Board Members Should Balance Short And Long-term Factors For Board Sustainability

The Challenges of Balancing Short and Long-Term Factors for Nonprofit Boards

The annual meetings of nonprofit organizations generally include some attention to both the short- and long-term goals of the organization. In the normal course of events, short-term goals tend to be on the minds of staff, volunteers and board members throughout the year. However, when it comes to long-term planning, many boards take the approach at the annual meeting of “set it and forget it.”

How do we define short- and long-term goals? The rule of thumb is that short-term goals relate to goals that will take a year or less to achieve. Mid-range goals span one to five years. Boards set their long-term goals with the hopes of achieving them within five years or longer.

Finding the balance between short- and long-term goals setting takes a close working relationship with board directors and managers, which means having the right people in both positions. In most cases, it also means both parties may need a healthy dose of boldness and courage.

Fiduciary Duties Play a Role in Strategic Planning and Goal-Setting

All board members, including nonprofit board members, have fiduciary duties. These duties include the duty of care and the duty of loyalty. These duties directly coincide with monitoring the health of the organization so that it will be sustainable. Long-term goals relate directly to sustainability, so that makes them part of every board member’s fiduciary duties.

As part of those fiduciary duties, board members are responsible for monitoring the organization’s performance against its strategic plans, continually steering activities toward the long-term goals. Board members can’t accomplish this alone. They must work with management, staff members and volunteers to keep the long-term goals in the forefront of their minds as well.

Nonprofits Follow Corporate Trend of Focusing on Short-Term Goals

The stock market has experienced more volatility in the last few decades than we’ve seen in a long time. Investors want to see results fast. While, in the back of their minds, investors are aware that corporations should be focusing on long-term goals while also keeping a sharp eye on short-term goals, they continue to place pressure on corporations to produce strong results every quarter.

Nonprofits function differently than corporations, but they still tend to follow many of the trends that corporations set. This is why we are seeing short-term thinking starting to infiltrate nonprofit boardrooms.

Intentionally, or unintentionally, nonprofit board directors are placing pressure on managers to produce impressive results over the short term. Dramatic results make the board, the managers and the organization look good.

However, long-term goals take time to bear fruit. Continual successes over the short term may set up situations in which the long-term goals are not being addressed. In this way, the organization may start to veer away from its true mission. In the long run, goals that will take several years to accomplish create greater value.

Finding the Happy Medium in Goal-Setting

The reality is that boards need to find a healthy balance between focusing on short- and long-term goals, just as corporations do.

There’s also a large focus among corporations right now about culture and how it needs to start at the top. The same is true for nonprofit boards and managers, who need to embed thoughts about the long-term vision into the organization’s culture.

The caliber of board directors can be instrumental in spreading a long-term philosophy of goal-setting strategies. To be successful in this, nonprofit board directors need to have practicality, strong values, leadership skills and discipline. Boards with directors who give long-term goals a high priority, and who can communicate that importance to a wider community of stakeholders, are moving in the right direction toward finding needed balance in goal-setting.

There’s a lot of talk about diversity and independence when appointing board directors. Something that doesn’t come up very much in discussions around director elections is choosing directors who are naturally long-term visionaries. Leaders from family-controlled businesses tend to make good board directors. Why? Because they typically believe in organizational longevity and in preserving businesses for future generations.

One way for board members to test their commitment to a longer-term strategy is to ask themselves if a new change will satisfy only the short-term goals when the pressure is on to make changes.  A “yes” answer suggests that the matter should be added back onto the board’s agenda.

Board directors will also need to find a way to partner with managers in placing more focus on the long-term goals. Directors should measure the managers’ progress against short- and long-term goals. Managers’ performances should also be measured in nonfinancial ways, such as whether they are actively communicating the organization’s culture and values clearly and consistently. Additionally, board members should oversee managers in sharing the organization’s long-term strategies internally and externally. Managers, along with board members, should continually be asking whether activities fit the long-term strategic goals.

Board members will also need to assure managers that long-term goals aren’t set in stone. They can and should evolve and change as things move along.

The Board Chair’s Contribution to Balancing Short- and Long-Term Goals

The board chair plays a significant role in driving the focus of goal-setting. Finding the balance in goal-setting requires a strong leader who sets appropriate expectations. Qualities in a board chair that nonprofits should look for are board directors who have experience in running large organizations and who have had exposure in managing crises. Working through failures at other organizations isn’t necessarily a bad thing. The lessons they learn can be very valuable.

These are the types of skills that form strong leaders who can see the big picture and give an organization the scope that it demands.

Changes in Strategy Are Challenging

It’s never easy to change course, especially with something that is long-term and complex. Don’t expect to change it overnight. Embracing a new philosophy and communicating it to others in a way that they can also believe in will take time. It’s more difficult to measure the impact of changing ideas than it is to measure financial things. When boards are successful, balancing short-term goals with long-term goals creates sustainability for all stakeholders, hopefully in ways that impact the organization beyond the five-year mark.