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?
Last Thursday I was part of one of the most provocative discussions I’ve been in for awhile.
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?
Eleven board practices I try to live by: 1Only choose board service if you are willing to carry the moral obligation on your shoulders.2. Serve organizations whose vision and values you are passionate about (or will quickly grow to be). 3. Limit your board service – two boards at one time is usually enough.
But where is the added value, the real difference that your board will make? I’m not talking bout 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?
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.
In just a few minutes, the 40+ board members, executive directors and staff who attended shared these words. Together, they described the perfect board experience.
Purpose. Vision. Wisdom. Humor. Joy. Passion. Shared Values. Dedication. Generosity. Insight. Productive. Patience. Flexibility. Common Ground. Perseverance. Investment. Struggle. Eye-opening. Community-building. Caring. Deep Caring. Collaboration. Diversity. Gratitude. Leadership. Creative. Integrity. Teamwork. Unity. Heaven. Rewarding. Brainstorming. Listening. Support. Respect. Commitment. Interactive. Different. Communication.