What distinguishes high-impact nonprofit organizations from their good-enough (or worse) counterparts? On the basis of our combined 60 years as students, leaders, and advisors of organizations in the nonprofit sector, we developed a model for analyzing the essential elements that define excellence in the sector.
We have discussed these “essentials,” and the way that most nonprofits struggle to master them, in a number of our Forbes articles. We also describe them at length in our book, Engine of Impact: Essentials of Strategic Leadership in the Nonprofit Sector. There are seven elements in our model: mission, strategy, impact evaluation, insight and courage, organization and talent, funding, and board governance.
In listing these elements, we purposely designate board governance as the final item in the series. It is, in effect, the capstone element that brings all of the other elements together—the one that keeps an organization moving forward while also keeping it on track.
That’s why, as we discovered in our research, smart nonprofit leaders recruit board members with care and set high expectations for them. “We view our board members as family members,” said Daniel Lurie, founder and CEO of Tipping Point, a nonprofit that funds poverty alleviation organizations in the San Francisco Bay Area. “Our organization needs to be a priority in their life. We do not invite an individual onto our board if they are already on ten boards; generally they need to be on no more than three nonprofit boards for us to feel confident that Tipping Point would be a priority for them.”
Yet, more often than not, nonprofits are unable to leverage their board in a robust and effective way. According to the Stanford Survey on Leadership and Management in the Nonprofit Sector—a study that we conducted while writing Engine of Impact—56 percent of organizations struggle with board governance. (We base this finding on an analysis of responses from nonprofit executives, staff members, and board members.)
In many cases, this struggle occurs because board members do not fully embrace the responsibilities that define their role. One of their primary responsibilities is to ensure that their organization has a high-performance “engine of impact” in place. Building such an engine starts with marshaling the first four essentials: A well-run nonprofit must have a clear and focused mission; it must a comprehensive strategy for pursuing that mission; it must have a system of impact evaluation that measures the effectiveness of that strategy; and it must have leaders whose insight and courage enable the organization to keep its engine going at full throttle.
How can board members gauge whether their organization is faring well in these essential elements? How can they determine whether it has a well-built engine—a vehicle for achieving impact at scale? We developed a diagnostic tool that will help nonprofit board members—and nonprofit leaders in general—answer those questions.
The Engine of Impact Diagnostic features a survey in which users answer questions about a particular nonprofit. The organization can be one that users know in their capacity as an executive, staff member, board member, funder, or consultant, or in some other role. After completing the survey, users receive an assessment of their organization’s performance in the seven “essentials” of our model.
To get the most value from the diagnostic, board members should not only take it themselves but also invite other stakeholders in their organization to do so. In many cases, different stakeholders will get different results from using the tool. Exploring those differences can be a crucial step toward identifying opportunities to improve an organization’s engine of impact.
An equally important responsibility for board members is to help their organization gather the “fuel” that an engine of impact requires. This fuel consists of three essential elements—organization and talent, funding, and board governance. Our diagnostic tool will enable board members to assess their organization’s performance in these elements as well. Additional quality tools and resources are offered by BoardSource, which supports excellence in nonprofit governance.
Nonprofit leaders should pay special attention to an issue that lies at the intersection of the last two elements on our “essentials” list—namely, board members’ support for their organization’s fundraising and development efforts. Nonprofit board members have a responsibility not only to donate money but also to help cultivate other donors. Yet many nonprofits today fall short in this area. According to our survey, less than half of nonprofit executives and staff members (49 percent) concurred with the statement “The financial giving to my nonprofit by its board members is currently very strong.” And an even smaller share of that respondent group (42 percent) concurred with the statement “My nonprofit’s board currently plays a very strong role in fundraising activities.”
There’s no single formula for an appropriate level financial giving by board members; reasonable expectations in this area will vary by organization. We believe that 100 percent board participation is always an appropriate goal. That said, not everyone on a board needs to be a major donor. Nonprofit boards, after all, need to reflect the diversity of the societies in which they operate, and that often means including members who are not affluent. But as a general rule, board members for a nonprofit should give to that organization at a personal stretch level. They should also prioritize that organization within their charitable giving overall.
Likewise, board members should recognize that they have a duty to identify and approach other potential donors. We offer this rule of thumb: Each board member should point their organization toward at least a handful of fundraising prospects every year. All members of the board of Eastside College Preparatory School in East Palo Alto, California, treat that organization as a top priority in their financial giving, and board members play a lead role in raising money from outside donors.
As part of its effort to reach such targets, a board should clarify how well its members have performed on this front to date. To assist board members and other nonprofit leaders with that task, we created the Engine of Impact Board Giving Tool. This tool enables a nonprofit to develop a fact base regarding the current and historical performance of its board members in financial giving and participation in fundraising activities. After entering quantitative and qualitative data about the board (sanitized to protect confidentiality), the result is a brief presentation that offers an accurate picture of the board’s contribution to funding their organization.
This presentation can form the basis of a rich discussion of the board’s strengths and weaknesses with respect to fundraising. It can also help leaders to set fundraising expectations for the board. And if that process reveals that board members are falling short of meeting their fundraising responsibilities, then a change in the composition of the board may be in order. That’s a heart-wrenching remedy, to be sure, but it may be the only way for an organization to raise the funds needed to achieve its mission.
Originally published in Forbes