Grantmakers + Governance = Organizational Success!

photo (4)The Annenberg Foundation funds what it considers to be a nonprofit’s most important asset — its leaders, both staff and board. Why? Because it sees a direct correlation between a nonprofit’s results and the strength of its leadership. Eight years ago, to further its mission, the Annenberg Foundation created Annenberg Alchemy, a leadership training program for nonprofit board chairs, board members, and chief executives living, working, and serving nonprofits in the Los Angeles area. BoardSource is an Annenberg Alchemy strategic partner and its consultants are among the program’s facilitators.

Sylia Obagi managed Alchemy for the past eight years. Now in transition between her role as Annenberg’s director of programs and operations and her new role as the first executive director of the Roy and Patricia Disney Family Foundation, Sylia sat down with Anne Wallestad, president and CEO of BoardSource, to share her perspectives on the connections between grantmakers, governance, and organizational success.

Anne Wallestad: The Annenberg Foundation has put a stake in the ground that board leadership and governance is something it cares deeply about. Tell us how it came to that thinking, and why it’s so important to the Foundation.

Sylia Obagi: Annenberg’s mission is advancing a better tomorrow through visionary leadership today. It believes that visionary leadership at the CEO and board level will drive impact, results, and sustainability — ensuring that an organization can make the greatest impact with every dollar that it spends. Many staff members of the Foundation have come from the nonprofit side and experienced firsthand what’s possible when you’ve got effective, engaged board leadership and a strong board–staff partnership. We’ve also seen that a dysfunctional board can bring an organization down.

To understand our theory of change, you just have to look at the numbers and ratios as they relate to nonprofit leadership. We’ve got roughly a million nonprofits and a million chief executives in this country. That’s a big pool of leaders, but when you compare it to the 15 to 20 million board leaders who are also closely aligned with the success of our nonprofits (and ultimately responsible for their success), you begin to see that grantmakers have been investing their time, energy, and resources disproportionately. As grantmakers, we need to invest more in board member training — ensuring nonprofit organizations have volunteer leaders who support an organization’s resiliency. Changes in the nonprofit landscape are constant, demand for services is growing, and funding is always fluctuating. Therefore, the resiliency of a nonprofit depends on its volunteer leaders’ ability to proactively navigate these difficult dynamics on behalf of their organization.

In the eight years since we launched Annenberg Alchemy, we’ve seen it really transform organizations. It’s about shifting a paradigm, shifting a culture, creating a new way of thinking about governance and how critical it is to organizational effectiveness.

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Unpaid Payroll Taxes Can Mean Real Problems for Nonprofit Board Members

photo (4)By Anne Wallestad, president & CEO, BoardSource

Last month, the Treasury Inspector General for Tax Administration issued a report that nonprofit organizations owe more than $875 million in unpaid taxes, including more than $600 million in unpaid payroll taxes.

Commenting on the report, Nonprofit Quarterly’s Ruth McCambridge cautioned the public — and the nonprofit sector — not to overreact to the sensationalized reporting on the topic. And, in most ways, I agree with her…except one: Board members of these organizations, or any organization that has failed to pay payroll taxes, need to react, and react big.

Why? Because unbeknown to many voluntary board members, they can be held personally liable for unpaid payroll taxes, and be forced to pay those taxes and penalties on behalf of a nonprofit organization.

That’s right — when a nonprofit organization is called onto the carpet by the IRS for unpaid payroll taxes, the IRS demands that someone be held personally liable, and be forced to pay — and that someone is the board and its members. The IRS’s Internal Revenue Manual Part 5, Chapter 17, Section 7 states:

“Any person required to collect, truthfully account for, and pay over any tax imposed by this title who willfully fails to collect such tax, or truthfully account for and pay over such tax, or willfully attempts in any manner to evade or defeat any such tax on the payment thereof, shall, in addition to other penalties provided by law, be liable to a penalty equal to the total amount of the tax evaded, or not collected, or not accounted for and paid over.”

IRS regulations specifically identify directors as potentially liable persons: “A director who is not an officer or employee of the corporation may be responsible for the TFRP if he or she was responsible for the corporation’s failure to pay taxes that were due and owing.” States also have similar provisions.

So, what does that mean for board members? Well, first and foremost, organizations that owe payroll taxes should get them paid immediately, prior to assignment of personal liability by the IRS. More broadly, board members should — as a part of their fiduciary oversight — inquire about any unpaid taxes that the organization might have and ensure that the CEO is prioritizing those payments. An efficient way to do this is to have a tax and information filing calendar for the organization that includes federal and state filing obligations.

The fiduciary responsibilities that board members take on are real and significant. This report was a good — albeit unfortunate — reminder of that.

For more information on what board members need to know about avoiding personal liability and providing financial oversight, check out these BoardSource resources:

Legal Responsibilities of Nonprofit Boards
Financial Responsibilities of Nonprofit Boards

 

 

Culture — The Holy Grail of Good Governance

photo (4)By Michael R. Vanderpool, principal, Signature Success LLC

This is the third in our series of posts written by nonprofit leaders who will be presenting sessions at the 2014 BoardSource Leadership Forum on October 9 & 10 in Washington, D.C. We hope you will be joining us.

For many years, boards have been on a mission to do a better job of governing. There has been no shortage of ideas as to how to make this happen. Yet, the quest continues as board members, board chairs, and CEOs look for the magic bullet of great governance. Having served on more than 20 nonprofit boards over several decades, I have observed and participated in this journey. And what I have learned is that the answer is not better by-laws, more dashboard reports, or more detailed conflict of interest policies. The best way to significantly improve governance is to change the way boards think, work, and act. In other words, to become the best possible leaders they can be, boards need to change their culture.

Board culture drives governance. Yet, in my experience, few boards spend any time thinking about their culture and even fewer understand what a good culture looks like. As a result of having advised and served on a wide variety of boards, I have found that really great boards have cultures with four characteristics. They are strategically focused, well-trained, active, and results oriented. They have what I call a STARBoard culture. These boards transform themselves into a high-performance team, and it is this high-performance culture that drives great governance. Patrick Lencioni in The Five Dysfunctions of a Team calls this teamwork “the ultimate competitive advantage both because it is so powerful and so rare.”

What do these high-performance teams look like in the boardroom? STARBoards are focused on the future and ways to constantly improve the organizations they govern. The board members clearly understand their role and the business model of their entity. Board meetings are full of purpose and energy and engage the talents of each member. Most importantly, the board encourages, supports, and demands real results. When these elements coalesce, the result is a highly effective team that truly provides excellent governance.

For this reason, the process of developing cultural awareness and engaging in culture-altering activities should be at the top of every board’s to-do list. Cultural awareness starts with an understanding of the board’s current culture. This can be determined by using a cultural assessment tool. With this information in hand, the board must do three things:

1. The board must actively decide what type of culture it wants to develop. What will it look like? What values will the board see being expressed?

2. The board must formally commit to change. The change leaders must paint a clear picture of how the new culture will make the organization better. It is critical that the entire board commits to becoming a high-performance team. Without this commitment, the transformation will fail. The CEO, board chair, and key members of the board must lead the effort. Connor and Smith put it this way in their book, Change the Culture, Change the Game. “Cultural changes must be led. You can’t delegate the initiative to human resources, organizational development or anyone else…[The board] must maintain ownership of the process…” While I agree with this, the reality is that few board leaders are culture change agents. Boards typically need outside help with the technical aspects of change — which leads us to the third leg of the journey to good governance.

3. The board must change its processes. Process feeds culture, and culture dictates process in reinforcing loops. Only by changing their processes can boards initiate and sustain cultural change. Fortunately, the studies of emotional intelligence, social intelligence, and small-group dynamics provide a foundation for developing new board processes.

Cultural awareness, a commitment to change, and execution drive transformation. All are necessary if a board is to become the high-performance leadership team that is a STARBoard. Having created this cultural foundation, boards can truly go about the important work of good governance. With the right culture, boards can and will become the leaders our nonprofit organizations need and deserve.

Michael R. Vanderpool is a principal in Signature Success, LLC, a board consulting company. He is also a business attorney and an adjunct professor in the School of Management at George Mason University. He will be presenting a session titled “Custom Designing a Better Board Culture” at BLF2014.

Business Model Thinking: Three Things Your Board Must Understand

photo (4)By Jeff De Cagna, chief strategist and founder, Principled Innovation LLC, and Michael Anderson, president & CEO, Canadian Society of Association Executives

 This is the second in our series of posts written by nonprofit leaders who will be presenting sessions at the 2014 BoardSource Leadership Forum on October 9 & 10 in Washington, D.C. Please consider joining us.

As the pace of societal transformation continues to accelerate, nonprofit boards must develop their capacity for generative business model thinking. The business model, which we define as the rationale of how an organization creates, delivers, and captures value, is also the framework that integrates the organization’s commitment to purposeful action with the equally critical pursuit of a responsible level of profitability. (Yes, you read that correctly. “Nonprofit” is simply a tax status, not a business model, and a measure of profitability is essential to make investments in building organizational capacity every year.)

To help your board fully embrace business model thinking, here are three things you and your colleagues need to know:

  • Business model stewardship is the most important form of fiduciary responsibility. Most nonprofit boards pursue fiduciary responsibility through the regular review of key financial documents, such as audits, balance sheets, and P&L statements. This type of oversight, although absolutely necessary, is mostly retrospective, and thus insufficient to build organizations capable of thriving in the years ahead. For 21st-century nonprofits, fiduciary responsibility requires energetic business model stewardship. Every nonprofit board has a duty to build a deep understanding of the organization’s existing business model to grapple productively with more complicated questions about new value creation for both current and future stakeholders.
  • Business model innovation must be an ongoing priority. When it comes to creating value, nonprofit organizations must listen closely to and learn with empathy for their stakeholders, many of who have demonstrated a strong preference for more open and inclusive platforms that embrace their technology-enhanced mobility, create more meaningful interactions, and enable simpler collaboration with their networks. For 21st-century nonprofits, coming to terms with and capitalizing on these new dynamics of value creation means boards must make consistent and well-paced investments in business model innovation in the years ahead.
  • Business model design is about nurturing both adaptability and resilience. The critical business model design challenge for nonprofit boards is crafting new business models that are both adaptable and resilient. Adaptive business models can more easily adjust to shifting conditions and are flexible enough to take advantage of emerging opportunities. Resilient business models are organized around a coherent strategic core that creates lasting influence with stakeholders by solving their short-term problems, meeting their intermediate-term needs, and helping them achieve their long-term outcomes. For 21st-century nonprofits, designing adaptive and resilient business models is essential to building organizations that can thrive.

For 21st-century nonprofits, the business model conversation is the most important dialogue your board will have for the foreseeable future. To have the right conversation, nonprofit boards must work with their staff partners to remove any obstacles that may interfere with the serious work of business model stewardship, innovation, and design.

Jeff and Michael will present the BLF Professional Development Institute, “Business Model Design Lab for Nonprofit Boards,” on Thursday, October 9, 2014 from 9:30 am -12:15 pm.

Donor vs. Investor: An Important Distinction

plantsBy Tom Ralser, principal, Convergent Nonprofit Solutions

This post is one in a series written by individuals who will be presenting sessions at the 2014 BoardSource Leadership Forum in Washington, D.C., on October 9 & 10. We hope you’ll be joining us.

So, what exactly is a nonprofit investor? Are donors investors? A key part of fundraising is learning what an investor is, who your investors are, what they value, and what return on investment they expect to see from your organization.

In my book Asking Rights, I offer the following definitions:

Donor: An individual or organization who typically provides low­-level (the definition of “low level” varies by nonprofit size, budget, funding model, etc.) and often sporadic financial support that is not necessarily connected to the mission of the nonprofit.

Investor: A type of funder who is looking for a return on his or her investment (often incorrectly referred to as a gift or donation). Although the term is more indicative of the mindset rather than the amount of money involved, an investor typically makes larger financial commitments that span several years. An investor is most concerned with the long-term success of the nonprofit.

As you can see, there are several very distinct differences between nonprofit donors and nonprofit investors and how each thinks. Take a look at these two examples:

1. When addressing the need for funding,
• a donor will ask “Have you demonstrated the need for your service?”
• an investor will ask “How will funding your organization improve the situation?”

2. When discussing the funding level requested,
• a donor will ask “Have we sufficiently spread our available funding across those organizations addressing the problem?”
• an investor will ask “Is this the right amount of money for your organization to bring about real change?”

Investors are the people most committed to seeing to the long-term success of your organization and are most likely to commit large dollars, both of which are key to a successful capital campaign. Understanding the differences between investors and donors will increase your fundraising results, and I look forward to discussing this in more detail at BLF.

Tom’s BLF session is titled “Identifying and Communicating Outcomes That Increase Funding.”

How Healthy Do You Want Your Nonprofit Board to Be?

check (2)By Anne Wallestad, president & CEO, BoardSource

Last spring, I had a tough conversation with my doctor. I’m diabetic and have to be very careful about my health — exercise, eat well, monitor my blood sugar, take insulin several times a day…the list goes on and on. For the most part, I do relatively well with all of this maintenance. But there are definitely places where I could do better.

As my doctor made suggestions about how I could improve my health, I squirmed in my seat a bit and made pathetic excuses about why I just couldn’t do more. “I travel a lot and can’t always choose what I eat,” I said. “I work long days and don’t always have time to exercise.” Whatever she suggested, I had a reason why it just wouldn’t work.

And then she looked at me and said, “Well, I guess it’s just a question of how healthy you want to be.”

Ouch! That hurt. But it was the truth. And I needed to hear it.

When it comes to nonprofit board development, many board members and CEOs throw up similar roadblocks to improved board performance. “I don’t have time.” “We don’t have the resources.” “How can I possibly think about strengthening the board when I’m worried about how we are going to deliver programs and meet payroll?”

These roadblocks don’t serve us, or our nonprofit organizations, well.

According to the Executive Director Listening Project conducted by the Meyer Foundation, “Strengthening the Board of Directors” is listed as a top challenge affecting executive directors’ personal and professional effectiveness (“fundraising” and “managing human capital” were the only two challenges ranked higher).

Can you imagine saying “I don’t have time to manage my staff” or “We don’t have the resources to fundraise”? No, it wouldn’t happen, because it’s understood we have to invest in these things for our organizations to flourish.

But for whatever reason, there is a disconnect when it comes to investing in our boards. According to the most recent “Daring to Lead” study, despite the fact that only 20 percent of executive directors are “very satisfied” with their nonprofit board’s performance, the majority of executive directors (56 percent) spend 10 hours or less on board-related activities each month. This finding is significant when you learn there is a striking correlation between the time CEOs invest in board work and overall satisfaction with the board — those who are the most satisfied invest significantly more time than those who are not at all satisfied.

But since time for time’s sake isn’t the point, I offer a few thoughts about how to leverage limited time for maximized impact:

1. Get it Right from the Beginning: Invest heavily in orienting and educating new board members, and making sure that they are the right fit before inviting them to the board (for more on screening board candidates, check out BoardSource’s Board Recruitment Center). Be honest about your board’s expectations — regarding time, fundraising, and overall engagement — and resist the temptation to downplay them. You’ll save countless hours of misunderstanding and frustration by ensuring that they’re on board with organizational needs and board member expectations, and that they have the information and knowledge they need to help them succeed.

2. Assess Performance Before There’s a Problem: The board’s regular assessment of its own performance and the CEO’s performance identifies challenges and opportunities long before they become significant problems, and ensures that your organization has a roadmap to self-improvement and ongoing board development. BoardSource offers tools for both nonprofit board and CEO assessments if you need help.

3. Challenge the Board to Manage Itself: Build a strong governance committee that takes responsibility for managing and cultivating board performance. The committee can help maximize the effectiveness of each individual board member and address issues of disengagement or dysfunction head on. Not only does this share the workload, but it creates greater buy-in and accountability across the board.

So, just as my doctor challenged me to reconsider my values and the amount of time I invest in them, I challenge each of us: How healthy do we want our nonprofit boards to be? And what are we willing to do about it?

If you’re interested in learning more about BoardSource’s year-round board development program for organizational members, which provides ongoing educational and assessment resources for your board, visit here.

This post also appears in HUFFPOST IMPACT.

 

20/20 Hindsight

car-mirror

By Vernetta Walker, chief governance officer and vice president of programs, BoardSource

A recent article, “World Vision Reverses Decision To Hire Christians in Same-Sex Marriages,” really caught my attention. Irrespective of whether this board’s decisions were “right” or “wrong,” its actions are illustrative of reasons why effective board governance is often the driver of a nonprofit’s successes and failures. Just two days after announcing the adoption of a policy codifying World Vision U.S.’s openness to hire Christians in same-sex marriages, the backlash from some Christian leaders, donors, employees, and affiliates led to the board reversing its position. In fact, World Vision U.S.’s board and CEO issued an apology, asking for forgiveness for their mistake.

Other nonprofits have been grappling with similar issues lately. The Boy Scouts of America’s policy banning gay troop leaders led the Walt Disney Company to cut its funding. This came after a long-awaited decision by the Boy Scouts board of directors last year to admit openly gay youth.  The difference here is that the Boy Scouts, for better or worse, is standing behind its decision.

The World Vision U.S. board, according to the article, prayed for years about its hiring policies after a U.S. Supreme Court decision supported World Vision U.S.’s ability to hire based on its religious beliefs. With such a quick reversal, though, it is clear that the board needed to do more to understand the core values that united its internal and external stakeholders—its values. The “more” in this case was the generative work of the board.

In Governance as Leadership: Reframing the Work of Nonprofit Boards, authors Richard Chait, William Ryan, and Barbara Taylor talk about the need for boards to work in three modes: fiduciary, strategic, and generative.  Generative work can be defined in a number of ways, but it includes engaging board members in framing the issues and asking catalytic and probing questions that provide insight into the organization’s purpose, mission, and core values.

According to World Vision U.S.’s own branding, it is “a Christian humanitarian organization dedicated to working with children, families, and their communities worldwide to reach their full potential by tackling the causes of poverty and injustice.”  Notwithstanding, a quick internet scan reveals that others, like Christianity Today and the ever-present Wikipedia community, often describe World Vision as an “evangelic” organization. The board is in a position to decide what it means to be a Christian humanitarian organization and how to best carry out the mission.  But it is the generative mode that helps the board make sense of the organization and determine the path forward that is both evidence and values based.

Read the full post »

Building Trust Through Transparency

photo (4)By Anne Wallestad, president & CEO, BoardSource, and Jacob Harold, president & CEO, GuideStar

There is much debate about how to measure the effectiveness — or strength — of a nonprofit organization. Some argue that measures like percentage of “overhead” or CEO compensation tell you everything you need to know about an organization. Others, including both of us, argue that organizational effectiveness cannot be reduced to crude financial measures — that to truly understand organizational effectiveness, you need to understand what the organization is trying to accomplish, what its track record of success has been, and what its plan for future impact is.

At the heart of this debate is the critical question of trust. Donors are asking, “Can I trust this nonprofit to do what it says it is going to do?” “Will it use my resources wisely and effectively?” “Is it stable and sustainable enough that an investment in it is an investment in the future?”

These questions are both emotional and rational, and get to the core of the delicate and essential trust between donors and organizations. And while there are lots of mechanisms to help donors and organizations build that trust, we often overlook the very important role of the board of directors.

Boards — by definition — exist to preserve and protect the public’s trust. They have both a legal and an ethical responsibility to ensure that there is meaningful oversight of their organization’s operations and finances. They guarantee that the chief executive is held accountable to an independent body of individuals who protect and serve the organization’s mission and — by doing so —safeguard the public’s trust in the organization.

All too often, though, basic information about nonprofit boards is hidden from view. Left with no way to tell which organizations are following clearly established governance best practices, the public is left in the dark and organizations are subject to speculation and skepticism.

That is about to change. In a move that we believe will create a seismic shift in the public’s understanding of governance and board leadership, BoardSource and GuideStar are launching a new tool to help organizations share information with the public about its highest level of leadership: its board of directors.

Beginning today, organizations will have an opportunity to share information about their board’s practices as a part of their profile on the GuideStar Exchange. It now includes questions about board orientation and education, CEO oversight, ethics, board composition, and board performance — key elements of strong oversight and accountability. Soon, as a part of the ongoing evolution of GuideStar’s website, this information will be visible to the public in a new section of the GuideStar profile focused on “People and Governance,” creating transparency around what has all too often been hidden from the public’s view.

We hope that organizations will embrace this opportunity to share more information about how their boards are leading their organizations in thoughtful, intentional ways and help build trust with their donors and the public at large. And for those organizations that have not yet embraced the essential governance practices that are highlighted in the profile, we hope that the questions will serve as a catalyst for self-reflection and change within their boardrooms.

Ultimately, we hope that boards begin to be seen for what they truly are: an essential mechanism to ensure that nonprofit organizations are worthy of the public’s trust. And for those boards that might be asleep at the wheel, we hope that this will be a wake-up call — and an opportunity to fulfill the promise of good governance.

Anne Wallestad and Jacob Harold are the presidents & CEOs at BoardSource and GuideStar, respectively. BoardSource is the recognized leader in nonprofit board leadership and supports, trains, and educates 90,000 nonprofit board leaders from across the country each year. GuideStar is the go-to resource for individuals searching for reliable information about nonprofit organizations, with more than 6 million users in the last year.

This post also appears on the GuideStar blog.  Further information about this BoardSource–GuideStar initiative can be found here.

 

Getting Beyond the Blame Game

pointingBy Anne Wallestad, president & CEO

The challenges that organizations face in securing the resources they need to succeed is well-documented.  Many organizations are teetering on the edge of failure, and many more are forced to forego advances in their programs or services due to a lack of resources.

At BoardSource, we often hear the frustration and angst from chief executives who are facing these tough realities.  Said one chief executive in response to the 2010 Governance Index, “I am so busy writing grants and trying to raise the money to pay the mortgage and keep the doors open that I don’t have time to get out and development relationships, cultivate donors, etc.  The board has got to become more involved and committed to its fiscal responsibility.”

This connection between executive angst around fundraising results and frustration with board fundraising performance is real.  According to a 2013 report from CompassPoint and the Evelyn & Walter Haas, Jr. Fund, “Underdeveloped: A National Study of Challenges Facing Nonprofit Fundraising,” 75 percent of all executives say that board member engagement in fundraising is “insufficient,” with 17 percent of executives indicated that their board has no involvement in fundraising at all.

BoardSource’s 2012 Nonprofit Governance Index indicated that fundraising is the lowest ranked area of board performance, with only 5 percent of all chief executives assigning their board an “A” and 75 percent giving their boards a “C” or below.  And, underscoring the frustration around board participation in fundraising, 40 percent of CEOs report that their board  “relies mostly on the CEO and staff” to fundraise, despite the fact that 75 percent of CEOs report that “expectations related to fundraising are clearly explained during recruitment.”

But it’s not just boards that are shouldering the blame when fundraising results are lackluster.  According to “UnderDeveloped,” roughly a third of all executive directors are “lukewarm or dissatisfied” with the performance of their development directors.  And, conversely, fewer than half of all development directors say that they have a strong fundraising partnership with the executive director, with 21 percent of all development directors characterizing the partnership as “weak” or “nonexistent.”

The frustration between boards, executives, and development directors is understandable.  If you’re not getting the fundraising results that your organization needs to sustain its mission, then it’s reasonable to ask the question about whether or not you have the right people on board to deliver those results.

But boards, executives, and development staff all too often get stuck in a blame game focused on determining whose responsibility it is to fundraise, instead of tackling the core issues that might enable them to achieve stronger results (for more on what boards and chief executives can do to change their fundraising culture, check out my blog post on the subject). To move beyond blame requires courage and commitment, and a willingness on someone’s part to take the first step.

A new BoardSource book suggests that staff have the opportunity — if not the responsibility — to take the lead.  I would go even further and say that if staff — both chief executives and development directors — can’t get beyond blame to begin building and strengthening the fundraising partnership in their organization, then they have no one to blame but themselves when there is disappointment in their performance or — worse — the organization suffers financial blows that threaten its sustainability.

As Engaging Your Board in Fundraising:  A Staff’s Guide makes clear, board members’ limited time for — and interest in — fundraising often curtails their engagement in fundraising efforts, and staff members need to work strategically to engage board members more fully.  The book goes on to offer practical advice on how to go about doing that, and challenges staff members to make that effort.

Here are some key take-aways:

  • Connect to Mission:  Successful fundraising efforts start with a passion for your organization’s work.  Taking the time to be deliberate about engaging your board members with your mission will ensure that they are inspired to raise the dollars you need to succeed and can be authentic and compelling when they do it.
  • Build Relationships & Trust:  For lots of folks (board members and staff alike) fundraising can be incredibly scary and intimidating.  Staff members are often in the uncomfortable position of asking board members to step outside of their comfort zone and — to do so — there needs to be a foundation of trust and understanding.  Taking the time to cultivate those relationships — especially with your most connected board members — can pay off in a big way.
  • Provide Support to Make it Easy:  Board members are busy.  To maximize their fundraising capacity, you need to use their time wisely.  Don’t waste their limited availability on activities or tasks that staff members could do.  Instead, be organized in your preparation and follow-up and ask them to do the things that only someone with their connections, relationships or stature can do.

Don’t get mired in the blame game.  A stronger, more productive fundraising partnership is within your reach.  Are you willing to take the first step?

Adapted from the foreword to a new BoardSource resource, Engaging Your Board in Fundraising:  A Staff’s Guide, by Kathy Hedge.

Boards and Public Displays of Disaffection

photo (4)By Vernetta Walker, vice president of programs and chief governance officer, BoardSource

A few weeks ago, there was a news story indicating that the entire 20-member board of the Minnesota Dance Theatre had stepped down en masse. In three paragraphs, we learned that the theatre is solvent and successful, and that the outgoing board says it hopes the theatre will continue to succeed. We also heard that the group is led by the daughter of the founder; we are then left to color the picture in as we will.

The adage “actions speak louder than words” seems to apply here. Who could read this and not wonder what fight was going on in that boardroom that required such dramatic action? Perhaps it’s best that we don’t know the details or drama, but it would be shortsighted to think no damage has been done. The stakeholders of nonprofits tend to believe that they have a right to know why the stewards of an organization they love or do business with would just desert the ship.

Internal strife comes in many forms. As a consultant for a national organization that focuses on strengthening nonprofit governance, some of the more fundamental breakdowns I see occur when there is a lack of a shared vision among the board and chief executive, an inability to form a constructive partnership, or a disagreement over strategic direction and how to proceed. Most boards and staff are committed enough to work through these issues, so when more drastic measures are taken — like this situation, or the one in which a CEO tried to “fire” his entire board, or where another board resigned in the wake of a criminal investigation —  organization’s reputation suffers, as do individual players.

Boards can never underestimate the impact of their actions on an organization’s image and reputation. Most nonprofit organizations depend on positive relationships outside the organization for resource development and the distinct competitive advantage that comes with having a positive public persona. As guardians of organizational mission and resources, the board must understand that those partners begin to get nervous when they see public displays of disaffection.

Bad news travels and spreads at the speed of light, maybe even faster in the age of the Internet, and there’s no opportunity to unring the bell. Recovery can be slow and painful. Just think about Susan G. Komen’s Race for the Cure and their continued struggle to bring in fundraising dollars at the level they enjoyed prior to what many claimed was a politically motivated decision to defund Planned Parenthood in 2012.

The lesson as I see it is for every board to consider how its behavior will impact the reputation of the nonprofit among its various constituencies. It is important to ask, “How is this action taken or message sent likely to play among our stakeholders?” Whether fairly or unfairly, the public and an organization’s stakeholders often make judgments about an organization based on what they know about the people who serve on the board. What people see and hear can influence what they will give or the decision to support an organization moving forward.

The post also appeared in The Nonprofit Quarterly.

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