There should also be limits on what directors can tell the board about what they learn while volunteering. Unexamined Performance If you serve on a board and have no idea how others view your participation, and have no means of giving feedback about the prevailing culture, expect trouble. Undiscussed differences in opinion between board members can gestate into deep resentments that trigger a crisis or drive people away.
Preventing this requires regular feedback and candid communication. One way this can be done is to form a small group composed of the board chairperson, the CEO, the general counsel, and the chair of the governance committee, or some other person with the requisite stature and judgment.
As I argue in my book Changing the World Without Losing Your Mind , following this approach diligently can obviate the need to impose term limits. Board members who are perceived as retaining their seats without contributing much effort or value are told as much; as a result, they usually raise their level of involvement or step down, regardless of how long they have been serving.
Stifled Dissent Minority views and skepticism should be welcomed around the board table, with all members encouraged to speak their minds and vote their consciences, even if this creates tension. Passionate debate and non-unanimous votes are a signal of a strong, not weak, governing body. Groups with members who argue like they are right but listen like they are wrong tend, in my experience, to make the best decisions.
They also minimize the risk of driving away useful and critical dissent. I have seen board leaders commend naysayers for their thought-provoking comments, thus encouraging everyone in the group to engage in critical thinking about organizational matters without fear of harsh judgments or reprisals. When boards are encouraged to pay close attention and express skepticism as appropriate, those preparing proposals that require approval of the governing body are apt to prepare assiduously before seeking a green light to move forward.
I have also been on boards where asking hard questions about program effectiveness, financial management, organizational theories of change, and CEO performance is met with disapproval, silence, or even marginalization.
As a result, such organizations are prone to approving half-baked budgets and strategies, and are less equipped to respond to problems.
Tolerating Misbehavior More than once I have observed people behave unprofessionally and even unethically around a nonprofit board table in ways that I doubt those same people would ever do in a business setting. I have seen directors berate staff members for lacking detailed answers to their questions, ignore or minimize obvious conflicts of interest such as companies owned by directors doing business with the organization , disregard people's novel solutions because acknowledging them would highlight a problem that the group wanted to ignore, and change the subject during a formal meeting instead of making a crucial decision.
Again this can take a variety of forms, from boards meddling in operational matters to boards that fail to set strategic priorities. Garthson acknowledges that this situation often leads to staff or board members voting with their feet. A chair may sometimes be aware that they are the problem but not be aware of how they can fix the situation. To this, Garthson suggests the board can use self-assessment as a way of determining challenges and solutions.
This can also be a place for bringing in a consultant who can help clarify the situation or coach a chair in developing stronger skills. Group dynamics and interpersonal relationships can go wrong in any sector or situation.
As a sector, we need to become better at dealing with conflict for the sake of the people and causes we serve. She has written for the nonprofit sector for almost two decades and loves a good story. And thus they are failing to fulfill the fiduciary duty of care that the law imposes on them. Commentators suggest that each and every director should work harder and more effectively at governance.
Recent legislative proposals indicate that some lawmakers agree. In our view, the commentators are right on the facts — many directors are not governing — but dead wrong on the solution. We believe the answer for many nonprofits is exactly the opposite: All directors should not be asked or expected to govern. Nonprofit organizations and their boards vary, but for many the expectation that all directors will govern — an expectation that stems from a misplaced analogy with for-profit boards — is inconsistent with the inherent nature of the nonprofit board, inconsistent with effective governance by the board as a whole, and inconsistent with the board being effective in other equally important functions.
In contrast to their counterparts on for-profit boards, directors of nonprofit organizations are called upon to perform several functions. Some directors give or raise funds; others provide special expertise; others maintain ties to an important community; others are there because their stature serves as a signal that the organization does good work. And some — perhaps just a few — govern. Directors who do not govern generally perform other functions that are just as important to the organization.
There is no reason to pretend that all directors actually govern, nor is there reason to ask or expect them to. And there certainly is good reason to keep them on the board so that they can contribute in these other ways.
This specialization and clarification of roles would improve governance without sacrificing the valuable contributions that board members make to the organization they serve.
Depending on where a nonprofit organization is incorporated, this approach could be adopted by some organizations under existing law. For others, state but not federal nonprofit corporation laws would have to be amended in the way that we outline below.
A typical board meets between four and twelve times a year, and, depending on the business to be conducted, diligent preparation for a meeting can require several hours of work. In addition to exercising oversight as a single body, boards often govern through committees as well. Board committees typically delve more deeply into issues than does the board as a whole, and they recommend actions to the board. The most important and most active of these committees is typically the executive committee.
Most notably, nonprofit boards commonly serve a fundraising role, a role that, for many organizations, is a sine qua non of their existence. Some board members make large contributions; others use their contacts to raise funds. For some nonprofits, especially cultural organizations, funds raised by board members make up a high percentage of donated funds. These figures do not include funds that board members raised from others. Other types of nonprofits also rely heavily on their boards for fundraising.
Board members of this organization contributed an additional 4 percent of that total themselves. Board members also provide valuable services to their organizations. Often these services are administrative. The Brearley School, a prominent New York City day school, for example, traditionally enhances the substantive expertise of the board by including in its membership one or more heads of comparable schools.
Board members also serve as goodwill ambassadors to the constituencies that the organization serves or the community in which the organization operates. They inform the community and relevant constituencies of the services the organization can provide. As an institution,the substitute teacher works effectively.
The device assures school administrators and parents that children who might otherwise run amok will remain under control. But the job of the substitute teacher is singularly unattractive. Adherence to minimum standards—not trying to teach but merely trying to keep order—is as or more challenging than actually teaching. It is also far less rewarding.
So it is with board members. What we have essentially asked is that trustees keep order. Why not concede that boards do unglamorous but essential work and get on with it? The reason lies again in the paradox of substitute teaching.
The teacher who educates children actually stands a better chance of keeping order than the teacher required only to keep order. Similarly, the board that is expected to improve organizational performance also stands a better chance of ensuring accountability.
By focusing primarily on accountability, we have created a job without a compelling purpose. As a result, board members become disengaged. And the more disengaged they are, the less likely trustees are to ensure accountability—the very reason we created boards in the first place.
By asking for a little, we get even less. The problem is not that the board is some pointless appendage that renders board members inconsequential. To the contrary, the board, as an institution, is so important and effective that it can sometimes function almost without regard to the effort of individual board members. In that sense, a board may be more like a heart—too vital to rely on conscious effort to perform.
Consider four cases where the board can perform well and thus leave board members little to do. First, boards provide legitimacy for their organizations.
They merely confer it. Presumably, a more curious or inquisitive board will compel managers to be better sense-makers, but the mere occasion of board meetings goes a long way by itself. The board, as an entity, also encourages vigilance by managers. Ever mindful of the possibility of being stung, the CEO remains vigilant. As that image suggests, even random, annoying activity can be sufficient to keep managers alert.
The flurry of activity alone has important effects. Parsing these individual and institutional roles, we return to the legal role of the board as an accountability agent.
The board assumes the ultimate legal responsibility. As trustees attempt to define the purpose of a body that in some ways requires little of them, they face something of the predicament of a monarch in a modern, democratically governed state.
The monarchy helps to create a national identity, reassuring and unifying the country especially in times of crisis , marking important events through ceremony, and, not least, developing the tourism economy. Board members face the same challenge. If they rely on the institution of the board to generate meaningful work, they are likely to be disappointed. Sometimes boards resemble neither substitute teachers nor modern monarchs.
Under these circumstances, such as hiring a CEO, considering a merger, deciding whether to expand or eliminate programs, or dealing with a financial crisis or personnel scandal, boards are called on to be diligent and purposeful.
We tend to take little account of the fact that important board work can be highly episodic. Board members meet at regularly prescribed intervals, even when there is no urgent work to do. In response to this demand for strategic content, staff may begin to inflate routine issues into questions of strategy.
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