Are Nonprofit Boards Antiquated?

Are nonprofit boards antiquated?  I’ve give a lot of thought to this topic.  There isn’t a nonprofit executive director in this country who, frustrated beyond her/his last straw, hasn’t asked that question.  Or, let me correct myself, hasn’t made that question a statement:  “!#$%^&*!  Boards are so antiquated.  Why do we even need them?”

The reality, however, is that the theory of nonprofit boards is not at all antiquated; it is the practice that that gets in the way. But, truth be told, when boards are practicing as the theory says they are supposed to, they help a nonprofit beyond even the measure that the most gifted executive director could achieve on her/his own.

There really are three key responsibilities that nonprofit boards need to be executing, and executing well.  Unfortunately, most do all poorly—if at all; some do a bit here and there well; and only a handful really do all three and do them equally well.

1. Oversight: this is really clear and simple and yet one that far too many boards do so badly to their own detriment.  How hard is it, truly, to provide financial oversight?  Granted, it does mean that every board member needs to take the time to understand the financial status of the nonprofit at the time s/he joins the board and then how to monitor that status on an on-going basis.  That includes understanding the financials, reviewing them monthly, asking questions when things do not appear right, taking the risk of being viewed as the “troublemaker”, etc.  To do otherwise means that his/her organization could be tomorrow’s headline because the board treasurer, executive director, CFO or any combination of the above or others have embezzled, robbed Uncle Sam, or some other wrongdoing.  And trust me:  it isn’t hard to be the overseer.  The board collectively, and each individual member on her/his own just has to commit the time.

How hard is it to oversee the executive director?  Unlike the executive director who probably has multiple direct reports, each of whom has to be evaluated on a regular basis, the board only has one employee to supervise:  the executive director.  It is far easier to catch missteps or intentional bad behavior if a board is providing oversight of its one employee through the development of a clear and open process for regular performance assessment and development.  And yet, anecdotal evidence tells me that the vast majority of executive directors do not get regularly evaluated by their boards of directors.

I will, however, grant you that overseeing—by which I mean creating it and then on some regular basis reviewing/monitoring—policies is the most cumbersome in the oversight arena, as for most nonprofits there are lots of policies that the boards have created.  But even this doesn’t have to be onerous.  A simple system that sets up a calendar of what year each policy should be reviewed allows a board to spread this oversight responsibility over several years.  This prevents the situation, for example, of being in 2010 using personnel policies that were last looked at in 1999; and that prevents unwanted problems.  And all of this isn’t to say that some times circumstances arise where a policy needs to be reviewed out of its “regular cycle,” such as reviewing investment policies when the economy is crashing all around you.

1. Strategic thinking:  most people join boards because they think they can help the organization and because they really want to help.  Bringing their strategic thinking capabilities to every board meeting is a crucial way to help, and yet it so frequently doesn’t happen.  And quite honestly, most of the time it isn’t the fault of the individual board members but the fault of the way board meetings are structured.  The vast majority of board meetings are not set up to allow for strategic thinking.  Just look at the agenda for, I’ll be kind, 80% of the board meetings around this country.  The agenda is simply a list of reports from committees and individuals (the Executive Director, the Board President, etc.).  This is the mistake that too many boards make.  They equate doing board work with receiving the data (all those reports) instead of understanding that the data is a tool they need to do their real board work.  Board meeting time should be spent questioning the data, making sense of the trends in the data, asking the tough questions the data reveal.  In other words, applying strategic thinking at every board meeting as opposed to doing what so many boards do:  reserving strategic thinking to the once every year or several year strategic planning retreat.  No organization, big or small, profit or nonprofit, will be sustainable if strategic thinking is a tool only periodically pulled from the box.

1. Revenue generation:  yes, one of the key responsibilities of nonprofit boards is to ensure sufficient revenue to execute organizations’ mission promises.  But before a board is ready to engage in this revenue generation, it should have first assessed all of its programs to be sure they are a good fit with the mission, to determine if they are built on a sound business model, to assess whether they are, indeed, delivering on the promises they claim.  Because you cannot be a successful fundraiser for a program that isn’t worth it.  So, step one is to make sure the nonprofit is doing only what it should be doing and doing it well.  Then, the board’s responsibility is to determine how the money will come in—and the only “correct” answer is through a diversified revenue generation strategy.  What combination of raised and earned dollars is the right fit for the organization at this point in its life cycle?  And how will board members make this happen?  Will they bring their friends’ checkbooks to the table? host a gathering? cultivate relationships? support the business planning for a social venture? bring in that large gift?  But, as with the financial oversight, it truly isn’t hard to be successful at generating revenue, but it does take time—and training and practice and knowing the options.

None of these three areas of board responsibility is hard to do.  But two key things are generally missing at most nonprofit board tables, which leads to the lack of execution.  There is an unwillingness to say, “Despite being a superbly accomplished person in my day job, I do not know how to be a good nonprofit board member.  Could you please teach me?”    And there is an unwillingness to recognize that being a board member is a job, albeit one which every board member volunteers for, seeking intrinsic rewards rather than looking for monetary ones.  And like any job, success at the job requires a commitment of time.  When, and only when, these two impediments are overcome will we see nonprofits truly flourishing.  And then no one will waste any time asking the question:  are nonprofit boards antiquated?