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Nonprofit Board Scandals: Let Them Move Governance Forward

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The nonprofit board scandals of the past year are highly distressing: revealing everything from complete board dysfunction in the firing of the CEO at the University of Virginia, to the cover-up of criminal behavior at Penn State, to policy decisions that arguably destroyed Komen's leading nonprofit brand. In all three cases, the financial and reputational losses are quite severe. People to be served by the mission and outsiders have been harmed, the victims at Penn State devastatingly so.

However, the fact that these boards and organizations have been raked through the coals, including being investigated, analyzed and heavily criticized by experts, the media and the public -- day after day -- is a sign of progress. The lessons are out there for all to behold.

You might wonder why I call this "progress." For those of us who have worked with boards for more than two decades, board dysfunction is unfortunately not new. In fact, how can boards possibly be high functioning when so many are so large that they are composed of dozens of people, many of whom never even appear for meetings? Even board cover-ups have not been rare enough; they've just been more effective than they are today. What is new is today's level of accountability and transparency.

Already by the 1990s, more progressive boards were becoming self-aware, asking for greater clarity in understanding their roles and responsibilities and how to organize themselves to function more effectively. This trend has continued in a positive direction. Nonetheless, far too many nonprofit boards and funders have continued to be too accepting of board apathy and dysfunction.

Too much is at stake. The role of global, national and regional NGOs/nonprofits is to improve lives, communities and our world. Only a high-performing board -- in partnership with the CEO -- can truly achieve the organization's mission.

What's required for a board to ensure that an organization achieves its mission to the fullest is a board composed of people who:
  • are fully committed to the mission, and understand the role of the board in achieving the mission
  • have the diversity of experience, expertise, networks, relationships and perspectives that are needed for the particular board to advance the organization in achieving its greater vision
  • will work in partnership with the CEO to create and achieve the revenue model for success
  • have leadership potential
  • commit to the legal duties of care, loyalty and obedience
and that the board is organized efficiently and effectively in terms of:
  • board structure: size (not too large), number and duration of meetings
  • committee structure
  • board meeting agendas
  • expectations and accountability of board members
  • leadership succession planning
  • board member identification and recruitment
  • practices, such as terms and term limits
  • board member orientation and education

Critical to effective board governance is board leadership, process and culture. In every case where there were problems, there apparently were failures in all three of these areas. People on boards must be welcome to express themselves and to be heard; differences of opinion must be encouraged. Ultimately decisions must be made, but the best decisions are made once a variety of perspectives are considered.

The most important value must be the integrity of the institution, and the driving purpose must be the mission of the organization and the community it serves. Let the transparency of these scandals and the severity of the consequences serve to move nonprofit board governance forward.