When Good Boards Break Down
Sometimes, despite good intentions, nonprofit boards miss the mark. Even when organizational decline is obvious to external stakeholders, the board fails to recognize the problem or solution. While most of these crises aren’t necessarily caused by the board, the board sometimes is the culprit. A recent article in The Nonprofit Times identifies common circumstances and potential fixes for those occasions.
Time Orientation
The first problem derives from board members’ orientation of time. The ideal board looks out, toward the future, not down, into the details of the present. The author suggests the tendency to focus on the latter reflects board members’ personalities and professions. If their paid work keeps them focused on the here and now, that’s where they tend to stay, thereby neglecting even the short-term future of the nonprofit.
The simplest solution to this challenge is, according to the author, a difficult one. The agenda for each board meeting must be constructed to keep focus on future opportunities and challenges, rather than the past and votes about the present. Framing the agenda for strategic governance requires collaboration between the CEO and board chair and a shared future orientation to time.
Visioning
Board member and “trustee” are terms often used interchangeably, but they are not the same. Legally, a trustee holds property on behalf of an outside beneficiary, which does not reflect the range of responsibilities of nonprofit board members. Perhaps that confusion, however, creates another challenge in that protecting assets is paramount to a trustee, while board members are expected to partner with a CEO in leading an organization.
While board members certainly should protect the financial assets of the nonprofit, the tendency to overemphasize this responsibility can paralyze a board. A potential solution is improving the board development and recruiting processes. Ongoing efforts to teach board members what to do and identify the talent needed to do it will keep the board aware of and aligned with strategic goals.
Industry Expertise
Most industries have their own jargon, but nonprofits that rely heavily upon federal and state governments for funds can be buried in regulations and reporting requirements that even the CEO finds cumbersome. Board members, then, wind up even further removed and confused. The answer here is to keep it simple at board meetings, enabling board and senior management to discuss relevant matters in ways all parties can understand.
Holding Back
If the most coveted board members are those who can make significant financial contributions to an organization, then those with high net-worth serve many boards. Unfortunately, their orientation to equity investing and money management might stifle their contributions to nonprofit decision-making. By withholding their expertise, perhaps fearing irrelevance in this different context, such board members compromise the effectiveness of the board. Board chairs and CEO’s can work to solve this problem by personally appealing to all board members to contribute their expertise.
As the author concludes, “nonprofit board governance is an imprecise process at best.” While the role of the board is clear, actual practices vary greatly. The author adds that a lack of board engagement might reflect the challenge of nonprofit governance or a breakdown in the governance process, but boards can succeed with increased commitment to board development.
The Argument for Looking Out
I recently read in Nonprofit Quarterly that yet another nonprofit board voted to throw in the towel, igniting the fury of stakeholders. The governing body of Sweet Briar College, one of approximately 40 remaining all-women’s schools in the US, voted to close in August, citing financial difficulties despite an $84M endowment.
While we certainly don’t have enough data to debate the decision, the board might well have acted responsibly. Surely, too many nonprofits limp along, draining community resources long after they cease to be needed or effective. In this case, though, some stakeholders believe “the board acted precipitously and without much imagination.” That made me wonder.
Perhaps this board was focused on fiduciary — decreasing enrollment, increasing expenses — at the expense of the other modes of governance. The article above seems to discuss such perils, but uses the orientation of time to distinguish between looking down (fiduciary) and looking out (strategic and generative).
Perhaps I now view everything within that framework, but it’s easy to see. The concept of “trustee,” as described above, also corresponds to a fiduciary focus and the author’s assertion that nonprofit boards have broader responsibility seems to imply the strategic role.
I agree with his conclusion that governance is an “imprecise process” with inherent challenges and that systematic board development efforts are essential for keeping boards on track. I was surprised, however, to read his suggestion that any board member would need the board chair or CEO to “coax” his/her participation. Effective board development, in theory at least, would ensure the board is comprised of the right people who understand their roles, share their talents, and focus collectively on the right things.
I wonder if that’s true at Sweet Briar College.
