Nonprofit Boards and their organizations still experience exponentially higher risk in their effectiveness and efficiency.
Time for a change.
(Originally appeared in the September 7, 2017 'Across the Board' Publication Reaching 22,000+ Savvy Business Leaders In Over 65 Countries - sign up here)
I fundamentally and wholeheartedly believe that the world is a better place due to nonprofit organizations. Whether for scenarios involving social services, disaster relief & recovery, serving underprivileged portions of our population or simply furthering countless worthwhile causes, nonprofits have and continue to serve their purpose to elevate society. But not without their significant challenges. Namely, the effectiveness and efficiency of their Boards, which ultimately challenges the ongoing success and longevity of the organizations they serve. And the research supports this.
In 2015, a survey of over 924 nonprofit Board Directors by the Stanford Graduate School of Business, in collaboration with BoardSource and GuideStar, focused on the 'composition, structure, and practices of nonprofit organization Boards.' Some may consider the findings to be astounding, but for those experienced public and private Board Directors who also serve on nonprofit Boards, they will likely nod their heads in agreement. The study reported:
- 'The skills, resources, and experience of Directors are not sufficient to meet the needs of most nonprofit organizations'
- Nonprofit 'Board processes fall short'
- 'Over a quarter of nonprofit Directors do not have a deep understanding of the mission and strategy of their organization'
- 'Nearly a third' of nonprofit Directors 'are dissatisfied with the Board’s ability to evaluate organizational performance'
- 'A majority' of nonprofit Directors 'do not believe their fellow Board Members are very experienced or engaged in their work'
Furthermore, a study conducted by Concord Leadership Group in the nonprofit space surfaced issues with the collective output of nonprofit Board action (or inaction):
- '49 of 100 nonprofits' surveyed 'are operating without a strategic plan'
- '77% of nonprofits have no succession plan or leadership development program' (even with the unprecedented Baby Boomer retirement currently in play)
- '42% of nonprofits do not have any formal evaluation systems for anyone'
Wow. All of these major shortcomings reside in foundational areas that define an effective and efficient Board. So, where should nonprofit organizations focus their efforts to right these wrongs? The answer in my opinion is surprisingly simple - implement formal Board structuring processes and governance utilized in the public and private sectors to build, evaluate and measure nonprofit Boards and their Directors. At the very least, start with a clear 'Sphere of Influence' and 'Planes of Congruence' exercise to ensure the depth and character of your Board.
Nonprofit Chairmen/Chairwomen need to be willing to push structure and formality across the Boards they lead. Many Chairmen/Chairwomen have inherited nonprofit Boards that were built solely on the 'friends and family' candidate approach with little to no expectations, requirements or performance measurements. This typically doesn't last long and can (and likely will) jeopardize their organization's success. Questions for nonprofit Chairmen/Chairwomen to ask themselves and plan for remediation when evaluating the buy-in, dedication and effectiveness of Board members - Does your nonprofit Board Member:
- View their position as a true 'job' with responsibilities?
- Have leadership, Board Director, Board Advisor and/or C-Level experience?
- Do they have the time to dedicate to their role? Take note:
- I have never seen a truly successful Board Director put in less than 200 hours per year per organization (public, private or nonprofit)
- I have never seen a truly successful Board Advisor put in less than 50 hours per year per organization (public, private or nonprofit)
- Know the organization's values, vision and mission by heart?
- Spend time with the organization's operations staff?
- Get involved in the organization above and beyond Board Director duties?
- Attend Board meetings in person?
- Consistently attend Board meetings?
- Lead or get involved in Board committees?
- Submit or contribute to a monthly or quarterly status report for their committee?
- Assist in setting Board and organization performance expectations?
Notice how I didn't mention anything about the amount of revenue/donations a Board Director in a nonprofit can bring into the organization. This is not an oversight. Many times the nonprofit Director's ability to personally donate to the organization is the first deciding factor on their appointment to a nonprofit Board - and this is typically a big mistake. Where most nonprofits initially fail is in their strategy as well as their operations and this needs to be the paramount consideration of Board Director expertise. Nonprofit organizations incorporate their maximum donation outreach potential through their strategy, not individual Board 'heroes' who write a check yearly. Yes, a common additional requirement of nonprofit Board directorship includes the ability to donate to the organization, but I will take a dedicated and disciplined nonprofit Board Member with a significant leverageable network over a 'hero' Board Member any day of the week.
What will you consider when evaluating or building your Nonprofit Board?
Reach out directly to Mark A. Pfister to discuss your Nonprofit Board's strategy.
Mark A. Pfister
Chairman & CEO
About the Author: In addition to sitting on numerous Boards, Mark A. Pfister is a certified Board Director and advises public, private and nonprofit boards in efficient and effective operations. He is the inventor of the 'Board as a Service' (BaaS) engagement model and an expert project/program manager frequently consulting on strategic global initiatives in their initiation and operational phases....... << read full bio here >>
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