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developing a nonprofit board

How to Keep Your Board Members Engaged All Year

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Nonprofit Board HelpThere are volumes written on staying engaged with your professional work, how to motivate employees, and communication in the workplace. That’s great for businesses, but how do nonprofits keep volunteer board members engaged in their work? Busy professionals who are donating their time to a cause want to do well in their board service, but they may need a little help. Here are some ways to keep them excited, involved, and effective with nonprofit board work all year round, even if they are remote or only meet quarterly.

Make It Personal

Humans are hard-wired to pay more attention to human faces than any amount of text or audio presented in a meeting. If many of your board members are remote or rarely meet in person, it is crucial to maintain that human element in your communication and meetings.There are a number of ways you can do this. Provide a people directory with everyone’s photo to help new members feel familiar with the other board members. If you have remote meetings, ask everyone to use their video cameras during the meeting. You might be surprised at how much this simple measure does to personalize the experience.

Create even more rapport by developing a buddy or board mentor system. Sometimes just the accountability of knowing even one person will be working with you on specific goals or looking for your attendance at the meeting is enough to get that extra effort from a board member. Additionally, it is a great opportunity for members to learn from each other and discuss how they can advance initiatives. This works especially well at knitting a geographically far-flung board closer together.

Communicate, Communicate, Communicate

Have you ever heard the advertising adage that a person needs seven impressions of your brand before it “sticks” in their mind? Obviously, you don’t want to bother your board members seven times about every initiative, but it is hard to underestimate the value of multiple nudges. Some board members will favor email while others may prefer to keep tabs on goals with your board portal. Regardless of the medium, don’t be shy about sending a variety of updates, reminders, and nudges for key deadlines. The first reminder might catch a board member at a busy time, but the second could allow them to take action on the goal.

It isn’t enough to just communicate regularly, however. It is also helpful to make the communication as specific as possible. Many people will ignore an email to the whole board, but it is much harder to sleep on an email that starts out with their name and has information specific to something that board member is working on at that time. Be sure to keep it balanced between reminders or asks and recognition or celebration. If every time you contact your board members it is to nag them about some initiative, they will quickly learn to dread (and eventually ignore) your communication. Everyone appreciates someone noticing their hard work and small successes. Get to know your board members well enough to know if they’d appreciate a public shout-out or prefer a personal note.

Progress Should Be Visible

Similar to our propensity to react to human faces, people love visually scannable information when possible. There are two big advantages to this. First of all, with publicly visible graphs or charts, it is simple for your busy board members to glance at the dashboard and see how things are trending. You could send a three page report that no one has time to read, or you could provide three visuals that get eyes on them every time.

Second of all, visuals have a wonderful way of “gamefying” board service.Is it halfway to your big event and only a fraction of the tables are sponsored? Time to kick it into high gear. Are you just dollars away from reaching the campaign goal? Every board member wants to be the one that closes the gap. Celebrate progress and ask for help as transparently as possible with a real-time, visual representation of your goals.

Keep It About the Mission

We all know about creating “mission moments” in a meeting to keep board members in touch with the effects of their work. You can take this a step further to increase the connection. Have board members take turns every month reporting on a specific chapter or organization and some interesting results they’ve had in the recent past. Board members also feel more connected to something that they can articulate themselves. Research activities you can do with your board, such as practicing elevator pitches of why they’re invested in the organization, brainstorming sessions on the vision of the nonprofit, or interviewing each other about how they came to the organization and summarizing it in a sentence or two for the board. Not only do activities like these get board members thinking about why they volunteer their time for board service, it also offers great discussion material during meetings about the direction of the organization.

Connection Is Crucial

It can be a huge challenge to keep a group of perhaps spread out, busy, volunteer board members thinking about their board service between meetings. It’s not impossible, though. With some effort around building rapport, making information easily digestible, and motivating for progress, your board can stay a productivity machine all year long.

 

About Boardable:

Boardable is an online board management portal that centralizes communication, document storage, meeting planning, and everything else that goes into running a board of directors.

 

 

How to Get on a Nonprofit Board

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How to Get on a Nonprofit BoardSo you want to join a nonprofit board. Whoa, back up, really? That’s terrific, but can we explore the why before we get to the how? Hopefully you are driven to seek a seat at the table in order to take personal action using your experiences, skills and connections to solve a problem or address a challenge in your community or anywhere else on the planet. Think hunger, homelessness, poverty, a particular health crisis, uneven educational opportunities, unsafe relationships, aftermath of wars, as a start. Let’s begin with the assumption that you are joining others driven by the same degree of passion. If they aren’t . . . that is a topic for another day. You are going to develop an intimate knowledge of how your fellow board members analyze opportunities, how they communicate, what talents they bring to the table, and how you might learn from them, and utilize their connections to expand your own network. These are good things, and you will be bringing your own value adds to share.

Do you know what it means to be a board member for a public charity? Do you understand the fiduciary, fundraising, volunteering and advocacy responsibilities that are expected by law and by the public? Not all boards introduce and onboard with the same degree of clarity, so you need to know what kind of a board and what kind of participant you want to be. There are online resources to learn more and help you answer these questions, and in some communities you will find organizations that offer related workshops for preparing to become a nonprofit board member.

When you join a nonprofit board, you will have motivating ideas of how you can support the organization and even what you might gain by doing so. You may rightfully anticipate the connections you can make to further your ability to put your passions to work with a team of like-minded individuals. Board service can expand your business and community networks, as you learn from others with a variety of experiences that have shaped their attitudes and paths. You may see board participation as a chance to stretch your leadership style in ways that everyday life and work experiences don’t readily offer. You may be hoping for a place to leave legacy footprints, making a purposeful difference where it matters most to you. The right board match can help you achieve these goals.

On some corporate boards members can be compensated for their participation. “Compensation” looks very different and special for nonprofit board members. As a nonprofit board member you are expected to make a financial contribution, beg your friends to donate as well, spend hours (mostly evenings) in meetings, buy tickets and tables to events, and operate often without an exit strategy of when to step away from this “privilege.” If you are not deterred, then thank you! Nonprofit board service can be the most intense, important and satisfying volunteer commitment you can undertake. And quite honestly, there are many, many benefits you should enjoy as a result.

Don’t shy away from the win-win of board service. If you are going to spend that much time, energy and philanthropic dollars, you better get something in return. It can be a warm feeling in your heart, a warm lead to a new customer, or the satisfaction that you actually took action to solve a thorny problem. Go for it.

Now as for how to join a board, please keep in mind that there are a variety of nonprofits just as there are a variety of for-profit businesses. How you proceed to join a “Fortune 500” nonprofit board will be different than the path to joining one that is a startup. The bigger the budget of an organization, the broader its geographic reach, the more “prestigious” the current board, the more likely it is that you will need to be willing to write a big personal check or deliver a sizable donation from your company on a regular basis. You may already be a significant donor. You may already have a large reputation for direct involvement in the organization’s mission or in a related area.  The closer to a Fortune 500 type nonprofit, the more likely it is that you will be head-hunted for the board because nonprofits of this size and scope understand that many others are fishing in the same pond for potential additions. They have determined that it is worth the investment to professionally search for key thought leaders and those who could add cache in some way. If you want to be considered for one of these boards, you likely already know how to go about it.

The path to joining any nonprofit board, but certainly one of a small to mid-sized or startup organization, must start with passion. Ask yourself, “What do I care about; what keeps me up at night?” and then look for organizations working on solutions. If your passion is solving a problem that is halfway around the world, you are honestly less likely to find a board opportunity in your backyard, but you can certainly find ways to donate money or volunteer your time. For example, Google “solving water pollution.” You will find organizations that tell you how to donate, volunteer and advocate to this end. This may never lead to a board position, but you might find your engagement to be equally satisfying.

The closer your interests are to local problem solving, the better the chances of eventual board service.  You want to get to know an organization from the inside as early as possible to confirm that this is a place where you want to invest your time and resources more deeply. Maybe you already have your eye on a local nonprofit. Explore their website and see who is on the board and who is in leadership on staff. You may already have connections so that you can learn more about how the board operates and what the expectations of a member. In the meantime, note any volunteer opportunities posted on the website or reach out to see if there are ways that your skills (marketing, HR, accounting, legal, etc.) could be utilized on a committee or special project. See if there is an event where you could participate in its planning or execution. Ask if there is a need for advocates to speak out or write on behalf of the organization. All these activities will give you a chance to get to know the organization and, equally important, give the board and staff a chance to know you and what you can bring to the table.

If you have the interest but don’t have connections or don’t know where to begin, don’t despair. Read local media with an eye to organizational leadership commenting on issues you care about. Use LinkedIn, Facebook, Instagram and Twitter to see which organizations and people are engaged. See if there is a volunteer connector organization or local affiliate of Points of Light in your area and explore volunteer opportunities. Ask local thought leaders in government, civic organizations, business networking groups, and faith-based institutions for names of nonprofits doing good work and introductions to learn more.

After spending thoughtful time, if you are still interested in joining the organization’s board, let it be known. Usually a conversation with the Executive Director, Board Chair, Governance Committee Chair or a key program officer will get the ball rolling, but it doesn’t guarantee an instant or eventual place at the table. The best boards aren’t just looking for warm bodies with deep pockets, to be crass. The best ones are looking for new additions who are passionate about the mission; can fill particular skills and knowledge gaps around the table; bring diversity of opinions, backgrounds and experiences; understand what their role will be; recognize they will be expected to make financial contributions and introductions to others; anticipate that there will be personal and professional fulfillment; and are ready to roll up their sleeves and make a difference.

Not every date leads to a permanent lasting relationship, but good things will always come from getting to know key nonprofits and the boards that lead them. Enjoy the search for a great board to join. It’s out there, and the benefits are going to be as personally rewarding for you as they will be to the nonprofit.

Improve Your Nonprofit’s Leadership: 4 Top Tips

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Nonprofit Leadership TipsLeadership plays a crucial role in the success of any nonprofit. While your board and executive director might not typically be on the very front lines of fundraising, these bodies are the ones that create the strategic plan for that initiative and greenlight any funding put toward it. Both are essential tasks.

However, from tension within nonprofit boards to leadership that is disengaged from their organization’s work, sometimes sub-par nonprofit leadership is an organization’s biggest complication.

Just consider the Survey on Leadership and Management in the Nonprofit Sector conducted by Stanford University’s graduate school of business. When given a list of 11 options, 38% of respondents noted weak or ineffective management as a top challenge in the nonprofit sector as a whole.

If that sounds like your organization, it’s time to make a concentrated effort to improve your nonprofit’s leadership. We’re going to explore the following strategies to help you do so:

  • Outline roles and expectations for each leader clearly.
  • Cultivate a culture of philanthropy.
  • Bring in professional help.
  • Recruit quality leadership from the start.

Strong leadership will have a domino effect on your organization, motivating every team member of your nonprofit to perform at their best. Continue reading to learn how to improve your nonprofit’s leadership today!

Outline roles and expectations for each leader clearly.

Consider how your organization would fare without a nonprofit strategic plan in place. While you might be able to easily navigate short-term fundraising efforts, any longer-term efforts (such as building fundraising capacity or even projecting your annual fund needs) would be significantly more difficult without a 3-5 year plan in place.

It’s a very similar scenario for your leadership! Without clearly outlined operating rules, your leadership’s “strategic plan,” successfully completing their job is significantly more difficult.

This doesn’t just mean copying standard nonprofit bylaws from a digital template and calling it a day. Rather, in addition to bylaws tailored to your organization, you should outline clear roles and expectations for each leader on paper.

What are the expectations of a board member? What are the expectations of executive directors? Answer those questions clearly and concisely and make sure every leader is aware of it.

Just like your bylaws, revisit these documents regularly to make sure they’re still relevant for your organization and leadership.

Cultivate a culture of philanthropy.

When discussing nonprofit leadership, there are generally two facets considered: executive leadership and board members.

While the former (directors and other salaried leaders)  play hands-on roles in your organization by mere definition of their role, the latter (board members) can often be found in distant roles in many organizations.

Think of it like this: your executive directors coordinate the planning of fundraising activities, while board members simply sign off on the funds needed to hold the initiative. Of course, the exact level of board involvement will vary greatly from one organization to another. The main point is that board members typically have their own very separate lives and careers that occupy most of their time.

Whether filling a less-present role or not, it’s crucial that all members of your leadership feel connected to your organization and cause. They need to feel the philanthropic spirit that fuels your cause because that’s what will motivate them to fulfill their role to the highest degree.

There are a few different ways to cultivate this culture of philanthropy in your leadership:

  • Encourage leaders to participate in fundraising efforts. This could be as simple as writing giver thank-yous as a capacity-building task after a major campaign.
  • Set an expectation of board member fundraising. During each fundraiser, your board members should be making gifts and reaching out to their networks to do the same.
  • Hold leadership retreats. Bring your leaders together for a weekend of training on fundraising best practices. Bonus points for adding a volunteer aspect to the retreat and incorporating nonprofit-branded t-shirts into the mix!

Regardless of how you get there, it’s important that each leader in your midst pitches in to your cause.

Bring in professional help.

Sometimes, improving your nonprofit’s leadership is simply too large a task to handle within your team. It makes sense— evaluating where your leadership is failing and instructing your peers on how to improve is a sensitive task.

If that sounds like your organization, consider bringing on a nonprofit consultant to help navigate the improvements. Consulting firms offer a variety of leadership-strengthening services, including conducting leadership learning events and embedding expert staffers in your team to provide in-person, daily training.

An outside perspective will notice issues in your leadership that you might not notice yourself. After all, it’s hard to see all of the details of a picture when you’re standing too close to it! Plus, consultants can help guide critical but necessary conversations with your organization’s leaders.

Learn more about hiring a fundraising consultant, and the associated fees, through this guide by Averill Fundraising Solutions.

Recruit quality leadership from the start.

Improving your nonprofit’s leadership doesn’t always refer to improving those already serving in your nonprofit’s highest ranks. It could also mean hiring new leaders to enhance (or replace) those already in position. Or, it could mean building your leadership from the ground up if you haven’t had much of a formal body before!

Regardless of why you’re hiring new leaders, it’s crucial that you recruit quality team members from the start. Evaluate each board member and director you hire against specific criteria most important to your organization.

For board members, consider the following criteria:

  • Is the candidate considered a thought leader, or a “go-to” expert in their industry or your greater community?
  • Does the candidate have an impressive social following, specifically on social networks?
  • Do they have experience relevant to your nonprofit’s cause, or nonprofits in general?
  • Do their interests align with your organization’s values?

For executive directors, consider:

  • Does the candidate have stellar communication skills?
  • Do they have extensive knowledge of fundraising and the nonprofit sector overall?
  • Do they have technical skills specific to your organization’s fundraising efforts?
  • Are they able to keep a level head under pressure?
  • Do they have a long-term vision for your nonprofit that aligns with yours?

This is another task where it might be helpful to bring in a nonprofit consultant. Some consulting firms offer executive search services, through which they recruit impressive executive leaders that fit your organization’s existing culture. Further, these consultants can help create a strategy for successfully onboarding new leaders! Check out this guide to learn more about nonprofit fundraising consultants and strategy development experts.

Conclusion 

Having strong leaders at the helm of your nonprofit is crucial for future success. Luckily, improving your leadership doesn’t have to be a difficult task!

Consider incorporating any of the above strategies and watch your leadership become more engaged, more philanthropic, and more helpful participants in your organization.

Conflict on the Board of Directors? Four Tips to Defuse Tension

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Nonprofit Board Conflict ResolutionMembers of a nonprofit board of directors are wonderful people. They are often accomplished professionals, visionary leaders, and passionate supporters of the cause. Interestingly, these characteristics of excellent directors can also set the stage for tension in the boardroom. Let’s look at four tips for defusing any conflicts.

Clearly define roles and rules of conduct.

The most effective boards and meetings have one thing in common: clear expectations. Board conflict prevention starts with everyone knowing who is in charge and what is expected. I encourage boards to actually make a board member commitment “contract” that spells out the roles and responsibilities of being a director. There should be a similar description for each of the board officers, too. That way, no one is confused about who should be reporting on which areas and who is responsible for certain decisions. Make sure there are also procedures spelled out for meeting discussions and votes. If everyone is aware of the rules ahead of time, it is much easier to address conflict later.

Be hard on ideas, not people.

This is a great mantra I learned from our board governance coach, Kim Donahue. It’s all about cultivating a culture that can pick apart ideas as needed without making it personal. This is a fairly intuitive way to behave, but reminding board members about it in a fun informational session can go a long way towards boardroom decorum. Additionally, make sure that your board is building in enough social time to grow real trust and respect between members. It is much easier to express an opposing view if you believe that your fellow board directors all have the organization’s best interest in mind.

Enlist the troublemakers.

I use the word “troublemakers” loosely here to mean the people who might be more inclined to dominate a discussion or always be the first to offer their opinion. Sometimes this happens organically as other directors look to a few strong leaders to see how they feel about an issue before weighing in. If you find your meetings always revolving around the opinions of one person, elist this person to lower tension in the boardroom. Try pulling them aside and saying something like, “Brenda, everyone values your point of view so much. I wonder if we could try an experiment in this meeting. I really want some feedback from the others on this agenda item, so it would be interesting to see what would happen if you withheld your ideas for a minute to see what they come up with.” Win the more opinionated board members over to your side and you might find that the people who were previously a challenge become the peacekeepers.

While some dissent is healthy, everyone needs to come together after a vote.

 Disagreement is a part of discussion, but everyone should understand that the vote on the motion should be the end of that discussion. The board will vote yes or no, and all board members should know that is the time to accept the decision of the board. This can sometimes be difficult for board members who disagree. Consensus means that even though I may disagree, I can support this decision because the majority of board members believe it is the right thing to do. It is not a bad idea to remind board members that the decision of the board should be supported by everyone in the room. Being considerate of dissenting opinions will go a long way toward resolving any differences.

Conflict in the boardroom can take time to resolve.

Don’t be discouraged if it seems like certain disagreements keep flaring up over and over. There will be times that people simply don’t like each other that much, and that’s okay. As long as you have started implementing the four steps above, you will be on the way to reining in any disputes. Don’t be afraid to periodically take a step back and ask board members what is working and what isn’t. With some careful thought, board feedback, and proactive practices, your board will be on the right track.

 

About Boardable:

Boardable is an online board management portal that centralizes communication, document storage, meeting planning, and everything else that goes into running a board of directors. Founded in 2016 by nonprofit leaders and founders, Boardable has a mission to improve board engagement for nonprofits. Boardable is based in Indianapolis, Indiana.

Nonprofit Board Roles and Responsibilities

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Nonprofit Board RolesYour boss just asked if you’d be willing to be nominated for a seat on the board of the local YMCA. You are flattered to be asked. You enjoy working out at the Y. You think this is great – maybe board members get to attend classes for free! You tell your boss you are interested, and a meeting is set up with the YMCA executive director.

As the meeting draws closer you realize you are unsure about what it means to be a board member. What exactly are the roles and responsibilities of a board member?

Your first responsibility is to find out the expectations of a board member and ensure you can meet those expectations. Learn all you can about the organization. Are their mission and values consistent with yours, such that you will become a passionate advocate for the organization? As a board member you’ll be asked to make your service to this organization your priority for the next several years.

You have a responsibility to give them your time, talent and treasure, the three “T’s.” What is the time commitment of a board member? You have a responsibility to prepare for and attend all board meetings. In addition to board meetings, both in person and remotely via conference calls, a board member is expected to participate in committee meetings/calls. There may also be events and community activities that board members are asked to attend. Understanding the time commitment prior to agreeing to serve is important. If a board member does not fully participate, they let their fellow board members and the organization down.

Giving your talent is your next responsibility. A well-planned board recruitment strategy results in a diversified board with skillsets needed to fulfill the mission of the organization. That likely means board members with finance, investing, communications, marketing, legal, human resource, strategic planning, event planning, fundraising, technology and/or programming expertise are needed at various times. When you meet with the organization’s director prior to agreeing to be nominated, determine if your expertise fits with a skillset needed on the board.

The last “T” represents your treasure or the financial commitment that comes with serving on the board. Every non-profit expects the board to take a leadership role in fundraising. Asking others to give without setting the example is difficult and may make the potential donor question why they should give if the board is not giving. Some boards have a minimum donation they ask from all board members. Others may ask each board member to give to their personal capacity.

So: you’ve met with the executive director, you know you can meet the expectations and enthusiastically agree to serve. Your first meeting is approaching, and in reviewing the pre-meeting materials, you feel a bit overwhelmed and start to doubt yourself. The financial statements look like they are in a foreign language. There is an investment presentation included that is confusing. The agenda includes program topics you were not even aware were part of the organization’s offerings. Don’t worry there is a board orientation before your first meeting. And you have been assigned a mentor who has requested a call prior to the meeting.

Set up a time to speak with your mentor. They will help you navigate the board meeting and help you feel comfortable. Also, you can ask them questions prior to meeting that you might be afraid to ask during the meeting.

Your First Meeting

Prior to your first meeting review all the materials provided in advance. Ask your mentor or the executive director any questions. Attend the orientation where you will likely hear about the history of the organization, review the financial statements, be provided with key documents such as the by-laws and key policy statements, meet staff and hear about which areas they are responsible for, and meet the officers of the board. The officers may explain the committee structure and their responsibilities. They may invite you sit in on the committees so you can decide which committees you would like to serve on. Or they may appoint you to a committee that fits your skillset.

Hopefully during the orientation, they will explain your roles and responsibilities. The primary legal responsibility of every board member is referred to as “fiduciary responsibility.” A board member should never do anything this or may be perceived as violating fiduciary responsibility or duty. It is your responsibility as a board member to serve as a fiduciary of the organization to ensure to the best of your ability its long-term viability.

The Cornell Law School Legal Information Institute website (http://www.law.cornell.edu/wex/fiduciary_duty) defines fiduciary duty as follows:

A fiduciary duty is a legal duty to act solely in another party’s interest. Parties owing this duty are called fiduciaries. The individuals to whom they owe a duty are called principals. Fiduciaries may not profit from their relationship with their principals unless they have the principals’ express informed consent. They also have a duty to avoid any conflicts of interest between themselves and their principals or between their principals and the fiduciaries’ other clients. A fiduciary duty is the strictest duty of care recognized by the US legal system.

In your situation as a board member, you are a fiduciary for the organization who is the principal in the above definition. Whenever you are acting as a board member, you should ask yourself if you are acting solely for the benefit of the organization.

Most well-run organizations conduct their meetings in accordance with parliamentary procedure outlined in The Eleventh Edition of Robert’s Rules of Order Newly Revised. Often an organization’s by-laws specify that meetings and conventions be conducted in accordance with the latest edition of Robert’s Rules of Order. Prior to your first meeting, familiarize yourself with parliamentary procedure.

Familiarity with the basic parliamentary rules for meetings will make any new board member more comfortable in making motions, understanding when a “second” is required for a motion, understanding the rules of debate, and knowing how to end them by “calling for the question,” etc. Sounds like a foreign language, but once you understand the basics as outlined in the above short book, you will understand how to take part in the meetings more effectively.

Staff vs Board Member Responsibilities

Strong committee and board performance results from a partnership between staff and volunteer board members. Effective organizations have a clear understanding of their respective roles as they move the organization forward. To be clear, the only staff member who reports directly to the board is the executive director.

Generally, the board is responsible for hiring the executive director, providing feedback to the executive director, communicating expectations, conducting annual personnel evaluations, and rewarding their performance. When external issues arise, the board has the role of analyzing the situation and working with the executive director to handle public relations and respond as one voice supporting the executive director.

The key to success in the leadership team of the executive director and the board is the ability to understand the expectations of each other and to communicate frequently. Joint responsibilities include establishing the priorities of the organization based on the overall strategic plan. They also include defining the who, what, when, where and how’s of execution of the priorities. Jointly evaluating the activities and results is also important. Was the latest project worth the effort?

The best way to build relationships is to spend time together, even if it is telephonically. No surprises builds trust. Things will not always go as planned, but if the board member is kept informed, both parties can use their specialized knowledge to resolve issues together.

Volunteers have much to learn from staff, and staff have much to learn from volunteers. Each is in their position because of their specialized experience, knowledge, and skills. Many board members have experiences gained in the for-profit world that are applicable in the not-for-profit world. However, board members need to understand that they are not the CEO/CFO or chief anything of the non-profit and that the organization’s staff are not their staff. Mutual respect is critical for a successful board and staff partnership. Both groups are passionate about the mission of the organization, and only by working together can they fulfill the mission. The following chart clarifies board vs staff responsibilities:

Board Responsibilities

Staff Responsibilities
Manage the strategic
decision-making process		 Provide information to assist in
the decision-making process
Review data Gather, analyze and present data
Set priorities and establishes
goals and objectives		 Develop action plans to implement
goals and objectives
Establish relationships and seek
support from external stakeholders
such as donors and related
organizations		 Provide research and document results
of those solicitations and relationships
Evaluate risk and review policies
and procedures for compliance
with legal and regulatory
requirements		 Establish procedures and systems
for carrying out activities
Approve budgets Recommend allocation of resources
Monitor progress and quality of
programmatic and administrative
support activities		 Direct day-to-day operations
Recruit, motivate, and thank volunteers Supervise staff and volunteers
Establish criteria for measuring
the effectiveness and efficiency
of the activities		 Present data and recommend
revisions to programming

Remember, your responsibility as a board member is to help set the strategic direction of the organization and oversee the financial results and controls—not to manage day-to-day operations. Your role is to develop the strategy, policies and procedures for the staff to execute. Stay out of the weeds and focus on the big picture and mission of the organization. Now go forth and serve, moving your organization forward.

Nonprofit Board Member Responsibilities

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Nonprofit Board Responsibilities The real challenge for directors of nonprofit boards isn’t regulatory compliance—it’s high performance. Most who serve on a nonprofit board have a passion for the organization’s mission, and they show up filled with good intentions. Too often, however, they don’t have clearly defined responsibilities, or directors disagree with management about what those responsibilities should be, or someone defined these duties long ago, and they no longer seem relevant. Now, more than ever, directors are taking their responsibilities seriously, speaking up, and striving for results; but in many cases, the evolving relationship between the organization’s management and the board has not found the right symmetry. Finding it will depend on everyone systematically examining how board members can have both high impact and high involvement.

The key to better board performance lies in the working relationships between directors and executives, in the dynamics of board interaction, and in the competence, integrity, and constructive involvement of individual members. Most people understand what boards should be: sources of challenge and inquiry that add value without meddling—champions of the organization that make CEOs more effective but not all-powerful. The high-performance board, like any high-performance team, is competent, coordinated, cohesive, and focused. Such entities do not simply evolve, however. An exacting blueprint—a plan for both high impact and high involvement must guide their construction.

Nonprofit Board Responsibilities

This model addresses how directors and executives need to view nonprofit directors’ involvement and their role in overall effectiveness. Sometimes boards can enjoy effectiveness, even with low involvement. Boards that have their fingers in when they shouldn’t will be only minimally more effective than boards that stay out of everything. The key lies in appropriateness of involvement.

When involvement is inappropriately low, effectiveness will be low, too. Organizations in the Passive Board quadrant experience minimal board participation in decision-making. These directors also have limited accountability among themselves and find their primary duty to be ratifying the CEO’s decisions.

Passive boards meet at scheduled times but seldom schedule anything outside of those meetings. They overlook or ignore opportunities to meet with internal and external auditors, general counsel, or key managers. They don’t seek active participation in strategy formulation or attend to the leadership pipeline. Members fail to make themselves available to the executives in the company, so the experience and expertise of the directors languishes

Boards operating in the Laissez-faire quadrant manage to enjoy some effectiveness because they have learned to be involved on critical issues. For instance, they may devote time and attention to strategy formulation but then leave implementation to the company’s executives. Directors oversee CEO succession planning but trust most of the rest of the leadership pipeline to management. If the company has hired strong executives, directors don’t need much more engagement than the Laissez-faire Board offers.

Directors on these kinds of boards maintain credibility with stakeholders because they know the difference between the important and the unimportant and show up for the important. The board certifies that the business is managed properly and that the CEO meets the board’s requirements. Many CEOs have come to appreciate and desire a Laissez-faire Board, even though it’s not the most effective of the four options.

The expression among many executives is that directors should be “Noses in, fingers out.” In other words, these executives want directors who know what goes on but who stay out of the day-to-day management of the company.

Fingers-In Boards can exist in any situation, but they tend to surface during crisis. The board becomes deeply involved in making key decisions about the company and holds frequent, intense meetings. They intrude inappropriately, compromising both morale and effectiveness. They bother people. Frequently the Fingers-In Board focuses on tactics, not strategy. They can waste an entire meeting discussing a new label or brand—something that even the VP of marketing wouldn’t ordinarily spend time on.

These kinds of directors have been known to bypass the CEO and give direction to employees. They want deep involvement with decisions. They convene frequently, often without a clear purpose in mind. They lack effectiveness, primarily because they squander their time and energy on the non-critical instead of zeroing in on the critical efforts they should be addressing.

Directors on Stellar Boards serve as the CEO’s partners. They provide insight, advice, and support on key decisions. They recognize their responsibilities for overseeing CEO and company performance. Board members conduct substantive discussions on key issues and actively define their roles and boundaries. They fill gaps in executives’ experience and expertise, so they serve as a constant source of advice and wisdom.

When Stellar Boards meet, their agendas limit presentation time and maximize discussion time. Directors and executives take advantage of informal interaction among directors. Board members are honest yet constructive. They stand ready to ask questions, challenge leadership, and oversee CEO and organizational performance. Directors tell executives what they need to know and hold them accountable for results. Board members also actively seek out other directors’ views and contributions. They prioritize well and spend appropriate time on important issues.

Top performance on nonprofit boards starts with strong leadership—persuasive management leadership and influential board leadership. Too often, however, directors assume the role of sponges who simply absorb that which management puts in front of them. One of the key responsibilities of each director involves asking questions and showing independent thinking. These questions should stimulate dialogue and guide the process of making the implicit explicit—of making knowledge pragmatic advice.

To do that, board members need to receive the agenda and related materials in time to review them prior to meetings. During the meeting, board members should request and encourage discussion, not presentations. Between scheduled meetings, management should keep directors informed of major changes and important issues.

The next major leadership duty is to move the discussion to decisions—not necessarily consensus. The discussion should uncover all kinds of differing points of view, but ultimately the board needs to ask, “How will management use these insights to make necessary changes?”
Active, compliant boards and executives no longer offer organizations enough. Companies need and demand stellar performance from both individual contributors and the board as a whole.

Risk and Reward Often Arrive Simultaneously for Nonprofit Boards

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Tips for Nonprofit BoardThe phrase “black swan” comes from 2nd-century Roman poet Juvenal who described “a rare bird in the lands and very much like a black swan.” The poet and most others assumed that black swans didn’t exist. They were wrong. Today, we use the term as a metaphor for the fragility of any system of thought that can come undone once we disprove a set of assumptions.

Expanding on Nassim Nicholas Taleb’s theory, we now explain things as black swans if they are hard-to-predict, rare events that don’t fit our expectations. Taleb regarded almost all major scientific discoveries, historical events, and artistic accomplishments as “black swans”—undirected and unpredicted. He was wrong, too.

Nonprofit boards have to do better. Organizations count on them to recognize that black swans exist and to identify them before the competition does. To do that, directors must overcome the psychological biases that blind them to uncertainty and a rare event’s potential risk. Traditional enterprise risk management (ERM) processes do not address key assumptions on which boards base the organization’s strategy and operating model. Nor do these conventional approaches help directors determine the impact and likelihood of potential risks in order to prioritize scarce resources. Too often boardroom discussions involve an examination of past performance, which can limit insights about unexpected and rare risks. Instead, these discussions should address the changing landscape, customer demands, and innovation.

Who’s Going to Try to Kill Us Today?

In 1983, Motorola introduced the world’s first cell phone, the DynaTAC 800x. In 1987, Nokia introduced its first mobile phone, the “Mobira Cityman 900.”  No one was paying attention to Apple, but after the company’s first smartphone in 2005, no one could ignore them. What were once large and bulky luxury items became small, compact devices we can’t live without. In fact, by 2018, 95% of Americans owned a cell phone of some kind, and 77% of those were smartphones. Directors at Nokia and Motorola probably thought of Apple as a computer company, as we all did. Apple’s application for a patent should have mobilized those making mobile phones to suspect a black swan might be lurking, but it didn’t because directors didn’t have “situational awareness.”

In general, situational awareness involves three segments: perception of the elements in the environment, comprehension of the situation, and projection of future status.  Although the term itself is fairly recent, the concept has roots in military theory and appears in Sun Tzu’s The Art of War and in World War I records, where decision-makers recognized it as a crucial skill for crews in military aircraft. In a nonprofit boardroom, situational awareness means directors should be aware of their own biases that stem from their past experiences and personal, yet limited perspectives. Only then can they ask, “In today’s climate, what business are we really in?” That will lead them to ask, “What are we doing proactively to listen to those we serve and to respond to the direction our mission is taking us?”

The landscape in nonprofit organizations changes a bit differently from how it does in for profits—with more layers of complexity and complications. First, like their for-profit counterparts, directors of nonprofit boards need to protect themselves against disastrous outcomes that could threaten their survival. But they must go a step further—to consider how these risks may affect their mission, especially when that means guarding against potential liabilities from operating risky programs such as children’s summer camps.

Second, as nonprofits consider alternative ways to address their missions, they may find that those options that promise the greatest rewards also involve greater risk. In these situations, the strategic balancing of risks and benefits allows organizations to have the greatest impact on their missions. Since nonfinancial impacts of financial decisions often matter more to nonprofits than they do to for-profit companies, financial decision-making can prove more complicated for the nonprofits.  Therefore, nonprofit directors must weigh combinations of risk and reward more deliberately.

What Will Those We Serve Need Tomorrow?

Too many boards focus on last year or last quarter. They need to quit looking in the rearview mirror and start inviting other directors to view the company through a kaleidoscope to see multiple possible futures and to develop a mindset devoted to continuous learning.   Certainly, effective directors need to be students of history, but boards that keep their eyes on the future realize they need a soothsayer—a human crystal ball who can look into the future to identify where and when the opportunities and risks will appear. Many directors fail this future-oriented litmus test, however.

For example, merger and acquisition (M&A) activity within the healthcare industry shows no sign of diminishing, with nearly all indicators pointing to continued consolidation, according to a 2019 Health Leaders Mergers, Acquisitions, and Partnerships Survey. The fundamental need for greater scale, geographic coverage, and increased integration remains unchanged for providers, and this will sustain M&A activity for years to come.

Nonprofit directors that don’t take a strategic approach—one that carefully balances risk and reward—to an M & A deal risk creating unintended consequences. That’s what happened in Maine.

Beginning in January 2019, MaineHealth became a single nonprofit entity with nearly 19,000 employees and more than $3 billion in annual revenue. MaineHealth joined a long list of hospitals that have merged to form large healthcare systems. According to the American Hospital Association, of the more than 5,500 hospitals in the United States, nearly 60% are part of a health care system. In many cases, a single board of trustees governs the large systems. From a purely reward point of view, successful large healthcare systems can reach economies of scale, share resources, reduce cost, and leverage their increased revenue to attract physicians and purchase the latest medical technology.

From a risk-management standpoint, however, the news isn’t all good, with rural hospitals facing the greatest challenges. Since 2010, The Cecil G. Sheps Center for Health Service Research has recorded 87 rural hospital closures in more than twenty states. According to one study, more than 600 additional hospitals in 42 states are vulnerable to closing, with 12 million patients losing direct access to care and about 99,000 jobs at stake. In short, nonprofit deals are more complicated because they must consider keep a keen focus on how risk and reward march in lockstep precision with the organization’s mission

When leaders acquire a company, of course they believe the deal will work. If they felt otherwise, they wouldn’t have gone forward. Human beings have a psychological tendency to justify our decisions, making it difficult to see the signs that we made a mistake. Thus, a leader who drove an M & A deal is usually more hesitant to pull the plug than someone who didn’t make the acquisition in the first place.

In general, boards of nonprofit health care organizations have done a good job of asking what patients will want and need in the future. They realized years ago that a hospital’s best customers don’t want to be patients in the hospital. So, they started offering more out-patient options, including same-day surgery centers. They asked themselves the question their patients wanted them to ask, “What can a health care organization do to keep people from becoming patients?”

Mission-driven boards address the health, education, and spiritual needs of people, look to improve the quality of life, champion the arts, or seek social change. Additionally, they consider how to satisfy the ever more demanding accountability requirements of funders, donors, and government overseers. Consequently, directors often find themselves trying to develop quantitative measures of their mission-related impacts.

Unfortunately, too many directors focus too much on reviewing data and setting it aside until it’s time to review the data again—usually within a terribly short interval. The value isn’t in tracking the metrics, however. The real value in metrics is the customer-focused discussion they drive, the decisions directors make, and the actions they take as a result of the discussions. The process starts with the right questions, which lead to an understanding of which data are important and which measurements they should really pay attention to. By doing this, they spot customer patterns before the trends cease being trends. Learning from the data can also help them engage in scenario planning to be to speculate about the unknown.

Adaptive Governance

Adaptive governance describes an emergent form of environmental governance that scholars and practitioners increasingly call upon to coordinate resource management regimes in the face of the complexity and uncertainty associated with rapid environmental change. Nonprofit directors apply the principles of adaptive governance when they actively involve directors in setting and maintaining a boardroom culture that involves open discussion and constructive challenge. These directors devote ample time on board agendas to looking at the future because failure to respond appropriately to disruptive situations can make the difference between growth and obsolescence. These directors demonstrate an openness to alternative, nontraditional viewpoints and a willingness to question assumptions. They recognize that some level of tension is acceptable and insist that management share bad news early. Their bias for continuous improvement encourages them to engage in honest self-reflection.

Directors committed to adaptive governance understand that they need to encourage innovation and learning, set ethical standards, and promote accountability, especially with the CEO. Most importantly, these directors take a proactive approach to the oversight of culture to drive sustained success and long-term value creation.

What do we mean by “culture”?  Legends tend to have differing adaptations; the truth has no versions. Both influence—either intentionally or unintentionally—the cultures we build. Corporate culture, the way we do things around here, the pattern of shared assumptions that the group has adopted and adapted, develops in much the same way as legends and traditions do.

Organizations learn as they solve their problems and adjust to the world around them. When something works well over time, and leaders consider it valid, members of the organization begin to teach the behavior or idea to new people. Through this process, new directors find out what those around them perceive, think, and feel about issues that touch the organization.

Excellent decisions serve as the coinage of the nonprofit realm. When directors consistently make good decisions, little else matters; when they make bad decisions, nothing else matters. A pivotal decision—or, more likely, a series of pivotal decisions—literally separates the organizations that flourish from those that flounder. Every success, mistake, opportunity seized, or threat mitigated started with a decision.

Success doesn’t happen without decisions, but neither do mistakes, except when the decision involves indecision—a kind of decision not to decide. When directors play in the most competitive leagues, they will have mishaps and missteps, but indecision doesn’t have to be among them. However, the culture of too many organizations conspires against success. Decisions—good, bad, or decent—get stuck in the entrails of the organization, much as flotsam and jetsam accumulates on an untended beach. Boards create their own bottlenecks and harm themselves in ways that the competition never could. They become their own strongest competitors—the enemy within—the entity that creates risk rather than mitigating it.

Effective directors set the tone at the top and lead the never-ending journey to discover new and better ways to solve problems and adapt to the world around them. For example, when discussing risk, directors often home in on data breaches because this sort of risk can quickly move from bad news to full-blown catastrophes. Addressing a data breach should be done quickly, honestly, and responsibly. Frequently, however, companies minimize the seriousness, explain what happened but fail to apologize, or treat it as merely a public relations problem. Boards spend time discussing cyber risk, but a cyber breach won’t usually put them out of business. A failure to learn from mistakes and make the requisite changes can, however.

Nonprofit directors tend to underestimate the importance of a change-oriented culture when they should see it as one of their top governance imperatives. Culture inextricably links strategy and risk, and it can be an organization’s biggest asset or its greatest liability. Yet, recent studies indicate that more than 80% of directors don’t have a firm grasp of the culture that exists in the organizations they serve. Most directors would be hard-pressed to define corporate culture, and those that can don’t always know what their role should be in influencing it.

Successful directors realize that, in the long run, how a company does business is as important as short-term gains. Now, more than ever, directors are taking their responsibilities seriously, speaking up, and striving for results; but in many cases, the evolving relationship between the company’s executives and the board has not found the right symmetry. Both the company and the board benefit when directors take a more active role in influencing culture.

Conclusion 

Up until now, for various reasons, nonprofit boards have not taken a sufficiently robust approach to risk management. While this tactic has seemed sensible because it minimized risk, it also reduced the rewards of growing and changing.

In his book I Really Didn’t Say Everything I Said, baseball’s great philosopher, Yoggi Berra, cautioned us that we can’t know the future because it “ain’t what it used to be.” Mr. Berra was correct. Directors can’t know the future, yet the organizations they serve depend on them to do just that—and the future arrives more quickly than it used to. Today, directors have learned that opportunity and risk often arrive at the party concurrently—and instantaneously, without warning.

Directors need to strengthen the aspects of board culture that help the organization identify and respond to disruptive risks—to make the board’s culture a corporate asset. When they do that, they will support the management team, even while engaging in uncomfortable conversations. They see tension as a catalyst that motivates deeper engagement. Then, they will be able to welcome both opportunity and risk.

The future will remain uncertain and unstable for nonprofit decision-makers—and we probably won’s see these unpredictable situations diminishing, either. All indicators point to continued change and limited options for preserving the status quo. An expanded capacity for strategic risk management and a willingness to consistently and continuously balance risk with reward will serve nonprofits well, however.

How Can Nonprofit Boards Develop a Merger Mindset?

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Nonprofit Board Merger Mindset

When companies merge or acquire, stakeholders rightly expect the whole to become greater than the sum of its parts. Unfortunately, this happens less than half the time. Not only does one plus one not equal three; too often mergers and acquisitions result in losses. A once exceptional organization can quickly take a turn toward mediocrity, or worse.

Study after study puts the failure rate of M&A between 70% and 90%. Many researchers have tried to explain these abysmal results, usually by analyzing the characteristics of deals that worked and those that didn’t. That’s a start, but it only informs decision-makers about the features of the deals that caused or prevented failures. Statistics don’t truly get to the core of the cause–effect relationships among planning, evaluating, and integrating—the essential traits for successful M&A.

Deciding whether to do the deal presents the first round of tough calls, decisions about integration, the second. In the heat of finalizing the deal, board members often leave integration until the last minute or give it short shrift. Board members need clarity about what they should consider when they attempt to align two disparate organizational environments, histories, and cultures. When leaders make the decision to merge or acquire, board members know the stakes are high, and they also understand that they can set the stage for success. Too often, however, these same board members inadvertently invite dilemmas and disasters to come from the wings to take a bow in the spotlight.

Why does this happen? Because the same board members who influenced the initial decision to merge or acquire stop making the necessary tough calls to make the deal work. Realizing the dire consequences that can result, why would sane board members choose to place themselves and their companies in the line of fire?

Why Do a Deal?

When an organization considers an M&A deal, board members need well-honed judgment, courage, vast experience, and unimpeachable integrity to make the tough calls associated with any growth initiative. Unfortunately, judging from the number of failed deals, most decision makers lack one or more of these four constructs. They also need, but frequently fail to obtain, a clear answer to the question, “Why do we want to do this deal?”

The answer to this question starts with the leadership team and the board agreeing about why they want the deal, but then things get more complicated. The senior team, who must make the deal work, need to know why, and they need to be enthusiastic about the answer. Then, members of this team need to test their conclusions with key groups and stakeholders. Otherwise, everyone involved will lose the energy needed to make the deal work. In these situations, companies end up with a plethora of props but no performance.

When asking the reasons to do a deal, “We want to get bigger”—the response that often fuels the passion for a deal in the first place—is not the right answer. These reasons are better:

  • Our reputation in the industry will skyrocket.
  • We will attract top talent.
  • Customers will benefit.
  • We will enjoy better financial results.
  • A combined organization will better position us to compete.
  • Operational synergies become possible.

When an industry consolidates, board members wonder whether they are missing out by not acquiring or merging. These emotional and often unconscious motivations tug at decision makers, often relentlessly. To validate their emotions, leadership teams often conduct studies, analyze data, and hire consulting firms to validate their theses. Data from this kind of research can build confidence in the future success of the deal, but ultimately, clear benefits like these should surface, too:

  • A stronger brand
  • More customers
  • Improved speed to market
  • Increased revenue and margins
  • A bigger, stronger organization uniquely positioned for growth
  • The avoidance of costly mistakes that could tarnish the brand

The desire to amass data to authenticate gut feelings often serves as a powerful motivator—even more so because people don’t admit why they want the data. They feel the urge to believe, feel, and act in ways that others also believe, feel, and act. Board members tend to be smart people—smart but also emotional.  Their emotions guide them, but frequently they fail to analyze or talk about their emotional reactions—all the while hoping that logic will prevail.

Board members who possess a Merger Mindset balance logic with insight. They have a clear read on how others are responding or likely to respond. They react positively to change, control their own fears, and try to mitigate the negative reactions of others.  We can deny the emotional aspects of a deal, laugh at them, or ignore them, but these reactions create the path to perdition—not to good deals.

What Makes a Nonprofit Deal Different?

And what makes a nonprofit deal work well? The Chicago Nonprofit Merger Research Project wanted to know, so they analyzed twenty-five nonprofit mergers that occurred in the Chicago area between 2004 and 2014

When deals failed, the researchers blamed a lack of strategic intent. That means that too many organizations lacked clarity about why they wanted to do a deal. Instead of pursuing a merger based on opportunities to grow the company, leverage their competitive advantage, or offer more and better service, they responded to some sort of force, like the retirement of a CEO or some form of failure avoidance

In contrast, the researchers also uncovered several thoughtful, well-planned, and strategically-driven deals that resulted in more services and greater growth. They noted that the successful merger of mission-based organizations resulted in the expansion of their impact, which they advised should be the goal of all nonprofit organizations and should provide incentives for boards to explore mergers as a strategic option.

For instance, in 2013, United Cerebral Palsy of Greater Chicago merged with Seguin Services, creating UCP Seguin Chicago. The two shared a common mission of service to the disabled. Combining their separate competencies resulted in robust growth in both revenues and services.

Similarly, the 2015 merger of three Chicago area hospice providers created the largest hospice provider in Illinois, JourneyCare. The three geographically neighboring providers pooled their resources, expanded their collective customer impact, and gained a competitive advantage in an industry where for-profit providers had greatly expanded. In each of the twenty-five cases the researchers studied, the companies employed different merger strategies for pooling their resources for greater collective impact or for combining their competencies to grow in new or different markets.

Organizations that don’t take a strategic approach to an M & A deal risk creating unintended consequences, however. That’s what happened in Maine. Beginning in January 2019, MaineHealth became a single nonprofit entity with nearly 19,000 employees and more than $3 billion in annual revenue. MaineHealth joined a long list of hospitals that have merged to form large healthcare systems. According to the American Hospital Association, of the more than 5,500 hospitals in the United States, nearly 60% are part of a health care system. In many cases, a single board of trustees govern the large systems. From a purely strategic point of view, successful large healthcare systems can reach economies of scale, share resources, reduce cost, and leverage their increased revenue to attract physicians and purchase the latest medical technology.

From a mission-driven standpoint, however, the news isn’t all good, with rural hospitals facing the greatest challenges. Since 2010, The Cecil G. Sheps Center for Health Service Research has recorded 87 rural hospital closures in more than twenty states. According to one study, more than 600 additional hospitals in 42 states are vulnerable to closing, with 12 million patients losing direct access to care and about 99,000 jobs at stake. In short, nonprofit deals are more complicated because they must consider the Five Essential Traits of a Successful Deal with a robust focus on how these traits march in lockstep precision with the organization’s mission.

Five Essential Traits of a Successful Deal

Even if the board and leadership team make a well-formulated decision to go forward, more dilemmas surface during the integration stage. During both formulation and integration, board members should consider the essential traits of a successful deal and apply these principles to other difficult decisions:

Nonprofit Board Advice

A simple but clear vision helps everyone see where you’re going—a critical first step in formulating strategy. It defines what you want in the future; it inspires, motivates, and challenges. In conjunction with your organization’s values, vision helps you take a stand on all sorts of issues, including ethical ones.

Before discussing the organization’s vision, however, board members do well to revisit the mission to avoid the aforementioned unintended consequences. The mission clarifies why the organization exists; the vision identifies where the organization intends to go; and the strategy specifies what everyone must do to head into that ideal future. Vision comes from the mission, and strategy (which is shorter term and more specific) comes from both vision and mission—or at least it should.

Thinking about an organization’s future and imagining potential growth does not involve a tough call—at least not initially. Organic growth can happen slowly and deliberately, an approach that tends not to demand too much change too fast. It has an advantage in that people don’t usually fear organic growth. Nor do they need advanced critical thinking skills to formulate tactics for it. Even a little experience will serve to help replicate what you’ve done in the past. If the growth honors the mission of the organization, integrity issues typically don’t appear.

Decisions related to this kind of strategy formulation don’t usually involve tough calls—neither initially nor eventually. That may seem like a relief, but great board members consider this safe zone more imaginary than real. A current rate of unacceptable growth is one reason board members look to merge or acquire. When they do, the decisions they need to make will change markedly, and the speed at which they need to make them will accelerate.

Most board members find embarking on such a strategy far more challenging after many years of reliable, though slow, growth. When considering an M&A transaction, decision-makers will face a particularly tough set of decisions about people. While an organization may have many excellent people upon whom they can rely in the short run, their reliability does not guarantee future success. Of course, decision-makers will evaluate people in the usual ways—looking for evidence of a strong work ethic, high integrity, and effective interpersonal skills—but because deals tend to make things more complex, they will need to demand higher-caliber decision-making among the talent in the new organization.

A key attribute that differentiates those who will succeed from those who will not involves the ability to discern. People with a keen ability to discern see patterns, anticipate consequences, and solve the complicated problems a deal invites. They have a finer ability to distinguish critical issues from unimportant ones, and they don’t easily lose sight of why things need to happen. They differentiate, detect, and determine the tough calls they should make and the essential criteria they must use. While important in all situations, the powers of discernment show their value most clearly in high-stakes situations such as M&A.

Brilliant talent, a breakthrough product, dazzling service, or cutting-edge technology can put you in the game, but only rock-solid execution of a well-developed strategy can keep you there, especially after a deal. You must deliver—to translate your brilliant strategy and operational decisions into action. Your stakeholders will wait impatiently for these results, and they will usually fear the worst.

Therefore, you must make things work—quickly. Even very smart board members, in an effort to improve slipping performance, address the symptoms of reduced performance, not the root causes of it. Meanwhile, as they look around to determine which changes they need to make, people in the organization get nervous. Nervous people are distracted people. Before you know it, they don’t have eyes on the ball. Rather, they abandon their roles as star players and assume that of umpire or critic—two roles you don’t need at any time. A focus on what’s going wrong instead of why you’re experiencing problems never works. Too often, people get distracted by emotions when they should search for logical explanations.

Successful deals start with a strong investment thesis—a clear objective about what the organization wants to accomplish. Clear strategy leads the process; great performance completes it. However, we often get confused. We over- and misuse strategy to describe anything important, and strategic planning becomes an oxymoron. Senior leaders and board members formulate the strategy; they plan the execution—or at least the successful ones do. Execution involves discipline, requires senior leader involvement, and should be central to the organization’s culture. Done well, execution pushes the organization to decipher their broad-brush theoretical understanding of the strategy into intimate familiarity with how it will work, who will take charge of it, how long it will take, how much it will cost, and how it will affect the organization overall—and the customer, most importantly.

Operating plans often masquerade as strategic plans. Strategic planning too often involves a list of goals or set of tactics from which it is impossible to derive solid decision criteria.

In a newly merged organization, you don’t want your operating plan to concentrate on the past—to focus on the reflection in the rearview mirror. After all, at whose past would you be looking? And to what end? Furthermore, you will seriously undermine your ability to see the future. You’ll create an image more like the one you’d see in a fun-house mirror than an accurate reflection. Instead, your operating plan should resemble a kaleidoscope that exhibits various symmetrical patterns reflecting the loose bits of information you have aggregated. As you rotate the kaleidoscope with new information and contingencies, new patterns and answers will appear. If you focus on the bits, you see chaos. But look at the bigger view through the kaleidoscope instead, as if it were a strategy. Then, you can tolerate the disorder and still see the picture that emerges.

Some refer to “incompatible business models” undermining a deal, but what does that really suggest? It means the companies make money in different ways, perhaps doing things differently than board members initially thought they did. If board members don’t recognize and understand these differences, joining the two companies will prove challenging, costly, and probably ill-advised. If you don’t understand how the other organization makes money, you can’t assess the feasibility of its growth plans. Further, board members who overlook critical questions about the financial feasibility of decisions develop overconfidence.

Overconfidence is a key reason that financial performance post deal often disappoints. In fact, overconfidence about future revenue and overly ambitious goals for cost control and synergies do more than just disappoint. Too frequently, they also create a path for struggle and conflict.

On the other hand, the ability to paint an accurate picture of revenue and rate of growth is the single most important factor in evaluating acquisitive success. Even small changes in revenue can outweigh major planned cost savings. Similarly, a drop in sales immediately after an acquisition can have dire consequences, not only for the obvious reasons but also for less apparent ones, such as suspicion among customers, employees, and suppliers. Combined companies find regaining lost momentum far more difficult than preventing it from the outset. Even when board members have engaged in a financially solid deal, during the integration stage, they find their attention drawn inward. But that’s not where you’ll find the customer.

When a deal fails, too often culture takes the blame. Many view culture as some sort of complicated, abstract, nebulous force. It’s not, but research indicates more than 80% of board members don’t have a firm grasp of the culture that exists in the organizations they serve. While culture plays a role in any major transaction, the cultural differences that derail M&A deals have more to do with beliefs about the ways the companies make money and less to do with customs and interactions. Tough calls—good, bad, but especially those unmade—explain more about how deals turn out. Decision-makers need to think about and address the type of culture the newly formed organization will need to create in order to achieve its objectives. Board members must be prepared to make decisions about both the culture and the type of person who will fit into it.

Conclusion

When companies merge or acquire, stakeholders expect improvement. Sometimes the expectations are wildly unrealistic, but nonetheless they exist. Most expect one plus one to equal three or four. Unfortunately, as evidenced by countless failed or disappointing mergers, one plus one all too often doesn’t even equal one anymore, and the numbers move to the wrong side of zero. The deal disappoints, and the acquiring organization loses market share, margins erode, or profits drop

To prevent this scenario, ask yourself, “Do we currently run the existing business well enough to sustain the strain of integrating another?” If the answer is no, proceed with caution. It takes strength to bring companies together, and an acquisition will put a substantial strain on the acquirer’s resources. Ask, “Do we expect this deal to solve a systemic problem?” If so, an acquisition probably won’t solve that problem; rather, it will complicate the situation. In general, before you make a deal decision, start with questions about the current culture of the buyer. Better to clean your own house before inviting other people to live in it with you!

In the end, you’ll have the culture you shape. Whether you do it systematically or haphazardly, as a board member, your actions will sculpt the character of the organization. Decisions about the Five Essentials of the Deal—vision, talent, operations, financial synergy, and culture—will form the foundation. Prepare for things to happen in a simultaneous fashion, not a linear one. Think about how a deal should, ideally, unfold. Then work backward.

 



How to Boost Nonprofit Board Performance

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History has taught us that the prerequisites of nonprofit board success—courageous leadership, bold direction, clear goals, and a systematic approach to implementation—can also provide a recipe for disaster. The reason? Decision-makers must make choices with far-reaching consequences based on assumptions about what that future will look like. Of course, this paradox has always existed—nothing new about an inability to prophesize about the future. But one thing has drastically complicated the landscape—the future arrives much more quickly now than it used to, and many of the guests it tows along are neither invited nor welcome.

 

Boosting Nonprofit Board PerformanceMany board members feel unsure about their ability to create a credible strategy to boost their own performance and to influence the performance of those working in the organization. Yet, the best plans to improve productivity come from pragmatic business leaders who willingly consider alternative futures for their organizations. This doesn’t happen automatically, however. Board members must painstakingly address how to link mission to margins to create a stellar board that capitalizes on the organization’s unique contribution.

It all starts with the organization’s mission—but it can’t end there. Before board members influence leaders on strategy formulation, they should have a clear understanding of the mission of the organization and how to tie margins to it.

A mission statement should play the same role in an organization that the Holy Grail did in the Crusades. The mission defines the organization’s reason for being—the touchstone against which everyone evaluates strategy, activities, and expectations for overcoming the competition or making a unique contribution. Without one, members will diffuse resources, enable individual units of the organization to operate in silos, create conflicting tactics, and confuse customers, suppliers, financiers, and employees.

Conversely, when you have a well-articulated sense of purpose, you build a firm foundation that provides clear guidance for all significant decisions and establishes a point of reference for setting strategy and planning its execution. An effective mission statement answers these questions:

  • Why do we exist?
  • Who are our best customers?
  • What do they expect of us?
  • Who would miss us if we went away?

In addition to defining the organization’s identity, the mission guides its development over time. Although the mission should be resistant to capriciousness, as the external landscape changes, leaders must tweak the mission statement as they recognize how to translate purpose into practice—and how to take in enough money to keep the mission relevant and alive.

Most nonprofits don’t suffer because their board members don’t understand the organization’s mission. On the contrary, they miss the mark when they don’t figure out how to honor the mission while making money. I consistently repeat two mantras to my nonprofit clients: “No margins, no mission,” and “Nonprofit doesn’t mean not-for-money.”

Most boards understand how to make what I call “Mission Income.” This money comes from the products and services the organization provides. For example, a nonprofit hospital board knows that reimbursement is key, and they may also understand how to generate income from non-hospital amenities, like coffee and gift shops. But too often they leave other revenue streams like grants, individual contributions, corporate gifts, and government funding untapped.

Board productivity requires that decision makers at all levels of the organizations have the financial acumen to know what to do with the money once they have it, too. But if board members have overlooked these quantitative skills when they have recruited new members, the board will continue to struggle. Simply put, members need to know what the numbers mean, how to make sense of them, and how to use them to make sophisticated business decisions.

I have often said that on any board—public, private, or nonprofit—if you can sit on an audit committee, the organization will likely build a statue in your honor. If you can chair one, they will notify the Vatican of the miracle, and you will meet the requisite criteria for canonization. That’s not too much of an exaggeration.

In most cases, the real challenge for directors and executives in nonprofit organizations isn’t regulatory compliance or abandonment of the mission—it’s high performance. To achieve it, directors and executives need to systematically examine the five constructs of a successful, stellar board.

Nonprofit Board Performance Tips

Board productivity depends on strong leadership and tone at the top. Therefore, I recommend that the chair and CEO roles remain separate. Both directors and the CEO can be more effective when the roles and duties of the chair differ from those of the chief executive. Also, when different people have these roles, the chair can act as a lubricant between the board and senior leaders in the organization, especially when inevitable conflict occurs.

Board success starts with the relationships between the directors and the CEO.  The the CEO should regularly disagree with the board, and robust debate should occur, but never at the expense of good rapport. Embrace tension. Move beyond the outdated thinking that the board is a necessary evil and realize that a certain degree of tension is both healthy and desirable.

Contention, however, is not productive. The CEO should ask questions and question answers but all in a climate of candor and responsiveness. Trust, respect, and open communication form the foundation of any strong relationship; board relationships are no exception. Once the board has established rapport among themselves and with the leadership of the organization, everyone can focus on strategy.        

Too often board members don’t understand when and how they should be involved in strategy. Stellar Boards don’t formulate strategy, but they maintain a clear focus on it. They assess and critique it. Like the princess in the story about the pea, members need to detect flaws deep in the strategy—not to execute but to notice and report.

To safeguard the leadership pipeline, members will also want to influence succession planning—especially of C-suite positions. Members will certainly want to discuss the retirement plans for senior leaders plans, but they need to do more. They can play a more active role in setting criteria for hiring and promotion, identifying the stars in the organization, and creating opportunities to keep these people challenged and engaged. It’s all part of governance.

“Governance” is one of those all-encompassing words that people use but that few can explain in concrete terms. For nonprofit boards, it usually means general board oversight. Governance underpins the board’s ability to do all the aspects of its job. While strategy and succession planning address specific “What?” questions, governance deals with the “How?” It includes but is not limited to decisions about the board’s size, frequency of meetings, director selection, stakeholder relations, and social responsibility. When a board has a governance committee, those directors initiate action plans with specific timelines for implementation of recommendations. This committee should have the authority to shape and recommend policy and structure.

Why do board members so frequently fail at linking missions and margins? As noted, it’s not because they don’t understand the mission. They do. Boards run into problems for one reason. Most people who serve on nonprofit boards have a clear passion for their organizations, but they lack strong financial acumen that would help them make the margins that would ensure the mission. The remedy? Set the strategy, define goals for moving the organization forward, and become more self-directed than grant-driven.



The Five People You Need on Your Development Committee

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Board Development CommitteeDevelopment committees can be critical to the success of any non-profit’s fundraising efforts. A great development committee can drive an annual fund campaign to success, secure new sponsors for special events, and play an integral role in cultivating and stewarding donor relationships. In short—they can be every Development Director or CEO’s secret to fundraising success!

So, who belongs on a development committee? It’s true that any one passionate board member could be a productive, contributing member, but just like any strong board of directors, a development committee requires a certain set of skills and resources be combined for best results.

In my experience, here are the five people you’ll find on the most successful development committees:

  1. The Business Owner or Chief Executive

I once had a professor (who also happened to be a seasoned executive with years of experience at the helm of one of our nation’s non-profit giants) sum up board development in one sentence: “You want the number 1’s or the number 2’s,” she would say, referring to business owners and corporate leaders in top positions. She believed strongly that when you engage corporate leadership, they bring with them more than just their own resources and teams—they bring along their partners, their vendors and suppliers, and they open doors to resources you may never have imagined. In my experience, I have known this to be true.

For the smaller non-profit, this might be intimidating. However, look at the composition of your own board. Do you have top leaders of local businesses or corporations? Who has access to the strongest networks? These individuals need to be engaged on a development committee.

  1. The Marketing Professional

 Often times, marketing departments are a luxury only afforded to larger non-profits or those few that are willing to invest in them as a means to strengthen fundraising efforts. However, whether it’s a marketing professional from your board of directors or your internal team, your development committee needs their participation.

The right marketing professionals can aid in developing a cohesive communications strategy, help raise brand awareness, and can take your sponsorship materials and marketing collateral to the next level. At a time when so many non-profits are competing for event attendees and individual donors, delivering a polished professional image and engaging materials could be the key that helps you stand out to donors.

  1. The Salesman (or Woman)

 Let’s face it. Not everyone is comfortable soliciting donations, even when they love and care for the cause. What good is access to strong networks and awesome marketing materials if you can’t muster up the courage to ask for support? The key to a successful development committee is making sure it’s made up of individuals who aren’t afraid to make the ask! I refer to them here as salesmen and women; however, in reality, they are any members of your board with the passion and confidence needed to connect with prospective donors and ask them for support. When it comes to inviting members of your board to join the development committee, start with those you know fit this description and then utilize them at every stage of fundraising—cultivation, solicitation and stewardship.

  1. The Board Treasurer

Every development committee should have a good understanding of the financial position and needs of the organization. Having the board treasurer sit on the committee is a good way to ensure that the committee receives regular financial statements, and can closely monitor income and expenses. The board treasurer can provide valuable insight and answer questions relating to the budget and financial history of the organization. And, besides, everyone needs a good numbers guy!

  1. The Development Director or Executive Director

As a best practice, the development committee should be chaired by a board member. However, the chief development officer or executive director (or in some cases both) should be a key member of the development committee. Not only do they ensure the committee has access to necessary internal reports, but it is ultimately their responsibility to implement the development plan with support and guidance from the committee.

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