Governance in Not-for-Profit: Random Learnings
Not-for-profits frequently enjoy a purpose for being that more easily draws people with skill, experience and enthusiasm to their staff organizations and Boards. Board members are attracted by the opportunity to share in a corporate mission that is often trying to do some good for a part of our society that is struggling. Individual Board members resonate with the mission and see their skill set as helping further the goals and make a difference. For an experienced executive this is a great opportunity to give something back to society. And with a scenario like that for a not-for-profit, what can possibly go wrong with Board governance?
I draw upon three examples from my own Board experiences to demonstrate that speed bumps can (and will) occur.
Skill Set for Board Recruitment: For five years I participated on a Board that had developed a skill set/experience matrix to guide recruitment. We felt we always needed a lawyer to help us address risk issue, at least two people familiar with financial statements to lead the audit committee and at least two people with a personal connection with our mission. We also tried to maintain gender equality and achieve some geographic diversity. In addition, we had staggered three-year Board terms to constantly provide new blood.
As a purely governance Board we seldom left the boardroom, although staff BBQ’s were a welcome exception. However, one year we undertook several Board initiatives that took us into uncharted territory. Our goal for the year was to strengthen our connections with our stakeholders and the plan involved a variety of activities: town hall meetings, revamped newsletter, surveys, formally evaluate how we were doing, and connect with municipal leaders. All good ideas in theory, but staff were quick to point out how fully occupied they already were and would have difficulty taking on the Board’s agenda. “No problem,” we said. “Stay calm,” we said. We’ll do it all ourselves.
Ultimately, the exercise was a positive one and our goals were largely achieved with only Board effort; meaning staff time was not required to support them and thus, the staff did not revolt. The Board actually pulled it off. Along the way we discovered we had Board members that could write content, were adept at public speaking and making presentations or could develop an effective PowerPoint, that knew how to design and build an internet questionnaire, could pick up the phone and use their personal network of business leaders to open doors, and were able to arrange meetings and book space -the whole nine yards.
The two lessons learned were 1) that being a governance Board does not mean you don’t have to do real work now and again, and 2) doing real work as a team and supporting each other can be a great way of engaging the Board on a whole new level. As a result we have now added a shadow skill set matrix to our Board recruitment process. Can you make a decent PowerPoint? Can you write well? Can you take readable minutes at a meeting, key them in and distribute? And so on. All of these skills are critical in order to avoid leaning on busy staff. We must have pulled that part of the exercise off too because they still invite us to their BBQ’s!
Transition from Governance to Fundraising: Some years ago I was with a not-for-profit that raised money for health research. Virtually all support came from fundraising events, bequests and monthly donations. Board members were recruited for their interest in the mission, for their general business experience and for their basic desire to get involved in the organization to help promote events. One fateful day a Board member came back from a seminar and began promoting the concept of attracting some “heavy hitters” to the Board in order to substantially increase donations. This proposal had several iterations over a couple of years ranging from starting from scratch with a new Board composed of people willing to commit to significant personal donations all the way to setting up a totally separate Foundation composed of those heavy hitters leaving the existing Board to govern the charity itself. In the end, there was no consensus on any of the proposals and the Board did not and has not changed its strategy. But during heated discussions several Board members did leave before their terms were up, citing they were feeling pressure to donate as the reason. Word gets around and the charity now finds that during the annual Board recruitment process it sometimes has to answer the question, “are you a fundraising Board?” The charity is not but the local community still thinks they might be going in that direction. It may have become more difficult to recruit otherwise quality governors.
Policy/Governance to Operations and Back Again: Another Board experience came during the years after 9/11. I was with a provincial health charity in 2001. Things had been going along well for some years but in the aftermath of this terrible event, our funding streams began to suffer and our research was telling us many donors were choosing to redirect a portion, or in some cases all, of their annual givings to organizations such as Red Cross and Firefighters. As an organization we were slow to react to this reduction in revenue. Our governance Board maintained for far too long that donations would recover and senior staff did not disagree. In any event, our Board found itself with significant revenue shortfalls. In order to survive we dove into operations and, for example, spent upwards of a year reviewing weekly cash flows to see if payroll could be met without exceeding our line of credit. We ceased to be a governance Board and became very much an operational Board immersed in the detail of staying viable. This is not Board governance but it became our life. In any event, a turnaround was eventually achieved and we found a new normal from which we could continue to advance our mission. But the biggest challenge for the Board was not orchestrating the turnaround itself, rather it was returning to a governance model once the need for detailed oversight had passed. After a few years of being focused on operations we had a majority of Board members that only knew that operational kind of Board model and we had to teach ourselves from scratch how to let management manage and let the Board govern. This process of re-learning how to govern took much longer than the turnaround and the years leading up to it combined. And it took some external consultant dollars to finally achieve that internal goal.
Like all speed bumps, they look smaller in the rear view mirror.