Sam Smith recently entered early retirement and wants to become a director on the board of a nonprofit organization. His motive is to give back to the community where he has prospered. As a first time board member, he can look to some advice from pros in the area, from a recently published article by Stanford's Center Social Innovation (CSI).
Following are my reactions to some of the article's suggestions, hopefully adding important field information. The comments are based on having served on 12 nonprofit boards over several decades and my experiences as a consultant to at least a dozen additional nonprofit boards.
Fall in Love Wisely
This is good advice. It follows the nonprofit dictum that each director needs to be dedicated to the organization's mission. In practice, however, some flexibility is required:
• the availability of choices at the time the search for the position takes place
• the board 's current composition -- example, no board needs six attorneys
• the time and frequency of meetings
• requirements of "get or give" etc.
• the compatibility of he new director with the current CEO -- a fast driving director may not be compatible with an ED, doing a status quo job but lacking in entrepreneurial instincts.
In my opinion, good nonprofit directors may only need to have a modicum of mission dedication, as long as long as he/s can be assured the organization is having positive impacts. For example, a director has joined a board for networking contacts does an outstanding fundraising job. Choosing a nonprofit board is akin to finding a spouse. Everybody looks for the perfect spouse, but in the meantime people get married!
Pick Your Preferred Developmental Stage
Like commercial organizations, the CSI article points out nonprofits range though three stages -- early stage, growth stage and scaling stage. The early stage can be most frustrating for those who have worked in commercial organizations. Board members often are called upon to doing everything, from securing the facility at night to assuming operations responsibility. Management relies on the board for both direction and operational decisions.
More staff support for the board becomes available in the growth stage. Board oversight committees are organized to reflect operational aspects bush as -- building, personnel, budget, program, etc. These can work well until they become redundant, as staff assumes more responsibility. Board meetings can become longer and filled with reports. Board turnover may increase rapidly. Unfortunately, during the growth stage a nonprofit culture can keep this system in place long after it is productive. When this occurs, the board needs to move to a corporate position.
Under a corporate position the board focuses on over-viewing management impacts, strategic planning and policy development. Tactical operational decisions become the responsibility of management and, hopefully, micromanagement is completely abandoned.
The CSI article calls for a third scaling stage: "Organizations that understand the difference between scaling solutions versus scaling the organization engage in collective impact strategies that require developing a strong network. The board relies on connections across sectors and disciplines." Here the board, hopefully, takes leadership through generative "what if" questions to increase the scale of client-based solutions. Mergers and partnerships can take place that should provide better quality client services.
Design for Harmony and Efficiently
Like a business board, the new first time board member has to know that the nonprofit board only has one employment decision -- engaging the chief operating officer. However, any sensitive nonprofit CEO should seek the formal or informal board reactions before changing or engaging the senior management team.
Board Engagement -- Every nonprofit CEO and board chair wants their board members fully engaged. But few talk about the need to have them meaningfully engaged. Since nonprofit directors representing communities and foundations over such a wide spectrum of backgrounds, the CEO and Board Chair need to clearly assess what is meaningful to each director. To some being involved with the details of the annual dinner is meaningful. Hopefully to most others, strategic planning and overview management outcomes are paramount.
"Cultivating the right composition? (The answer) lies in in the venerable idea of the 'the 3 Ws:' work, wisdom & wealth... . [M]embers (should) bring one or two or even three of these assets to the organization. "
Engineer Financial Health
Like the business situation, what constitutes an organization's overhead can be a debate among professional accountants. "Baring field variations, 15 percent of overhead is typical in the nonprofit world and reflects salary levels that are significantly lower than in the for-profits... . "
Most nonprofit directors serve limited terms amounting to anywhere from one to six years, with the vast majority in the four to six year ranges. Sometimes this brief tenure of board members precludes some boards from really focusing on the sustainability issue. While some operating expense, can be drawn from endowment (4-5 percent in recent years) there must be a prudent reserve to assure long-term increases and improvements in client services.
Fundraising should be a joint responsibility between the CEO and board members who are comfortable with the process. At the very least, each board member should feel responsible to provide leads and introductions to potential funding sources.