No, Nonprofit Boards Aren’t Ineffective
A new Stanford survey delivers some serious criticism of nonprofit governance. But not all is as dire as it seems.
That’s the dispiriting implication of a Stanford Graduate Business School study released in April. As Katie Bascuas reported here late last month, a majority of nonprofit board members say they believe their colleagues are inexperienced, and half think they’re disengaged. The report also points out some of the other issues that have been discussed here at AssociationsNow.com, including a lack of CEO succession planning and weak financial oversight.
There are ample examples of this playing out in the real world. In the past month, the New York City college Cooper Union has attracted the scrutiny of the state’s attorney general, Eric T. Schneiderman, over its financial management. The case is unusual in that Schneiderman is stepping in without there being any fraud or other illegalities: He told the New York Times that he’s attempting to get ahead of problems before they start. “Once an organization is in trouble, donors don’t want to give money and people don’t want to join the board,” he said. “We want people to anticipate these issues before they become disasters.”
That statement ought to straighten the backs of every association leadership team that would sooner not feel micromanaged by government authorities. But without denying the importance of what the Stanford survey has to say, a few points might be worth exploring in more detail.
First, the survey in part measures board members’ perception of their colleagues’ experience or knowledge of the organization’s mission. To the extent that boards are by definition fragmented groups, made up of people with different levels of experience and differing notions of what the organization ought to be doing, a lack of cohesion on those questions isn’t necessarily a surprise. It may not even be a problem—diversity of experience and opinion can be a sign of a healthy board. Note, too, that the survey measures “experience” by “the number of additional boards they serve on.” [PDF] That’s not necessarily the most valuable metric when it comes to board leadership.
Second, there’s a curious difference between the low marks the board gives itself for engagement and the high marks it gives the CEO: 87 percent are satisfied with the executive director’s performance, and 92 percent say they believe that person understands the organization’s mission and strategy extremely or very well. And overall, 85 percent say they’re moderately or very satisfied with the performance of their organization. Stanford lecturer William F. Meehan III chalks this distinction to a mentality where board members aren’t ready to sell out the organization as a whole. “We don’t like to hold ourselves accountable, and we don’t want to stand out to say we don’t understand something,” he said in a release related to the study. “It’s the simple law of human nature in small groups.”
But it may also be that the perceived lack of experience and engagement doesn’t rise to a crisis level—after all, only 11 percent of respondents said their colleagues were “slightly” or “not at all” engaged.
I don’t mean to go hunting for rainbows in stormclouds—the study demonstrates serious issues in terms of nonprofits planning for their futures in terms of leadership and finances. But if we feel the “better” numbers would reflect more deep engagement and respect among board members and a little less reflexive support for the CEO, you need not fall into crisis mode to address it. The late Hartford chairman and CEO Liam McGee, recently wrote in Harvard Business Review about how he improved his relationship with his board by stepping away from micromanagement and information delivery and spending more time opening conversations and building trust.
“We distilled the most important information into pre-reads for the directors to study in advance,” McGee writes of how he changed board meetings. “The meetings themselves, aside from the CFO’s report on financials, focused on discussions of the main issues. Real transparency, I learned, isn’t so much in the numbers, but in open conversation.” That helped resolved the issue that Meehan raises—the Hartford board members raised their hands and began asking questions.
As any association executive who’s tried to encourage a rubber-stamp board to become more strategic, that’s not a simple shift. But opening the floor to that conversation can start to create an environment where stakeholders take the direction and mission of the organization seriously—even if they don’t always agree on it. As McGee writes, “Wouldn’t you want all the directors to feel comfortable challenging you and each other?”
What do you do to promote candor and discussion among your board members around mission and strategy? Share your experiences in the comments.