Learning About Nonprofit Governance - Emily

As I reflect on the last six weeks, I realize just how much I didn’t know about nonprofit board governance. My experience with boards of directors is slim. I feel after this class, though, that I could sit on any board and assess its effectiveness. I have learned about theories and best practice implications for board governance. I now know more about the different dynamics within and surrounding a board of directors for a nonprofit.

One area I now understand the more about are the functions of the board. I didn’t realize the board was responsible for so many aspect of an organizations success or demise. I, like most I’m sure, assumed boards were just a voting body that acts as an extension of the CEO. Boy was I wrong! The board has responsibilities that reach for beyond the CEO. The biggest being general oversight of the organization, but the roles included in this are far and wide.

I enjoyed dissecting the dynamics and motivations of board members. I feel the first step in understanding how they function, is understanding why they serve. I touched on this topic in my blogs and we discussed it a lot in class.

The best learning experience of this class was assessing the board of directors for a nonprofit. I chose the Conflict Resolution center in Roanoke Virginia. This was a great pick because I got to see the working relationship of a smaller board with the CEO. The organization also gave me experience in how a board is responsible for the turnaround of an organization in crisis.

One area I would like to know more about is how to get the research that is done on board governance into practice with nonprofit boards everywhere. Of course, JMU graduates of this program will take these resources with them, but how can current boards get access to this rich information? There seem to be good online resources but I wonder how much busy board members and CEOs use them. I think research into this alone would be helpful in understanding better ways to enhance board governance practices.

There are many aspects of nonprofit board governance to yet to be studied that can assist in the sector being optimally effective to their populations….more research needs to be done. J

Local Nonprofit Disillusion - Emily

During the bulk of this class we have talked about the positive aspects of board involvement and looking to the future as part of their role. But what happens when events or conditions change which preclude the continued existence of the organization? Tough decisions and human impacts are sure to follow. The manor in which such stressful events roll out should be handled cautiously by the board along with the COE.

Roanoke is not immune to the closure or re-organization of nonprofit entities. Recently, the YWCA of Roanoke Valley announced a major change. In a move to reserve their mission, while unloading the Burdon of an outdated facility, they have negotiated a merger with De Paul Community Resources. This merger will allow for programs to continue to serve the WYCA’s current population, as well as, offer new ones under De Paul Community Resources. Some of the human impact of this particular merger involves the relocation of some of the female residents at the “Y”. Staying true to their mission, the YWCA has plans in place to assist these women during the transition.

Poor economic conditions have taken its toll on the Blue Ridge Housing Development Corporation. This nonprofit was created to assist low-income families to locate housing. The organization was also placed in a challenging situation when they were asked to return to the City, income generated to through grants provided to build housing. The City claimed Blue Ridge failed to return approximately $260,000 to the City and instead have re-invested in other programs. While the re-investing was meant to fulfill their mission, paying the money back to the city meant adding insult to their financial injury. The Board voted to dissolve the organization as the housing market continued to decline and the differences cannot be settled between them and the City of Roanoke.

As you can see, unfortunate circumstances will cause nonprofit organizations to flounder, or in better situations, alter their way of doing things. The proactive approach boards can have is to constantly monitor and react to internal and external circumstances. A wise decision a board should consider is to add a dissolution clause into their bylaws. In the unfortunate event that an organization must close its doors, this makes the process a lot less messy and much easier.

http://www.roanoke.com/news/roanoke/wb/245938

http://www.wset.com/story/14930958/non-profit-housing-group-shutting-down

http://www.reiofroanoke.com/2011/06/nonprofit-blue-ridge-housing.html

http://www.roanoke.com/news/breaking/wb/285236

The Importance of the Mission Statement - Emily

Nonprofit organizations are built around meeting goals that converge to complete a mission. This is outlined in the organization’s mission statement. Mission statements will vary greatly from one organization to the next. In nonprofits, the mission is usually to provide a service for needs that are not otherwise being met. It should describe what the organization does, who is served, how they are served. Potential clients, funders, and the overall community can read a mission statement and know what the organization is all about.

Organizations big and small will be faced with decisions of every kind throughout their operation. Some will find themselves needing to partner with other organizations to remain open, some might be faced with leadership that is not fulfilling the mission, and others may have disagreement on the goals of the mission itself. A mission statement should be both broad enough that changes in service can be made, and narrow enough to fulfill a specific need in the community. The importance of developing a strong mission statement at the establishment of the organization cannot be emphasized enough. This will be the foundation through which all other decisions are made.

Sometimes a situation of mission drift can occur. This is when an organization is pressured, either internally or externally, to change or expand their services. Marshall Jones (2007) gave a good example of mission drift in the Hershey School. Trustees of the school for orphaned children were fulfilling their mission. However, a proposal was made to expand the school into a research and teaching institute (Jones, 2007). While this was innovative and planned for all the right reasons, it was considered mission drift. The trustees wanted to use their assets to reach more children through education of caregivers, however the school’s alumni association felt it was an unneccisary expansion that didn’t actually meet the mission. This is a good example of how having more than ample money to complete the original mission can sometimes lead to mission drift.

Mission drift can be a wolf in sheep’s clothing. Organization leaders may be tempted into changes from their environment. An example of this is if a mega-donor would like to see their money used for a program that doesn’t align with the organization’s mission statement. The organization may need the gift to operate their current programs. If the donors wishes are granted and a new program is offered that is oppositional to the mission, this could create real problems for the organization. While the mega-donor is pleased other, perhaps more long-standing donors may not be happy with the changes. Additionally, grant funders may see that the mission is not being met and will not reinstate future funds. In the right situation, this could put the organization at a big risk for closing.

The takeaway message is that a clear mission should be developed upon the establishment of the organization. If changes need to be made, recognizing the implications for the changes is vital to the livelihood of the organization.

Jones, M. B. (2007). The multiple sources of mission drift. Nonprofit and Voluntary Sector Quarterly, 36, 299-307.

The Board/CEO Relationship - Emily

The relationship between a board of directors for a nonprofit organization and the CEO is a complex one. There are expectations by both parties for the other. I would like to take a moment to examine this relationship and discuss the positive and negative aspects.

One expectation is that the board will serve as a reliable “go to” for the CEO in times where guidance is needed. Another is the board will do its part in planning while the CEO implements. This expectation is accurate if the CEO’s priorities line up with the boards. Sometimes this is not the case. In the article by Du Bois, et al (2009), there is an example of how the CEO (or headmasters) was concerned with different objectives than the board of directors (chairs). The headmasters were concerned with objectives directly related to day-to-day operations, whereas the boards were interested in ideological values and school output. This is a natural occurrence given the roles of the headmasters and boards. Headmasters were impacted daily by staff and pupil satisfaction, so theses items were most important to them. On the other hand, board members were removed from these items so they were not as important as other, more prestigious objectives. It is clear then, that the relationship between the board and the CEO is dynamic just in the case of differing priorities. Where these differences can become harmonious is when each party recognizes that: the fulfillments of all of the objectives are for the betterment of the organization.

An interesting dynamic to consider is “founder’s syndrome”. “Founder’s syndrome refers to the influential powers and privileges that the founder exercises or that others attribute to the founder” (Block and Rosenburg, 2002). One issue to look at is the power (whether good or bad) that the founder possesses just by being the founder. No one else may have had the original vision. Board members, staff, or the CEO may not feel comfortable in suggesting new or different ideas to the founder. Another interesting point to not from the Block and Rosenburg article is the governance differenced in organizations where the founder is active. Only 22 percent of founder-led organizations had term limits for board members, compared to 50 percent of non-founder-led organizations. Keeping board members year after year allowes the founder to maintain control of what goes on in the organization. This may seem like a good idea to them, but non-diversified, overtime will become stagnant.

As I mentioned, board and CEO relationships have many facets. I gave examples of just a few ways the dynamics can facilitate or impede the success of a nonprofit organization. The take-away message is that open communication about expectations, mission, and roles is vital to making the relationship constrictive

Block, S. R., Rosenburg, S. (2002). Toward an understanding of founder’s syndrome: An assessment of power and privilege among founders of nonprofit organizations. Nonprofit Management & Leadership, 12(4), 353-368.

Du Bois, C., Caers, R., Jegers, M., De Cooman, R., DeGieter, R. P. (2009). Agency conflicts between board and manager: A discrete choice experiment in Flemish nonprofit schools. Nonprofit Management & Leadership, 20(2), 165-183.

Board Maturity - Emily

According to Houle (1998), “The central value of a board is that it provides the opportunity for shared wisdom”. It can stand to reason that board maturity is a value to the overall effectiveness of a board. What does a mature board look like? This depends on the organization and the member makeup. Maturity has little to do with the age of the members alone or the years spent in membership to the board. Board maturation could be described as the level at which the board effectively fulfills the organization’s mission.

The actual face of the board will not be one demographic but a mosaic of individuals whose experiences are rich and shared with the organization. Diversity of members is extremely important. Rubber-stamping, yes-voting members may be good for a CEO that has their own priorities; but this is short sided and shows board immaturity. The ability to question, investigate and contribute to decisions demonstrates a mature, well-rounded, and effective board. In addition to diversity of gender, race, ethnicity and socio-economic status, functional diversity is equally important in a mature board. Functional diversity is the professionalism that members bring to the table. For example, a functionally diverse board may have members who are bankers, lawyers, managers, business owners, and other relevant-to-the-organization professionals. This allows for separation of roles and responsibilities that are specific to members own expertise.

Board maturation cannot occur overnight. Members will come and go and there will be times when recruitment is needed. Recruitment efforts should be based around who can serve to fulfill the goals of the organization. There will also be times when board members become stagnant. A way to avoid this is to include terms and term limits in the board of director bylaws. This assures that members are not only constantly revolving but that new input is present and involvement is high.

A mature board will be more likely to make good, educated decisions for the organization’s success. However, it should be noted that there may be a downside to a very diverse board. Its strength can also be its weakness. When a room is full of different perspectives, it can take a lot of time to carefully deliberate on each agenda item. In the long run, this will be beneficial to the organization. It would be a good idea to create meeting agendas with high priority items and create smaller committees for lower ones.

A nonprofit with a mature, diverse, and well-qualified board will be highly effective for the organization. With special consideration of how each board member can be utilized, their individual assets will work as a synergy of value to the organization.

Daley, J.M. (2002). An action guide for nonprofit board diversity. Journal of Community Practice, 10(1), 33-54.

Houle, C. O. (1989). Governing boards: Their nature and nurture. Jossey-Bass Productions.