on a committee with a job description.
How can board members be motivated to do fundraising?
- Structure the effort in small achievable steps, such as a dinner party at a board member's house.
- Help board members to develop an "elevator speech" that communicates their passion for the mission. Sometimes, communicating that passion becomes infectious, and can mitigate the need to do a direct ask.