Musing on the Matrix

Skills, Ability, KnowlegeBy Linda Crompton, BoardSource president & CEO

Our friend Jan Masaoka has, as usual, penned a provocative and thoughtful article for Blue Avocado, called — bluntly enough — “Ditch Your Board Composition Matrix.” In typical Jan fashion, she fearlessly examined this received wisdom of the sector: “Use a matrix to ensure diversity on your board” and came out with the verdict: Ditch it.

If boards were to use the matrix purely to categorize people, and if, as she suggests, board members viewed adding a person of color to their board as one more box to check off, I’d agree wholeheartedly with her conclusion. And if that’s how you’re using it, stop.

The board matrix is a tool, and like any tool, it is never a means unto itself. Detailed in our book The Board Building Cycle, among others, a matrix only should be used as a worksheet for detailing the skills, characteristics, and talents of your board members, and identifying gaps. And using a matrix is not the first step in board building. A strategic plan that details the future of the organization and identifies what you’ll need to enact the plan — the resources of all kinds — financial and human, both board and staff, must be created first. The Board Building Cycle’s introduction reads, in part:

The search for new board members is a strategic activity; it has long-term implications for the board’s effectiveness. It should be driven by considerations of what resources the board will need among its members in order to serve the organization well during the next few years. Having a strategic plan in place will guide the board in its choice of whom to bring onto the board. The organization’s strategic direction can help to clarify the special skills and resources required on the board.

Jan’s primary beef with the board matrix is that it focuses on what people are, as opposed to what they do. Fair enough, but I reiterate: It’s a worksheet, not a job offer. If your strategic plan focuses on ramping up your organization’s technological capacity over the next five years, and your matrix of existing competencies on your board identifies a gap in that area, you know where to start looking. But finding a technologically savvy potential candidate is just the beginning — now you need to determine whether that person has the right combination of qualities, both personal and professional, for your board, in addition to that one you’ve identified.

I imagine the whole idea of board matrices becomes particularly uncomfortable when we get into the area of other kinds of diversity, especially racial and ethnic. Again, using it to categorize and check-a-box is reductionism at its worst. Not one of us is ever just one thing. No Hispanic man, for example, could ever be asked to represent the “Hispanic viewpoint.” But look at your board holistically — Are there voices that are not being heard that should be? If you’re not systematic about looking at who is around the table now, you may not realize who is not around the table.

How does your board ensure that the voices you need to hear are around your table?

The Last Cup of Tea

by Linda Crompton, president & CEO

Welcome back to the Central Asia Institute scandal, often referred to as the “three cups of tea” story —broken on “60 Minutes”  last year, it created a sensation, and as they say, not in a good way. Well, that party is over; the three teacups have been washed and put away, and the host, Greg Mortenson, has been told to pay the bill — more than $1 million in restitution.

Last week, the Montana Attorney General Office reached a settlement with Mortenson, Central Asia Institute’s former executive director, in restitution for what the AG called “past financial transgressions.” You may recall that the CAI was formed to build schools in Afghanistan and Pakistan, and readers of Mortenson’s books detailing his adventures, Three Cups of Tea and Stones into Schools, donated many millions in response. But a yearlong probe found that Mortenson squandered much of the money on travel to speaking engagements; personal items; and family vacations. In his legal opinion, the AG was careful to write that the Institute’s work is worthwhile, and that the settlement will not preclude its ongoing work towards its mission.

Last year when the story broke, I asked (as, unfortunately, I too often must do) in a blog post: Where was the board? The AG’s report gives us the answer: asleep at the switch (my words, not his). While the board adopted new conflict-of-interest and structural policies in 2008, the policies were essentially ignored. The report states that some board members did, indeed, ask questions about financial irregularities, but were continually outvoted and eventually resigned, with no new members brought on until in 2009 — and continuing today — there are three voting board members, one of whom is Mortenson, a technically legal, but ethically questionable, structure.

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Reason to Know

U.S. Capitol building By Linda Crompton, president and CEO

As you may know, last year a Commission on Accountability and Policy for Religious Organizations was formed (at the request of U.S. Senate Finance Committee member Charles Grassley) to address some of the most challenging tax and policy issues involving religious organizations; its charter includes an examination of issues surrounding all tax-exempt organizations. I serve on the Commission as a representative of the nonprofit sector and recently articulated BoardSource’s position on excess benefit transactions for the Commission. You can find our position paper here; scroll to “Nonprofit Excess Benefit Transactions.”

The Commission posed questions regarding excess benefit transactions – meaning, essentially, overly generous executive compensation — for response. In all cases, the questions proposed higher standards for oversight of executive compensation: 1) changing the level of knowledge required for personal liability for approving excess compensation from “actual knowledge to “reason to know”; 2) assessing penalty taxes on organizations, in addition to individuals, that approve excess compensation; 3) replacing the “rebuttable presumption” protection with a provision stating that the steps involved in establishing the presumption constitute “minimum standards for due diligence”; and 4) whether new guidelines are needed for compensation studies, and whether there should be more disclosure of comparison data used.

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Does Size Matter?

By Linda Crompton, CEO

Recently, someone asked me, “What is the Number 1 question you get asked at BoardSource?” That was easy to answer: “What is the ideal number of board members we should have for an effective board?”

I am always a little bit depressed by this question, suggesting as it does a kind of formulaic perspective on governance.  It’s an example of what I call the “fast-food” approach — simple and easy but not likely to be good news in the long term.  For the record, an in-depth analysis of our Governance Index 2010 data revealed that there is no optimal “one-size-fits-all” for the number of members serving on a board. In other words, small or large boards can be just as effective as medium-sized boards, especially when you take into consideration the use of best practices such as engaging in a formal board evaluation process or offering structured orientations, both of which had a positive relationship to board performance.

So, if it’s not about size, what IS it that makes boards effective, and even exceptional? Effective boards bring a wide range of backgrounds and experiences to the table, are familiar with their role and what is expected from them, and bring an understanding of how they should be doing their board work. Having 5 or 15 individuals around the board table won’t make any difference if they don’t really “get” the work of the organization, don’t have a good leader in the chair, and either try to micro-manage or, just as bad, don’t ask any questions.

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Welcome!

Linda Crompton, President and COOIn 2009, in response to the challenging landscape in which nonprofits found themselves following the financial crisis, BoardSource introduced the concept of “Transformative Governance.” I wrote a long article for Board Member, BoardSource’s member periodical, in which I explained that if boards are to guide our organizations to sustainable and effective futures in face of so many challenges, we must establish a new framework for board leadership.  Boards must transform themselves if they are to transform their organizations. The Board Member article grew into my blog titled “Transformative Governance.”

Two years later, my call for governance that is both transformed and transforming remains urgent — so much so that it is critical that other leaders join the conversation and share their thoughts and ideas on how to unleash the full potential of boards.

I therefore want to welcome you to “Exceptional Boards,” the new BoardSource blog that will continue our conversation on a weekly basis and feature multiple contributors from within BoardSource as well as guest contributors. Our new blog is a forum in which we will encourage discussion and debate about what it takes to rise to a new level of performance, to lead amidst the profusion of social, political, and economic issues impacting nonprofits today.

So please, join the conversation. Write back, talk back, blog back…get involved. We’ve set a pretty ambitious agenda here — we don’t want to chit chat about board competency; we want to explore what it means to be a truly exceptional board and how, working together, our own boards can become just that.

Thank you for being a part of it!

Linda Crompton

President & CEO

Leadership Lessons

I attended the White House Forum on Nonprofit Leadership last week. It was gratifying to join 200 nonprofit leaders to discuss the challenges and opportunities of better preparing, training, and sustaining the next wave of nonprofit leaders.

After a welcome and framing remarks by Jonathan Greenblatt, director of the White House Office of Social Innovation and Civic Participation, and other dignitaries, we broke into working sessions to create actionable goals and strategies in these important areas: Advancing Diversity and Inclusion; Developing Cross-Sector Talent Pipelines; Equipping Leaders to Face Tough Challenges; Scaling Social Innovations; Catalyzing Public and Private Investments in Leadership.

The initial thoughts of the working sessions can be found here. As you can see, this is the start of a very important conversation, and the White House is asking for your ideas, too. I invite you to weigh in on those initial thoughts, here.
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Basking in the Afterglow

The Future is now History.

The 2011 BoardSource Leadership Forum, “Governing Toward the Future,” is now in the past. I, along with more than 600 of the most interesting and knowledgeable nonprofit leaders from across the country, enjoyed two full days of discussion, debate, deliberation, and decision. In groups ranging from two-person conversations to full-blown plenary keynotes, we conducted a wide-ranging yet intensive examination of the future of our sector and how it relates to the larger economy.

If you weren’t there, I have to tell you: the synergy was amazing. A number of themes emerged across the sessions as if all the speakers and participants had done one, gigantic planning conference call ahead of time. Here’s what everyone was talking about:
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Lessons from Mother Nature

As I write this, the East Coast is recovering from the effects of Hurricane Irene, a storm that didn’t quite live up to her advance billing, but that wreaked billions of dollars in damages and claimed at least 49 lives. The biggest earthquake in 50 years just shuddered through the region, causing damage to two of the most famous Washington fixtures: the Washington Monument and the National Cathedral.

Too depressing to look outside, I decide. I’ll just settle down and read the paper. But it provides cold comfort, especially for those of us who care about the nonprofit sector:

  • Extreme market volatility means major gift conversations are on hold due to uncertainty
  • The possibility of double dip recession means organizations that are on the edge might find themselves pushed over the brink
  • The Congressional Super Committee must make significant funding cuts—and we all know that our sector has a big, fat target on its back
  • The charitable deduction is once again on the chopping block, likely creating disincentives for individual donors to give. I guess we’ll have to look to the foundations…but see bullet point one.

Did I just hear locusts marching in the distance?
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A Win-Win for the Sector

Every year since 1998, The Nonprofit Timeshas put out a list of the “Power and Influence Top 50”—movers and shakers in the nonprofit world who are changing the way the world views our sector.

This year, two new faces appeared on the list:  John Griswold, executive director of Commonfund Institute, and Aaron Hurst, president and founder of the Taproot
Foundation, both members of BoardSource’s board. Here’s what the NP Times (August 1, 2011) had to say about them:

John Griswold directs Commonfund’s educational, market research and professional development activities, which includes the Commonfund Forum, the most important financial conference in the sector – if you can get in. Only 550 people get to go; it’s invitation-only access to some of the world’s great financial minds and
powerbrokers.

Aaron Hurst wasn’t the first to come up with the idea of hooking up for-profits with nonprofit partners, but boy has he made it happen. Taproot has recruited more than 10,000 business professionals as pro bono consultants. And, they aren’t just any consultants, unless you think Yahoo! is just another search portal. It’s capacity building at its finest.

While I didn’t need the NP Times to tell me these two gentlemen are committed, exciting game-changers, it’s nice to get the external validation. They both have taken their own organizations to new levels of success and influence by looking at sector needs in innovative ways, John by educating nonprofit board members on investment strategies and creating fantastic opportunities for networking; and Aaron by recognizing the untapped potential of pro bono service to the sector and filling that gap with thousands of professionals, who line up to volunteer.

And here’s the good news for BoardSource—and why I’m essentially tooting my own board’s horn today—Aaron and John bring the same commitment, energy, enthusiasm, and intellect to BoardSource’s board that they do to their own organizations. I feel incredibly lucky to have them—as well as 10 other amazing board members—as a collective beacon that helps me steer the organization. As you can imagine, candidates who accept an invitation to BoardSource’s board know they will be held as a standard for all nonprofit boards, and they accept that challenge. Last year, they even created their own board vision statement:  As the preeminent educational resource for nonprofit boards, BoardSource’s own board is a model of governance performance. As our organizational mission is to build exceptional boards, our own board is exceptional and inspires exceptional governance practices.

A pretty bold statement, but not out of reach for this exceptional group of individuals. Congratulations, John and Aaron, and thank you, Nonprofit Times, for recognizing their superb contribution to the sector.

Relationship Issues

I read an interesting article the other day on Bridgespan’s Web site. It was an interview about nonprofit board service with Phyllis Yale, a Harvard-trained consultant at Bain and Co., the “incubator” of Bridgespan. Phyllis serves on the board of Bridgespan Group, a national nonprofit, as well as Cribs to Crayons, a local, Boston charity. You can read the article here.

When asked how she decides whether or not to serve on a nonprofit board, Phyllis said her number one criterion was whether or not the board and chief executive had an excellent relationship. She said, “I would rather spend my time helping the organization and the CEO be successful, instead of dealing with unproductive dynamics.”

That got me to thinking. How much time do we spend in board meetings playing defense around the personalities and quirks of board members and chief executives? How productive is that? More important, whose responsibility is it to ensure that the dynamics are, indeed, productive?
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