The Many Hats of a Board of Directors - Emily

Volunteering time and talent to a board of a nonprofit organization can be rewarding and beneficial to the member as well as the organization. Membership requires not only time and talent, but commitment to fulfilling a set of roles and responsibilities.

The roles of a board, collectively, have one purpose: to advance the mission of the organization (Inglis, Alexander, Weaver, 1999). Members are selected for seats on the board based on ability for fulfilling these roles. The board as, a group of interested people, are to determine mission and purpose, develop strategic plans, support and evaluate the chief executive officer, provide financial management, enlist financial resources, advance the organization’s image, and strengthen its own effectiveness as a board (Inglis, Alexander, Weaver, 1999). In this administrative role, the board and CEO have a principal-agent relationship. This means that the board guides and directs the CEO and other upper management in the operation of the organization. This relationship works well if both parties are open and involved, which is the responsibility of the board chair to manage.

Outside of board agendas and meeting minutes, a board is responsible for stewardship of the organization. This goes beyond budgeting and program planning. Boards of directors are held responsible for revenue collected from donors and grants. Organizations must use the money they receive for the populations they serve. Nonprofits have more pressure than their for profit counterparts to be responsible, respectful, and wise in the use of generous contributions. Additionally, boards are charged with the responsibility of protecting the reputation of the organization. This means acting as representatives of the organization and responding appropriately to negative press, interactions with competing organizations, and the public. This is also a principal-agent relationship whereas the principal is the community (funders, population served, stakeholders) and the agent is the board of directors. Again, this relationship works well with openness, transparency, and involvement.

A method for ensuring proactive board involvement is to measure board productivity on a regular basis. The framework for this measurement should be derived directly from the mission statement and strategies for fulfilling it.

Board roles and responsibilities are vast and ever changing depending on the environment of the organization. Ideally, boards will have a proactive approach to these roles and responsibilities and be a stable go-to for the CEO.

Inglis, S., Alexander, T., & Weaver, L. (1999). Roles and responsibilities of community nonprofit boards. Nonprofit Management & Leadership, 10(2), 153-167.

Board Role in a State of Crisis - Emily

Nonprofit organizations face pressure on all sides – funders, stakeholders, populations served, partnerships, etc. – so when crisis arises, the reaction is just as important as the predicament. “How boards respond to failings can be an important factor in whether the organization recovers or not (Mordaunt and Cornforth, 2004).

Organizational crisis can come about in degrees of severity, with origins internally or externally, and abruptly or over many years. It could arise from program mismanagement, fraud, conflict over use of money, disagreement about mission fulfillment, or poor community support. Crisis of any kind can fatally harm a nonprofit organization, especially a young or weak organization. Unlike for profit businesses, where there are many invested stakeholders, nonprofits often serve a population that requires much more output of energy and resources than will ever be paid back. This is nature of a nonprofit and accepted as a norm. The difference is, nonprofits rely heavily on volunteers, donations and support of a good cause. When crisis arises and trust is broken, or at least questioned, the inflow of these dependencies may become significantly reduced.

The board of directors is then responsible for reacting (if they weren’t the original problem) to the crises. For my board assessment project for PUAD 662, I experienced a board reaction to organizational financial crisis. The board and executive director formulated an ADHOC committee and action plan to combat the crisis. I also had the opportunity to look back into the history of the board and the organization. This was not the first crisis it has experienced. Looking back, the board has responded to emergencies with heavy involvement. Conversely, when the organization is in a time of stability there is significantly less board involvement. This was a perfect example of the “bi-loopial” diagram we discussed in class. It was very clear based on board involvement when the organization was stable and when it was not.

Mordaunt and Cornforth offer four phases in dealing with crisis. The first is recognition. This can be easy or very difficult if the crisis has been slow to come to a boiling point. After recognition is mobilization. In the case of the board I assessed, upon recognition of the financial disaster, they immediately formulated a special committee and action plan. The action plan is the third phase of crisis turnaround. This was an appropriate and timely response. Lastly comes transition. Because of changes made, there is a transitional period expected to allow people to adjust and move forward with new thinking (Mordaunt and Cornforth, 2004).

To conclude, board members play a vital role in response to crisis. Frequently, an organization’s turnaround or demise will depend solely on the ability of the board to react effectively to the crisis. The added energy, time, and stress to board members during this time could lead to burnout. It is not uncommon to have heavy board turnover after a crisis have been resolved.

Mordaunt, J., Cornforth, C. (2004). The role of board in the failure and turnaround of non-profit organizations. Public Money & Management, August, 227-234.

A Note About Nonprofit Board Ethics - Emily

Ethics are not frequently on the agenda of issues to address at nonprofit board meetings. Why and how decisions are made at these meetings have a dramatic effect over the face of the organization.

Nonprofit leaders, whether it is the board of directors or management have a responsibility to be good stewards of their resources. Every decision made should be in response to fulfilling the mission. This will not always be the case. A few examples are: when leadership is corrupt, a pattern (or “slippery slide”) of unethical decisions are made, mission drift occurs in response to internal or external pressure, use of resources is not properly monitored, and when organization behaviors are not in response to population need.

How can a board improve their ethical standing? Like most problems, the first step is to recognize it. This should be fairly easy to discern with one question: Are we making decisions that help or harm the mission of our organization? Depending on the organization and how deep into the unethical swamp they are, this could get fuzzy. The next step then is to employ an operational measurement tool…a SWOT analysis. Analyzing the strengths, weaknesses, opportunities, and threats will guide a board to making changes for the betterment of the organization.

Taking an honest look into the workings of day-to-day operations is only one way to ensure ongoing best practices. Another is to continually strive for a diverse, will represented, board of directors and organization leadership, avoiding rubber-stamping members. The character of leaders will influence the way the rest of the organization is run.

Spending time to consider ethics in planning, decision making and in everyday operations will not only save time (and face) in the long run, but it will help in serving the population and advance the organization as a competitor in the nonprofit sector.

A NPO’s Board’s Role in Fundraising - Emily

Among the many roles and responsibilities boards have in the management of nonprofit organizations, one stands out as the least favorite: fundraising. While most boards will require fundraising participation, activity in this area is low. Wagner (1994) notes: “although board members are responsible for the financial viability of their organizations, some neither give money nor help get it”. Why is this? John D. Rockefeller stated that people feel they “need to apologize for asking someone to give to a worthy object” (1933).

It can be viewed as a chore to request money from personal and business contacts. Some will refuse to fulfill this role within their board membership; others just do not know how to ask for money, and other just fear rejection (Wagner, 1994). The board chair can overcome both attitudes for fundraising. The chair and CEO should collectively explain the importance of fundraising and how the board is the perfect body to do the job. Apart from perhaps the CEO, board members understand how the money is used better than anyone else in the organization. They are the single most effective people in “selling” the value of the organization. For this reason, it is most important that the board be constantly “up” on the successes and recent goings-on of the organization. They will need to share this with possible donors as “people give money to success, not distress” (Wagner, 1994).

Wagner brings an interesting point about why boards may not have interest in fundraising and that is simply that they “do not have a strong commitment to the organization’s mission and programs” (1994). (See also my blog about motivations of board members to serve). It is a natural assumption that nonpaid board members, whose involvement is essentially an extracurricular activity, will not have the same invested interest as a CEO. Board members may want justification of need before investing time and energy in fundraising (Wagner, 1994).

Nonetheless, fundraising is such a valuable tool for ensuring financial growth and program development. Members need to have an in-depth understanding of their role in fundraising; why they are the best people to perform this duty, and how much the organization benefits from increased funding. Additionally, strategic training on ways to ask for money, who to ask, and avenues for reaching new donors is a step in the right direction. As Wager bluntly states: “[b]oard members need to see that they represent a cause larger than themselves”.

Wagner, L. (1994). The road least traveled: Board roles in fundraising. New Directions for Philanthropic Fundraising, 4, 33-47.

Rockefeller, J. D., The techniques of soliciting. Address presented to the Citizens Family Welfare Committee, New York City, 1933.

Training Techniques for Busy Board Members - Emily

Nonprofit organizations require at least three board members to maintain their 501(c)3 status. Most boards have more than three members, each with a variety of roles and responsibilities that depend on organizational needs. No matter the size of the board they all have one thing in common; members are busy.

We have discussed in class the importance of board training. There is no denying that any advancement in the skills of board members is beneficial to the organization. These skills may include fundraising, financial management, effective governance practices, marketing, etc. Usually board members are hired because of the skills they already posses. The board chair can enhance these skills by training members on how to use them in the nonprofit sector and for the organization.

Finding time to train members remains a challenge for many board chairs. Meetings, due to their infrequency, often have crammed full agendas. It is difficult to put aside important items like financial management and strategic planning to train members. However, the benefit of individual members understanding critical issues within the nonprofit world will facilitate overall effectiveness.

There are different ways to train busy board members that do not eat into meeting time. One is to invite guest speakers to one or more meetings. Guest speakers can offer a wealth of information and the extra benefit of question and answer time. Similarly, a board could invite a professional trainer to facilitate learning, however, price could be an issue. Another method is webinars or other online training tools. Another is sending readings home with board members allows them to train in their own time.

Board chairs and CEOs must remember that while members are busy, they have committed their time to serving on the board. This commitment includes continuing education on how to best use their talents for the benefit of the organization. Taking time to research training methods, topics and resources will prove to be worthwhile for the effectiveness of the board.

www.npconnect.org

www.boardsource.org

Nonprofit Resource Center of Western Virginia