If I have seen further than others it is by standing upon the shoulders of giants- Sir Isaac Newton
They say that success has many fathers.
In the context of a nonprofit this statement is literally true. Look at any successful nonprofit and you will see the steady hand of the governing board guiding it through the rapids and whirlpools into calmer waters.
But recruiting the right governing board and working in concert with the members on a regular basis is no child's play. CEOs and senior management at many nonprofits face multiple challenges, from elucidating the grand vision to updating the board about the nitty gritty of day to day operations.
As this article indicates, the responsibilities of a nonprofit board can be summed up succinctly in the form of three D's:
Duty of care: Board members are expected to actively participate in organizational planning and decision-making and to make sound and informed judgments.
Duty of loyalty: When acting on behalf of the organization, board members must put the interests of the nonprofit before any personal or professional concerns and avoid potential conflicts of interest.
Duty of obedience: Board members must ensure that the organization complies with all applicable federal, state, and local laws and regulations, and that it remains committed to its established mission.
In real world terms, a nonprofit board is supposed to perform two types of functions, internal and external.
Internal functions include supporting the management and holding them accountable, outlining the organization's mission and vision, signing off on the strategic plan, taking the lead in molding the culture of the nonprofit, and providing legal and financial oversight.
External functions include advocacy, fundraising, raising the profile of the organization, engaging with the larger community, collaboration and increasing the reach of the organization.
Smaller and newer nonprofits also derive much of their legitimacy from the profile of the board members.
Therefore, it is in the interest of all stakeholders for a nonprofit board to run like a well-oiled machine. Which is why, it's crucial to for management and board members to know what other nonprofits do to solve these problems.
The Leading With Intent survey
In this context, the Leading With Intent: A National Index of NonProfit Board Practices survey released by BroadSource, a nonprofit which works on nonprofit board governance issues , in January 2015, is particularly illuminating.
This survey, which covered the CEOs and boards of over 800 nonprofits- big and small- aims to uncover the issues that nonprofit boards are grappling with and suggest improvements.
The report looked broadly at three different parameters related to nonprofit board performance:
Image courtesy Leading With Intent 2015
A few takeaways from the report.(N.B All the image source links open up PDF files)
1. Boards are failing to support CEOs
Image courtesy Leading with Intent 2015
CEO support, where boards have not really knocked it out of the park, is one of the most important duties of the board, and their failure to make an impact can have cascading effect on the organization.
This hands-off attitude on the part of a governing board is problematic because CEOs need support during the onboarding period so that they can fully understand the nature of their duties and their responsibilities.
Standford Social Innovation Review recommends a five-step approach to solving the problem which involves nonprofit boards:
- Taking stock of organizational goals before hiring the new CEO
- Setting the agenda with the CEO so that no one works at cross purposes
- Clearing the air on what roles each member of the leadership team is supposed to perform
- Spending more time in the orientation process
- Providing regular feedback and creating an execution plan.
2. Boards are too homogenous
Boards and CEOs are largely homogenous and skew white, male and over the age of 40. This can be a problem in a society that's increasingly diverse in terms of race and age.
The composition of a nonprofit board should ideally reflect the communities they serve. For instance, a nonprofit that works with underprivileged women of color might be hamstrung if most of the board members were white and affluent baby boomer males.
There is also a crying need for boards to recruit millennials, as they are projected to be the largest demographic in US at 90 million, with increasing buying power and an ability to significantly influence the larger society.
According to the Leading With Intent report, only 73% of nonprofit CEOs surveyed felt that they have the appropriate board members that can help with the stated mission..
3. Boards need to work more on fundraising
Image Source Leading With Intent 2015
Fundraising is the biggest area of improvement that both CEOs and boards think can be improved.
60% of nonprofit boards surveyed reported that 100% of the board donated to the organization.However, a significant percentage of board members didn't contribute to fundraising efforts with external donors.
. Image Source Leading With Intent 2015
As we mentioned in a previous blog post, contributions to nonprofits are projected to rise this year though the survey indicates that the financial performance trends are rosier for bigger nonprofits with $1million+ operating budgets.
Image Source Leading With Intent 2015
Check out our previous post on how to get better at fundraising.
4. Most board members know their roles and responsibilities
Image Source Leading With Intent 2015
Helping board members understand their roles, responsibilities and educating them about their duties are critical to building an effective nonprofit.
A significant percentage of CEOs- 34%- feel that the orientation process followed by their boards is ineffective. The numbers can be improved if the orientation and education of board members can be turned into a continuous process.
67% of bigger nonprofits have conducted a self assessment compared to 44% of smaller nonprofits. Boards that perform this exercise see an uptick in their performance.
5. Boards are largely failing to provide inputs on strategy and execution
Image Courtesy Leading With Intent 2015
According to their CEOs, nonprofit boards are severely underperforming in the strategy department.
Only half of the CEOs surveyed think that their board actually understands the mission statement of the nonprofit. (Click to Tweet)
Very few nonprofit CEOs give their boards full marks in plan execution and monitoring. This is partly understandable as the board is not involved in the minutiae of planning and implementation.
However, this lack of knowledge does no favor to the organization, as boards are charged with providing strategic guidance and oversight.
There is a need for both boards and upper management to communicate more frequently and comprehensively about the implementation of the strategic plan.
In this context, an easy to digest report on the progress of strategic plan, similar to ones generated by strategy execution software can be extremely helpful.
To view a 4 page snippet (PDF) of a sample progress report that updates board members on the progress of the strategic plan, click on the button below. No registration required.
The Leading With Intent 2015 report can help you benchmark your board's performance and offer you insights into how to improve board governance.
What are your biggest challenges concerning board governance?