Give, Get, Get Off or Govern?
Julie Garland McLellan
Confidential expert advisor to boards and directors ★ Practical governance for better outcomes ★ Director and Board performance ★ Author ★ Speaker ★ Facilitator ★ Mentor
The hard choices that non for profit boards need to make
Company directors on not-for-profit boards are often required to make substantial donations to the cause, or to elicit substantial donations from their network. Those that can’t or won’t become major benefactors are, more or less subtly, removed from the boardroom.
But, does this model sit well with current notions of directors’ responsibility and the professionalization of the role?
Bad outcomes for good people
All around the world there are stories (often in the form of court case judgements) about boards of charitable organisations who were found to have been inappropriately focussed on only a few aspects of governance – or worse still, operations – and to have neglected their governance role to the point where they were found personally liable for corporate losses or other faults. Discussions with CEOs in the sector reveal a deep frustration that not all boards are living up to current expectations but that ‘it is hard to demand more’ given that the board members are unpaid volunteers.
Prime among the CEOs lists of grievances is the inability of the board to contribute at a strategic level to the company or to provide the CEO with meaningful mentoring. Even when boards are contributing to financial oversight it is often at a superficial level such as checking expenditures against budgets rather than at a strategic level such as determining the appropriate amount of financial reserves and investment strategies. Many boards leave the financial oversight entirely to the executives or concentrate only on the aspects that they can influence such as donations, fund raisers, etc.
Another ‘offender’ is the stale board; comprised of members who have been there for years and – having given their best during each of those years – has little to give the current executive leadership. They have become a supportive and well-intentioned group of passive onlookers while the executive team shoulders the load alone. Nobody moves the directors on because everybody respects their contributions in the past and, anyway, there isn’t anywhere to move them to.
Then there are the ‘two tier boards’ not, alas, the carefully designed and culturally appropriate management and governing boards that prevail in some jurisdictions, but those where some board members are ‘more equal than others’. On these boards there is an inner circle of members who take a strong interest in the governance, often chairing committees whose membership excludes their ‘outer circle’ board colleagues and assuming responsibility in line with modern expectations of the director role. The ‘outer circle’ members frequently provide funding or host fundraising activities or otherwise use their personal networks to support the aims of the organisation. These boards are frequently characterised by high levels of mistrust and occasionally by mutual loathing amongst the board members. Each circle can easily resent the other as having a role that excludes the other.
A better way
Some organisations are restructuring their boards to allow for a proper governance function and creating specific committees or communities for volunteers, donors and supporters. These organisations manage to achieve a ‘best of both worlds’ solution with fit for purpose membership of societies of friends, councils of patrons or boards of directors. The CEOs of these organisations report that they are better able to design engagement strategies for each group, and that they benefit greatly from the increased input of a governing board that takes on all the aspects of its professional role.
The result is an organisation that looks to the board for leadership and is not disappointed when it does look there.
Correlation with success
The day of the professional director is dawning in our not-for-profits. Professional is about the standard of input, not a measure of whether the board are paid. With increased director liability, greater demands for transparency, more rigorous regulation it is time for directors to play a bigger role in governance. My experience of helping boards to perform indicates that this is a growing trend and that it is correlated with organisation success. Get the board performing and company performance naturally improves. I have had the joy of helping that transformation and also helping boards to create a pathway for former directors to stay engaged, continue to add value, and make way for new growth and ideas.
It's not easy. But it is worth the effort.
What do you think?
Chair, Director, Speaker, Accredited Mediator Diversity/Technology/Transformational Strategy/Culture/Risk
3 年This is an excellent "considered assessment" of the view that Board members should be major donors. I do support your alternative that the first priority is for good governance by the board secondly (and less important) they could also be donors. But more importantly I support the idea of a Committee where people who want to contribute to fund raising themselves and through connections,can do us and be a valuable part of the board process.
Principal, Board Member & Advisor I NACD Board Leadership Fellow I Aspen Institute Fellow I Chairman of the Board I Past: Global Practice Chair of Board and CEO Services I Commissioner I CEO & Interim CEO I MBA
3 年I could not agree more. How much the board world has changed over the past 200 years!
?? Communication & Connection Keynote Speaker | LinkedIn Top Communication Voice | Non Executive Director | Author | GAICD | MMgt | BComm |
3 年Spot on Julie Garland McLellan and in fact with the increased regulation among various sectors the focus of a qualified and capable board is more important than ever
Chair & Non Executive Director | Statutory Board Advisor | Governance & Purpose Powered Success
3 年You’re spot on Julie Garland McLellan. The “give, get or get off” governance model dominates arts board in the USA because the arts in the US are almost entirely funded by private philanthropic support, not governments, therefore fundraising is essential. In Australia it’s different because of government funding (investment and subsidy) for the arts and while arts organisations do need to fundraise this should be undertaken strategically by the organisation actively engaging board directors with the requisite skills or contacts. (Much harder in a micro organisation of course but that’s why government funding is so critical to the arts.) Board directors’ performance should never be judged on how much they give or raise but on the way the conduct themselves and govern. Leadership is essential to good governance. Gifts or donations are a way of demonstrating leadership and value. When a board director of an arts or other NFP or charitable organisation donates to the organisation on whose board they serve they effectively say, to the community at large, “I believe in this organisation, I value its work”. Any gift of any size from a board director speaks volumes.
Transforming Ideas into Million-Dollar Products & ventures: the designer serial entrepreneurs partner with | Talk on TED.com | Product Development & Product Design | Bestselling Author & Keynote Speaker
3 年I like the multiple-win approach. I know from experience that, it's not easy but it works and deliver beautiful results.