Not For Profit Boards : Imperfect But The Best Mechanism We Have, Let’s Make It Work

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By Chris Gandy

Like so many institutions in our society today, not for profit boards are under unprecedented scrutiny. Mainstream media seems to believe their audience is on a weekly diet of shock horror stories about the latest not for profit board transgression, oversight or calamity. Not to mention the gossip, innuendo and worse doing the daily rounds on social media. Little wonder the sector is struggling to attract suitable volunteers.

Recognising that some of the criticism is justified I am yet to come across a better mechanism to deliver a not for profit’s mission. We are therefore left with no alternative but to go beyond the anecdotal and gain better insights into how boards function. Hopefully armed with hard evidence we will be in a stronger position to develop effective strategies to support positive board development.

Those interested in helping not for profit boards function better have received a recent boost from the Urban Institute’s National Survey of Nonprofit Governance. This research has collected data from over 5,100 non-profits and provides a window through which to view areas of board weakness and a basis to consider various approaches to improving boards, including regulation, self-regulation, policy-oriented, and management-oriented strategies.

While this research focused solely on US based non-profits, many of the findings and recommendations have relevance in this country as well. I’ll leave it to you to read the Institute’s full Research Paper if you are interested but for me that take-out findings and recommendations were:

Findings

  • Low levels of engagement in core board duties – Respondents were asked to rate how actively their boards engaged 11 different roles: financial oversight, evaluating the CEO, planning, monitoring programs, setting policy, fundraising, community relations, educating the public about the organisation, monitoring board performance, acting as a sounding board for management, and influencing public policy. A significant percentage of boards were not very actively engaged in many of these fundamental roles. In only two did a majority say their boards are very actively engaged, and these majorities were small (52%).
  • Fewer than 20% of respondents said their board very actively monitors its own performance.
  • Approximately 25% do not regularly check whether their organisation is accomplishing its mission.
  • Having the CEO as a voting board member was negatively associated with active board engagement in several areas (such as financial oversight, setting policy, and community relations) – and positively related to none. It also had a negative impact on the adoption of several practices including having an audit, and having conflict of interest, document retention, and whistle-blower policies.
  • Creating a culture that encourages board members to influence the board’s meeting agenda was associated with higher engagement.
  • Non-profit boards with members that serve on corporate boards were more likely to adopt self-regulatory policies. This suggests that businesspeople on non-profit boards bring accountability practices from the corporate sector into the non-profit world.
  • Non-profits report that they are having difficulty recruiting qualified board members. 70% of respondents were experiencing difficulty recruiting board members and 20% found it very difficult.

Recommendations

  • Board members need to institutionalise a procedure to regularly monitor their own performance.
  • There is need to review the criteria used to recruit new members and boards should try to attract well-rounded members and seek a range of backgrounds and skills.
  • All board members should be encouraged to contribute to setting the board’s agenda rather than concentrating influence solely in the hands the top executive or the board chair or the two. Many non-profit groups do not do this, but unless they do, why would we expect their board members to feel that their involvement can makes a difference?
  • Non-profits should re-consider following the business world’s practice of making the CEO a voting member of the board. Research now suggests that blurring this line between board and staff tends to undermine active board leadership.

Plenty of food for thought about how not for profit boards may be assisted and, importantly, this shouldn’t be left solely to individual organisations to address. As the Urban Institute’s Paper concludes:

More broadly, there is a critical need for public and private initiatives that go beyond the individual organisational level, to increase the availability of board members and expand the pool from which board members are drawn. Furthermore, additional research is needed to better understand the barriers to obtaining board members, and to engaging a more diverse pool of board members. Sound practices and policies must be coupled with an investment in people so that boards have individuals that are willing and able to serve and implement those practices”.

Amen to that!

About Chris:  Chris Gandy is the founder and a director of Cause and Effective – a provider of contingent resourcing and leadership search services to cause-based organisations. He is also a not for profit board member.

 

 

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Thats our take on things. Over to you, please add to the discussion.

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