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TO:                 Board of Directors

FROM:           Gayle L. Gifford, Chair

RE:                  Board Meeting

Thank you to A…  for graciously sharing his home for what promises to be a delectable board meeting.

The meeting postprandial will be a lively humanities conversation with our special guest, Christopher Lydon, former host of WBUR’s The Connection and Radio Open Source, now live from the Watson Institute at Brown U. Chris is very eager to learn more about our Council and connect with board members. Personally, I can’t wait to pump him for his vast experience in “curating [humanities] conversations” over the airwaves and now in cyberspace.

Of course, before we can get to Chris and refreshments, we’ve got a board meeting to devour.

• Our main course is a discussion, feedback and approval of the goals and programming direction for FY 2008 which RKA, our Executive Director, will be presenting followed by approval of a working budget for FY 2008 that reflects those priorities and outcomes. (Alas, it remains a working budget until Congress finalizes the budget).
• Side dishes include a proposed bylaws change on the residency requirement for Board members and feedback from the Governance Committee on Board self-assessments.
• Of course, no meeting would be complete without THE CONSENT AGENDA which includes the thoughtful recommendation of grant awards from the Grants Committee, receipt of staff and board committee reports, and final approval of the FY 2008 Board & Board Committee Objectives.

Please arrive so that we can start on time (no excuses, we are back in Providence!) and preserve ample time to savor the planned conversations.

Bon Appétit

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Okay, so the memo may be a little cutesy.

But the reason I wanted to share this with you is that I think it is good practice for the board chair to frame the upcoming meeting for the board. This memo was sent out in advance along with the packet of materials for that upcoming meeting.

My memo also illustrates some of the practices that make for a better board meeting:

• Use of the consent agenda to quickly dispose of noncontroversial items, items where the authority for action has been delegated to a committee, or items discussed at a previous meeting that just need a final vote. Of course, any member can ask that an item be taken off the consent agenda for a more complete discussion.
• Most of the meeting spent on a few substantive issues.
• A conversation with someone really interesting from outside the organization but very relevant to the mission.
• And what you can’t see in the memo,  good food and social time.

And a few practices that make for a better board and organization:

• Clarity on goals and objectives for the coming year
• A budget that reflects those priorities
• Intentional board practice, including deployment of a governance committee, board self-evaluation, and learning from that feedback.

What does your board meeting look like?

In many nonprofits, the vice president of the board of directors is the heir apparent, slated to move into the top leadership position when the current president’s term ends.

So why doesn’t this upcoming leader have anything to do?

The laws of most states don’t require nonprofits to even name a vice president as one of their statutorily-mandated officers.

Tradition holds that nonprofits create a vice president position so they’ll have someone ready to step in should the president be unable to complete his or her term – in the same way we have a vice president of the United States. But your bylaws could just as easily mandate another officer to fill this role.

So rather than taking a perfectly capable board member and only ask them to hold their breath waiting for the president to expire, wouldn’t it be a better use of the VP’s talents to have something worthwhile to do? Especially if part of the process of choosing a VP is to groom that person for leading the board?

Here are three ways to use your VP:

1. Chair of the strategic planning committee

When I asked my networks about experiences of using the VP for something worthwhile, I received only one response. My Chicago-based colleague, Bonnie Koenig of Going International, said she’s seen vice presidents who are charged with carrying forward strategic planning and thinking in their organizations.

What a great idea. Why not make the vice president the chair of strategic planning. Strategic planning should be an ongoing process, not just a task that rolls around every three or five years. By doing so, you can improve the chances that your board is always looking forward. The committee can be the keeper of the strategic flame, promoters of the strategic plan, and surveyors of the changing landscape. I can’t think of a better way to groom your next board chair. And you improve the changes that you’ll have a leader who really understands and can champion your way forward.

2. Chair of the board’s governance committee

I promote this role for the VP. As the governance committee is charged with ensuring a fabulous board, again, this seems like another great place to train your board’s upcoming leadership. Tasked with recruiting great candidates, making sure bylaws and committees are suitable to the work ahead, mentoring board members and holding them accountable, governance committees have a critical role in creating excellent boards.

Given that the governance committee must have already decided that the VP would be the best next president, I don’t see many downsides (as long as the governance committee members are elected by the full board).  The VP could always recuse him or herself from evaluation of officers, if needed.

3. Project manager for the executive director’s annual performance evaluation.

Too many organizations put this vital task off and never get it done. It’s a lot to put on the President’s already busy plate, but that’s where it tends to fall. So why not have the VP be in charge of managing the process.

Note, I say “project manager.” I don’t mean to imply that the VP would ever conduct an evaluation all by his or herself (nor should presidents). Pull a small board team together to work with your executive director to create a true learning experience that gathers input from many constituents. And please ensure that the full board is in agreement on expectations, performance and next year’s objectives.

So stop wasting such a valuable resource. Find something for your VP to do.

P.S. I’d love to hear other ways you’ve put your vice president to good use. Please share any personal experience you’ve had with new roles for the VP.

He couldn’t really eliminate the board entirely — most states require board members in order to have a nonprofit corporation. To meet the requirement, he invited two friends to make up a three person board, including himself.

Why did he do this? Because he found as CEO of a previous nonprofit that the board was an incredible time sink for his attention. And that the board seemed satisfied with the status quo (quality programs delivered to a small cohort of needy kids) rather than demanding bolder action to meet what was such a bigger need.

Many of you commented, sympathizing with his plight yet worrying both about the long-term sustainability of the organization as well as the oversight to donors.

I promised I’d weigh in after giving you an  opportunity to comment.

I agree with him on two accounts:

1. Boards can be a real drag on Executive Director time.
2. Boards are often timid and unclear on what value they create.

And where I disagree:

1. Boards protect the public’s interests
2. Nonprofit ownership belongs in the community, not one person.

Let me explain.

First, where we agree:

Too many boards are a big time sink for their Executive Directors.

Executive Directors routinely say that they spend countless hours “managing” the board. This includes creating the agenda for monthly board meetings, making sure board materials are distributed in advance of the meeting, managing the minutes, preparing reports, coaching board leadership, filling in for lack of board leadership, recruiting new board members, etc. etc.

Ask your CEO how much time they spend on your board.

Yet, the work I just described has to be done. I fault the board chair for abdicating his or her management responsibilities to lead the formation of meeting agendas and to hold committee chairs and other officers accountable for their assigned tasks.

Most nonprofits lack dedicated administrative support for their board. But would you rather have your top staff member as your clerk or your peer and staff leader? Boards not only need to be self-managing, but also smart about the use of web tools and other technology that can dramatically reduce time and expenses.

And, if your board really wants to reduce the staff time to board tending, cut back the number of board meetings you have. If you’ve created a well-led and well-run organization and good monitoring practices, you shouldn’t notice a difference.

Boards are too timid and don’t know how they really add value to their organizations.

Most boards are at sea in what they should be doing beyond their fiduciary  roles. An Executive Director I know longed for “a big, bold, innovative thinking board.”

Like this CEO, I see too few boards framing the next BIG questions. Questions like “why are we content with delivering quality programs to a few hundred when there are thousands more who need our help?  What would it take to actually solve the need? Who would be our partners?” In their book Governance as Leadership, Richard Chait et al call this “generative leadership.”

In my humble opinion, I think too many boards are afraid to ask the BIG questions because they are fearful of what the answers might mean in terms of their own commitment.  We need more passionate advocates creating bold and fearless (though not reckless) boards.

Where I think he’s wrong:

Boards protect the public’s interest.

While execution is often imperfect, the board model should remind everyone that the continued privileges of the entire nonprofit sector depends on the faith of the public that organizations will deliver both a public benefit and wisely steward the gifts and privileges society allows.

Just about every founding CEO believes that he or she will always be honest and only act in the best interests of their organization and their constituents. Unfortunately, the newspapers provide us with too many cases of Executive Directors gone awry. And yes, while in those cases board members have either been lazy or complicit, who knows how many more cases of self-dealing might arise if we didn’t have any boards at all?

Nonprofit ownership belongs with the community, not one person.

I happen to take seriously the legal and moral foundation that nonprofit entities are not the property of any one individual, but are truly of the community. This is the toughest challenge for entrepreneurial individual founders to ask themselves. While “built to last” may not be a realistic goal for every organization in these dynamic times, built to last is more likely to come about when the weight of ownership, the responsibility for the mission, resides in a bigger pool of people than just the founder. And I do regularly meet founders who, when they hit a turn in the road — whether that’s a change in their funding model or a personal desire to do something else — lament that they never built an ownership board from the start.

Some may want to leave them behind, but for me, I’ll take the board for now.

P.S. I’d love to hear more stories from founders. Or from boards that have creatively handled some of these challenges.

The CEO of a year old start up public charity — I’d say he fit the description of a “social entrepreneur”  — was describing his leadership and management framework to a group of top level corporate types. He was confident, brash, passionate about his mission, and business oriented. He referenced  Jim Collins and Good to Great in his approach.

The business people loved him. Me too… until…

He explained how in starting this new organization he had learned many lessons from the previous organization he had founded (which had enjoyed both great program outcomes and growth).

• Like the need for a clear business model
• The importance of having great people in their jobs
• A commitment to the mission, including not settling for too small an impact on a big problem

All good, and then..

• Getting rid of unproductive time sinks, including the Board of Directors.

Whoa! Like throwing a firebomb into the room.

Hearing the collective gasp, he went on to explain. At the first organization he had founded, he spent 30% or more of his time managing the  Board of Directors. A  board that was complacent with the number of kids they were serving, which was barely a drop in the bucket of need.

So, this time around, he wasn’t going to waste precious time when there was important work to be done. Though he really couldn’t really abolish the Board (state law does require a board of directors for a nonprofit, usually with more than one trustee), he could make it small and manageable. Which he did by composing the board with two good friends and himself.

I noted that this is all perfectly legal. And frequently done. Think of the typical founder board, usually a family and friend affair.

Needless to say, lots of questions followed:

Don’t you need the Board to assist in fundraising? No, the business model is built on federal funds.

Who decides Executive Compensation? How do you ensure that you don’t get in trouble with the IRS over excess compensation? We do an regular market survey of salaries, I get paid under the top, and I recuse myself from the discussion and vote.

How do you build community ownership? Get contrary advice? We have an advisory board of community leaders and others.

Why didn’t you just create a for profit organization? Because this is the corporate structure I’m most familiar with and to leave open the possibility for philanthropy, even though the business model doesn’t currently depend on it.

What happens if something happens to you? That is a question, but my guess is that the board will find someone to replace me. Plus, as we grow, there will be staff under me who could step into my shoes.

I had lot of thoughts about this. But before I share them, I’d love to hear from you.

What do you think? A good idea or not?

One of the conditions I always query for is whether the board has any clear objectives for what it plans to accomplish over the coming year (or longer).

Board meetings are not in and of themselves meaningful work. I’ve attended a lot of meetings where I’ve left thinking “really, did they need me here for that!” Usually all I did was listen to reports where there was no action required. And any decisions before us were pretty inconsequential and didn’t really rise to the level of board work. A year of meetings like that and I’d be surprised if you had any attendance at all.

Every board can benefit from a set of annual objectives. I’d put the usual suspects on that list:

• providing performance feedback to your Executive Director
• setting with your Executive Director his or her goals and objectives for the coming year
• reviewing and approving the audit and other critical monitoring of the health of the organization
• recruiting and electing a high quality board

All of these are important fiduciary obligations of any board.

But what is the added value, the real difference that your board will make?I’m not talking about the volunteer contributions of individual board members, but the collective entity that is The Board (that corporate entity that sits around the table at a board meeting).

If you’re at a loss for value based objectives, try framing your board work around these questions:

• What questions about our organization’s future and its societal impact must we answer this year?
• How will we demonstrate our accountability to the community in whose interests we are acting?
• To whom are we accountable now? Is that whom we should be accountable to?
• How do we know that our organization is really making a difference?
• What will truly shift the landscape for the problems we address?
• What might we imagine on the horizon that we should already be preparing for?
• What is our ideal relationship with other community partners? What do they want from us? How do we know? What are we prepared to do?
• Do we have a clear definition of organizational health? Are we sufficiently resilient?

In our Toolbox, you’ll find a sample Board Meeting Plan and a sample set of Board Objectives to help jumpstart your thinking.

Even better, who about devoting a major agenda item at your next meeting to answer these questions: What must the board accomplish this year? What value must this board bring to our organization?

Congratulations! You’ve just joined the board of directors of a charitable nonprofit.

If this is a new experience for you, you are in good company. Many businesses today encourage their staff to serve on nonprofit boards. You’ll share the experience of board service with individuals from all walks of life.

A few of your fellow board members may already be old hands at nonprofit governance. A rarer few have attended workshops or studied some of the literature on nonprofit board governance.

Many, however, are learning on-the-job…just like you.

… Perhaps your organization provided you with a comprehensive orientation to help you start your work on the board

… Maybe you were teamed with a more experienced director who is serving as your mentor?

With luck, you joined a superb board that’s filled with great role models.

It’s not unusual to feel a little unsure of yourself at first.

You should find the reception welcoming, as most nonprofit staff and directors relish the opportunity to benefit from the business savvy, strategic mindset, professional connections, and access to resources that directors from corporate backgrounds can contribute.

Yet, I frequently hear complaints that all of those desired qualities seem to evaporate as soon as a business person is elected to a board. And I often hear business people describe their frustration with their board service.

So here are a few insights about nonprofits that I’ve realized over the last 30 years — and a few tips to help make your board service more rewarding.

Let me start with the insights.

Nonprofits have a different bottom line.
In business, the bottom line is easy to understand – it’s all about profit. Even if your business advocates a dual bottom line (social responsibility and profit), profit doesn’t take second place.

In a nonprofit, there is no private inurement. The bottom line is the delivery of a public benefit – for example, an artistic contribution, environmental protection, or health promotion.

Determining what that public benefit is, how to deliver it and how to evaluate performance isn’t always easy. Imagine you are on the board of an organization dedicated to the promotion of practices for good mental health. Can you concretely define what success looks like? What evidence would you point to? What changes would your small agency claim responsibility for? These are the challenges that will face you as a director of a nonprofit board.

Nonprofits are valued for their prudence, commitment to service and fiscal restraint, yet are expected to produce significant community benefits.
In the for-profit world, business owners are rewarded for taking risks – usually with other people’s money (venture capital). Under-capitalization is warned against. And a personality like Donald Trump is lionized for his opulent lifestyle and forgiven for past business failures.

Not so in the nonprofit world. Here, individuals are expected to make sacrifices for the common good in the name of service. Making do with less is a familiar mantra. Pick up a business publication, and the virtuous charities are the ones with the lowest overhead.

Meanwhile, nonprofits are being admonished to “act more like businesses.” In reality, most nonprofits are extraordinarily small, much more comparable to “micro-enterprises.” According to data available through the National Center for Charitable Statistics, over 80% of registered US public charities had annual revenues below $250,000 in 2004.

At these smallest of nonprofits, nominally-paid staff or their volunteer leadership often have limited experience in nonprofit management and resource development — yet they are expected to operate as efficiently and effectively as multimillion dollar, professionally staffed organizations.

It’s surprising that these tiny organizations get anything accomplished at all. But they do! From the neighborhood soup kitchen feeding the hungry to the volunteer land trust preserving hundreds of acres of open space to the volunteer ethnic organization staging an annual cultural festival for 20,000 participants, many tiny nonprofits are making significant and valuable contributions to their communities.

Nonprofits are expected to consult with their stakeholders and to collaborate with their colleagues.
It’s not unusual for business people to comment on the pace of decision-making that occurs at many nonprofits. Change may happen more slowly than they are used to.

Because nonprofits are accountable to their community for doing good, stakeholders (like consumers, funders, politicians) expect to have some say in their functioning. If your nonprofit depends on public generosity for a sizeable portion of its revenue base, you need to ensure that your constituents understand and support the actions you take, or you put at risk their goodwill and continued financial support.

Decisions and actions both big and small often rely on volunteers.
If a nonprofit has no or limited staff, volunteers are performing much of the work. The biggest decisions of all – where to dedicate resources, what community needs to focus on, and what strategies to deploy – are made by volunteers, you, the board.

Imagine your business self managing a motley crew of unpaid staff with varied levels of expertise, skills and experience. Family and work demands always take priority over their volunteer commitments. Managing volunteers requires all of the skills and tools you would use with your paid staff, absent one obvious and highly motivating reward – money. Get the idea of the challenges you face?

Despite these differences, there are many experiences that nonprofits and businesses have in common.

• Whether for- or nonprofit, all enterprises need to be responsive to their marketplace.
• All enterprises need business acumen and effective operations to be successful.
• Quality research and information are essential for good decision-making.
• Ethical behavior and accountability ensure the goodwill of the public.
• Every enterprise needs the structures, systems, people, skills, strategy and self-reflection that are essential elements of success.

So, as a nonprofit board member, how can you best put your business experience to work?

Here are a few tips to get you started.

Focus on the bottom line – the mission.
As I said earlier, in a nonprofit, the mission is the bottom line. If you think of your community as your shareholders, achievement of your mission is the shareholder value that you’ve promised to deliver. However your nonprofit has committed to making the world a better place – by filling an unmet need, solving an important problem, creating new knowledge, or by increasing the level of joy or beauty for the people who live here – everything your nonprofit does should be measured against how well it is fulfilling that mission.

Don’t undercapitalize.
Successful nonprofits also need the financial and other resources to get the job done. So while you focus on the mission, don’t forget to ensure that your organization has a well-developed capacity to obtain the resources it needs to keep moving forward. The fewer staff you have, the more likely that you, a leadership volunteer, will play a critical role in obtaining those vital resources.

Do your homework.
You wouldn’t think of starting a new company or making a major business decision without quality research to inform your decision. Yet, many nonprofit board members are tempted to make decisions based on their personal feelings or individual experiences. Do your research. Don’t conjecture. Seek out best practices and benchmarks. Keep up-to-date on issues affecting both nonprofits and your charitable mission. Ask for time at board meetings for education as well as action.

Share what you know.
Just like your business, your nonprofit needs your skills as an entrepreneur, a resource-getter, a strategic thinker, a people-motivator, or an organization builder. That’s why they recruited you. Apply those talents to your work on the Board.

Ask board leadership for your job plan and annual performance measures.
Just as you provide your employees with job descriptions and clear expectations for performance, you should expect the same of your board. What is it that you have committed to? What will you achieve during your term of office? What are your personal priorities? What resources do you have to work with? What relationships are critical? What are the limits of your position? How will you be evaluated?

Be serious about legal matters.
It’s tempting for volunteers, especially in all of those tiny organizations, to think – “those rules don’t apply to our little local agency.” Whether you are a $100,000 or $100 million nonprofit, you are similarly bound by federal or state statutes. Do you know your legal responsibilities as a director? Do you understand the federal, state and local regulations governing your nonprofit? Be vigilant about these matters. You may expose yourself to personal liability if you are negligent or willfully violate the rules.

Hold core values of stewardship and ethical behavior.
The nonprofit sector depends on the trust and confidence of the public for its existence. When a nonprofit violates that trust, it places the whole sector in danger of losing the unique privileges afforded to tax-exempt organizations. Nonprofits survive because they have promised the public that they will use their resources wisely for the community good and not for personal gain – the essence of stewardship. It’s easier to be ethical when you’re committed to wise stewardship.

Combine an entrepreneurial attitude with patience.
In their study of high performing boards, the international consulting firm of McKinsey & Company report that nonprofit leaders tell us that “when boards… devote time to providing expertise, helping managers get access to people and resources, and building managerial capacity, their organizations benefit the most.” At the same time, McKinsey and Company stated in a report on nonprofit capacity building that “almost everything about building capacity in nonprofits (and in for-profit companies) takes longer and is more complicated that one would expect.” Entrepreneurship and patience are important virtues.

Last, but definitely not least, be courageous.

It is not easy to be a good board member. It’s hard to rock the boat or risk offending business colleagues by asking questions that everyone else seems to be dodging, or by insisting on right but difficult courses of action. Even setting goals takes tremendous courage. But nonprofits need, no, they require the courage of board members.

As Dr. Martin Luther King Jr. said, “the time is always right to do what is right.” It’s just not always easy. Good luck. Enjoy your board service.

This article first appeared in Nonprofit Boards and Governance Review at www.CharityChannel.com.

These words emerged from a workshop I facilitated this morning called “boards that lead.” To get us started I asked everyone to think of a great board experience they have had and then to share one word that characterized that experience.

In just a few minutes, the 40+ board members, executive directors and staff who attended shared the words above. Together, they described the perfect board experience. What a gift.  Thank you.