Governance is a crucial component of any nonprofit’s success. It’s also one of the hardest aspects of nonprofit leadership to get right. We have observed this truth firsthand over many years of conducting due diligence on a wide range of nonprofits, first for the Henry R. Kravis Prize in Nonprofit Leadership and now at King Philanthropies. And research buttresses this observation: In a survey of nonprofit chief executives and board chairs conducted in 2015 for the BoardSource report “Leading with Intent,” respondents on average gave nonprofit boards a grade of B-minus in overall performance. Indeed, many people in the nonprofit sector simply assume that ineffective boards are par for the course. This sort of negative thinking all too easily becomes a self-fulfilling prophecy—one that we firmly reject.
Board governance is one component of the engine of impact that every nonprofit organization must build and tune to become truly effective. Leaders who want their organization to achieve maximum impact must embrace the essentials of strategic leadership. We compare this kind of intentional leadership to a high-performance engine. Previously in this series, we have discussed six components of that engine: mission, strategy, impact evaluation, insight and courage, organization and talent, and funding. The seventh and last component is strong and steady board governance.
Any organization can improve the performance of its board if its executives and board members are ready to confront the people, process, and behavioral challenges that prevent the board from operating at an A-plus level. We have identified six principles of effective nonprofit governance, and we will address three of them here. (We discuss all of these principles in detail in our book, Engine of Impact.)
Structure your board to support effective decision making
A simple way to approach the issue of board composition is to honor the venerable idea of the Three Ws: work, wisdom, and wealth. Your goal should be to attract board members who bring at least one of these critical assets to the table. Excellent board composition is not a conceptual challenge; it is, rather, a matter of recruiting one strong board member after another.
Every nonprofit board needs a core of people who are going to work—people who will contribute their time, effort, and energy to the organization. These board members undertake vital activities such as leading fundraising dinners, cultivating potential board members and donors, reviewing audits, and much more.
For our purposes, wisdom can be any special talent or area of expertise that helps an organization achieve its mission. It might be directly germane to that mission—a hospital will have medical professionals on its board, for instance—or it might involve a skill (such as financial management) or an institutional connection that enables an organization to survive and grow.
The importance of contributing wealth is self-evident: All members of a well-functioning nonprofit board must be able and willing to embrace their fundraising responsibilities. A board needs not only members who will give generously but also members who will solicit generous donations from others. We believe that 100 percent board participation in giving is an appropriate goal, but we acknowledge that not every board member needs to be a major donor. Nonprofit boards should reflect the diversity of the societies in which they operate, and adhering to that standard frequently means including members who are not affluent.
Evaluate and sustain your board
A nonprofit board should periodically review and assess the performance of each of its members. To support that process, the board should have a governance committee, and each member of that committee should be responsible for a group of board members. As a board member’s term nears its completion, the governance committee members should conduct a thorough evaluation that includes interviews with other board members and face-to-face discussion with the member in question. The decision to renew a board member’s term should occur only after that evaluation is complete and only by a vote of the full governance committee. Unfortunately, this kind of rigorous evaluation is rare. In the Stanford Survey on Leadership and Management in the Nonprofit Sector—a study that we conducted to support our research—only 51 percent of board members indicated that they “receive regular and specific feedback” that helps them improve their board service.
In part to avoid uncomfortable conversations with nonperforming board members, some nonprofits implement formal term limits. We discourage nonprofits from taking that approach, which can needlessly cause the loss of valuable board members. Many people who sit on nonprofit boards, we have observed, are able to sustain their passion for an organization and its work for decades. A term-limit policy also has another, more tangible disadvantage: A study of nonprofits in New York City found that average board giving among boards with term limits was $5.5 million, compared with $16.3 million among boards without such limits.
Engage board members seriously
Board members need to be able to engage directly and deeply in the substantive work of their organization. Otherwise, board meetings will degenerate into a staff-driven, prebaked exercise that is of minimal benefit to anyone. Helen Keller International (HKI) uses several methods to ensure that its board members retain a high degree of engagement. To make sure that board members remain alert and curious during meetings, for example, HKI focuses the agenda for each meeting on high-level strategy and relegates committee reporting either to separate committee meetings or to board-book documents. The organization also requires every board member to visit HKI programs in Asia or Africa at least once every three years. “I don’t mean to sound corny, but these visits provide a visceral connection to the work,” says HKI president and CEO Kathy Spahn.
Originally published by Guidestar