Several years ago, while attending a Money for Our Movements conference hosted by the Grassroots Fundraising Journal, I witnessed an interesting debate.
This was literally a debate, with two teams arguing the pros and cons of the proposition du jour:
Are we ready to give up on nonprofit boards and allow our organizations to be governed by staff?
The debaters offered spirited, thoughtful arguments on all sides of this question. At the end, the audience voted for the winning proposition. If memory serves, by a ratio of two to one, they preferred the traditional board governance model over staff governance.
I was a little surprised that these participants – a diverse group of social change activists and organizations with a strong critique of the nonprofit industrial complex – voted for the status quo. Huh?
In theory, the model makes sense
Let’s take a step back.
IMHO, the intention behind our modern nonprofit structure – I’m talking about your typical U.S. 501(c)(3) organization – is honorable.
In exchange for not paying taxes and giving donors a tax deduction, your organization must serve the community through education, social services, artistic endeavors, or other charitable activities.
How do you ensure that the community is being served? By creating a governing body – your board – that represents the community and makes sure that community needs supersede the self-interest of individual board and staff.
By relying on volunteers to govern your organization, the theory goes, you reduce conflicts of interest, serve the public good, and earn those tax breaks by meeting your charitable mission.
It’s kind of brilliant, but…
How the model breaks down
One could write a dissertation (somebody probably has) about the ways that nonprofit boards fail to honor this intention or do so imperfectly. Sadly, several shortcomings are baked into the system.
- The community served isn’t always represented in leadership. Consider anti-poverty organizations that don’t include poor people – people with lived experience – on their boards. Or teen-serving groups led solely by adults. This problem can be addressed in your bylaws, as some nonprofits have done, but that solution is far from universal.
- Reliance on volunteers. Board members can bring passion and relevant skills, but they also have jobs, family obligations, health issues, financial stresses, commutes, hobbies, and other commitments. Some serve on multiple boards. It’s sad but true: they’re not always reliable.
- The skills gap. Under the law, board members are fiduciaries. It’s their job to ensure the financial health and integrity of their organizations. Sadly, many are poorly equipped to understand financial statements, provide fiscal oversight, or raise money. Training helps.
- Amateurs supervising professionals. Most trustees connect to the mission – which is why they join the board – but know little about the day-to-day challenges of running a nonprofit. How many are qualified to supervise an executive director? How often does their supervision (or lack thereof) do more harm than good?
Let’s acknowledge the obvious. If you’re an all-volunteer or lightly-staffed organization, then yes! You need an engaged board, because somebody has to do the work. Once you staff up, however, the board’s role changes – and arguably diminishes.
Isn’t there a better model?
Winston Churchill famously said, “Democracy is the worst form of government, except for all the others.”
I feel roughly the same about our traditional nonprofit structure: maybe it’s the best unsatisfactory option. Regardless, consider the following alternatives.
- If you rely primarily on earned income – fees for service, contracts, tuition, etc. – maybe life would be easier as a for-profit social enterprise with a social mission. You’re less likely to get grants and donations, but if that’s not part of your business model, does it matter?
- How about a nonprofit version of a worker cooperative, with more decision-making power for employees? (Please share examples in the comments section below.)
- Using a fiscal sponsor eliminates the legal requirement for a board, though recruiting some sort of community advisory group is still a good idea.
Muddling through with a less-than-perfect board
Prior to becoming a consultant, I held staff positions with five solid, competent nonprofits. Only two of the five had effective boards. Somehow, that didn’t impede our work.
Since launching my business, I’ve worked closely with hundreds of organizations. Many accomplish terrific things while managing disappointing boards.
I use the word “managing” because boards require resources: time, training, staff bandwidth, diplomacy, and emotional energy. Indeed, in a previous post, I encouraged you to calculate if your board is costing more money than they’re raising.
For many groups, the answer is yes. Maybe boards are just a cost of doing business – financial or otherwise – and we embrace that reality without expecting too much.
It’s OK to expect less
Over time, I’ve come to view an effective board as icing on the cake, rather than the cake itself; a nice-to-have, not-always-essential bonus.
If you can help to improve their performance and deepen their engagement, that’s great. If not, life goes on.
Let’s allow our board members to be who they are: lovely, imperfect people operating within an imperfect structure.
And let’s give ourselves the grace to stop worrying about it so much.
I too am a nonprofit Board consultant and have often asked myself the same question. I can’t honestly say that boards are all that useful except at raising money and sometimes not even that. I have sometimes advised that staff spend as little time as needed on their boards if they are not really contributing but I have also seen boards that make a difference. The other really important job they do is hire/fire (and in theory supervise) the executive director. In this role they can be both a sounding board for the ED, a resource, or just a headache.
Like you, Ann, I’ve seen effective, indifferent, and problematic boards. Agreed: the good ones add real value. But I always get stuck on some version of the cost/benefit analysis: Does the time and money we invest in boards pay off, in both tangible and intangible ways? I wish we had a more rigorous, honest, and transparent ways to analyze this.
I have been consulting with nonprofit boards for almost 32 years. I have also been a nonprofit ED and a volunteer board member and officer.
Three quick points:
1) the requirement of nonprofits to serve the community (have a “public benefit purpose,” according to the IRS) does not necessarily mean that the “community” consists of those individuals (“clients,”, “patients,” etc.) being served by the nonprofit. Assuming that “community” is the same as those intended to be served leads to other, more consequential, errors.
2) “Fiduciary duty” is not just about finances, as the article implies. It’s a far more general and all-encompassing term that means far more than tangible assets, liabilities, revenue, and expenses as recorded in financial statements, audits, and IRS Form 990 returns.
3) Other board governance models (e.g., Carver’s “Policy Governance” and Chait’s “Governance as Leadership”) neglect to reconcile their models with existing law and regulation. It would be irresponsible (and potentially illegal) for a nonprofit to change its governance structure without regard for the legal environment in which it operates. Fortunately, since most states base their nonprofit corporation statutes on an ABA model, lobbying for changes to that model would be an important first step, coupled with federal regulatory changes involving the IRS/Treasury.
Thanks for your thoughtful response, Michael. I agree that a) complying with relevant laws is really important, and b) advocating for changes in those laws to benefit the nonprofit community (and allow us to experiment with different governance models) is an excellent idea.
However, legal/compliance is only one framework for evaluating the effectiveness of our boards and organizations. The law says nothing about organizational culture, sustainability, staff retention, or how successfully we do the work we aspire to do. Many fully-compliant organizations have been treading water for years. In some cases, they’re held back by stagnant boards.
So this is a yes/and response: I support what you say, AND we should still look beyond current models of governance, leadership, and organizational structure to consider better models. If not Carver or Chait — which, I totally agree, are flawed — then what?
Much to chew on here, Andy. I think I will continue to ponder this one! I love the idea of boards being challenged to tip the scales toward offering (significantly) more value than what they chew up in staff time and energy! I do appreciate Joan Garry’s analogy of the twin-engine jet, with both sides balanced and symbiotic. I have served on boards that have felt that way and on boards where it felt more like ticking the boxes to be there. If I felt like a board were doing more harm than good, I think I’d do what I could to change that or get on outta there!
Thanks, Amy. Here’s a spin on the old joke: How many consultants does it take to change a board? Only one — but the board has to want to change.
If the model has inherent flaws, as I’ve outlined in the post (and others may disagree), then maybe we need to look at the system, rather than the behavior of individuals boards or board members. Or maybe we accept those flaws — for example, how much bandwidth can we realistically ask of volunteers? — and adjust our expectations accordingly.
I find this discussion to be very compelling. Having served on a number of boards and now spending my retirement years trying to help board and organizations work better, I would suggest a few ideas.
1. Make sure your board has to work. Simply meeting X times per year to approve things does not add value. Having clear expectations for each board member to DO SOMETHING and allowing them (and expecting them) to do it helps immeasurably in making sure your board adds value.
2. Encourage dissent and discussion. I have left two boards (one early; one when my term expired) because comity was valued more than contributions of thought. I am not sure that I have seen much discussion of this topic, but I suspect it is more widely spread than just these two boards.
3. Strategic planning must include both preparation and implementation and BOTH steps must have clear roles for board members. One of my “favorite” rules is that nothing goes into a strategic plan until someone agrees to lead that part of the effort, often a board/staff pair.
Joe Engeln
Thanks, Joe. Great points. Per item 3, I’ve been trying the following rule at board meetings: Whenever you make a suggestion, you have to follow it with the words, “This is what I am willing to do to implement the suggestion I just made.” Because it’s way too easy to dream up cool stuff for somebody else to do…
I am part of a culturally diverse board where we have been asking questions about how we are expected to govern. Is it right to ask everyone to learn how to follow particular rules of order or is there a way to decolonize board governance so that members can participate more authentically (including ways to speak up, discuss, dissent, and take action–love those points above). We continue to try things and view the board as a place where people are learning to be leaders rather than groups who already know how to do it all. It’s an unconventional approach that involves mentorship and takes time for growth but I think we are making progress in working with what we have to increase capacity and going it in a creative way.
Lori, I love your question about “decolonizing board governance.” Several years ago I wrote a post about consensus vs. Robert’s Rules; here’s the link. It’s a partial answer to your question. I will research other resources and post them here. Also appreciate your goal of making your board a learning community where everyone is welcome, regardless of their previous board experience. Thank you.
Andy, here’s an answer to one of your excellent questions:
There IS a legal entity that is sort of like a worker-cooperative version of a non-profit: Worker Self-Directed Non-Profit: the staff are the board and the board is the staff.
The folks I know doing great work around this are the Sustainable Economies Law Center, based in Oakland, CA. https://www.theselc.org/worker_selfdirected_nonprofits
Also, the US Federation of Worker Cooperatives also has membership levels for democratically governed non-profits!
There are definitely alternatives out there. Thanks for asking and for this great blog post!
Yay! Thanks, Alex. I love crowdsourcing answers to these kinds of questions. Will investigate. And if other readers want to share resources, please do.
Thanks, Andy, for raising this important question, and to others for very open and frank comments. I will definitely check out some of the suggested resources.
I’ve been a nonprofit executive at varying levels for 30 years. I can’t say I’ve ever had a board I was enthusiastic about overall. It usually ranged from “not much trouble” to “too much a pain”. Yet every time encountering a board I start with hope.
I’ve also been a board member and chair for a decade (and rotated off after leading the search for a replacement ED to let new leadership have their opening). I like to think I was a different kind of board leader because I came from a nonprofit ED perspective. I strongly supported the ED and protected her as much as possible from micromanagement. I held the ED accountable but in ways that were supported with additional help and mentoring (not nearly enough as I would have like because, yes, I also still had my own nonprofit to run). But there were still times when rancor among other board members as gadflies still almost overwhelmed the small staff and other board.
This basic board design is from the charity model. Wealthy privileged people get together to do “good” with their money and influence (and perhaps shelter some of the wealth). Hire workers to carry out their wishes. And if they get peeved they fire the workers or go off in a snit. Family foundations can so still resemble this. It is largely colonial in origin and practice even if we don’t see that clearly these days. I agree there are limitations on options given the current legal requirements.
And when we go with the more community representation model, which I support, we do lose some of the wealth/influence factor (which, except at an art museum I worked at, seems more mythical than real – I love it when I get a raise with no source for it and yet am told to keep the budget balanced. I’ve turned down raises before to save my budget).
I hope someone can workshop a series of really open conversations on this. The model is broken, imho, but I don’t know what to replace it with. We’d need to get off our positions about which model we support and instead start from interests — the agreed upon fundamental needs that must (?) be fulfilled: fiduciary, community, expertise … — and from there allow a new model to emerge. Then we’d need to get some laws changed to accommodate it. Not unlike changing building codes to allow for more innovative and efficient building practices. PLEASE someone undertake leading this (and yes I would be willing to work on to support the suggestion).
Hi Chris — I think you just wrote your own blog post! And I agree with much of your analysis: the modern nonprofit structure and ethos is a legacy of wealth and privilege.
The conversation you seek has been going on for awhile in a variety of spaces. If you haven’t done so yet, check out Vu Le’s Nonprofit AF blog and also Community-Centric Fundraising, which I discussed in a previous post. I believe the Nonprofit Quarterly has also published articles on this topic.
If you want a real-time conversation or conversation series — a lovely idea — consider hosting it yourself or with a group of peers.
Hi Chris and Andy: As a long time ED and also a Board member of other orgs, I’m very interested in this conversation and would be happy to participate in brainstorming or figuring out ways to decolonize the nonprofit mode. There are so many good opportunities in this space that could be a model for a new way of understanding business, work, and symbiosis.
Hi Cheryl — Thanks! Always looking for good models and stories, so feel free to share any specific examples.
I think there is another aspect of this debate that you did not mention, which is that our reliance on board members for donations and fund raising skews the power dynamics in ways that are very unhealthy. I’ve seen way too many “giving” boards that think they have absolute “power” over the way the organization is run. It would be interesting to pull together community accountability groups (both constituents, and, to Michael Wyland’s point general community members) to have periodic meetings with the board to hold them accountable for community-centered governance. That still doesn’t address the skills gap but it would be an interesting way of putting the power back in the hands of the community.
Hi Molly — Interesting idea! I like it. If you know any examples, please share.
Modest caveat: I think you’re referring to larger, more established organizations. A lot of grassroots groups have the opposite problem — the board is resistant to fundraising. (Indeed, the #1 request I get as a consultant is board fundraising training.) These board members generally aren’t major donors, so that isn’t the source of their power.
A couple of comments to add to the thoughtful discussion:
1) In my 20 plus years of consulting, my three stints as an ED, and service on multiple boards, I have come to observe that executive directors have an enormous amount of agency and they typically get the boards that they build. Have a board that doesn’t do much meaningful work, or even micro-manages? Have you given them meaningful work to do? Are board meetings simply reports of what has already happened or are they thoughtful conversations of what could be? Do you know why your board members choose to serve? I wish EDs put in as much energy reflecting on their own relationship with their board as they do complaining about the board.
2) Government employees likely have similar complaints of the elected officials they serve. Many of our complaints about nonprofit boards are complaints about democratic process. We don’t create enough opportunities for people to learn to function within democracies. We don’t need fewer opportunities, we need more.
My ramblings for the moment.
Meredith
Hey Meredith — Both points are spot-on. Years ago I learned a phrase — “walking the board” — which means having a series of one-on-one conversations with board members to ask questions and test out proposals before bringing them to the full board. If EDs invested more time in board relationships, then — surprise! — the relationships would be more productive.
And… I still have big questions about the model, as detailed in the post. Thanks for sharing your experience and wisdom.
I remember that quite spirited debate! And I was also surprised at the landslide win for the traditional Board structure.
In my time as a Board member, ED and a consultant, I find the majority of organizations that I work with always hope their Board members will do “more.” Now what “more” means is often unclear – and at times unrealistic (e.g. raise $100,00 during the course of the year).
No matter how many Board trainings I do on governance and reasonable expectations of Board participation, EDs are often concerned it is not enough and Board members feel like they bear an unjust burden. I have taken to developing some simple Board orientation materials and a form for Board folks to identify realistic commitments they can make.
Is the Board the best model? Not always. Have we come up with something to replace it? Not yet.
(FYI Grassroots Fundraising Journal was a program of the Grassroots Institute for Fundraising Training – GIFT – where I had the honor to serve on the Board for about five years.)
Hi Robin — I’ve been amused at how many people have reached out to share their memories of this debate. Apparently it was a moment! And thanks for your shout-out to the much-beloved GIFT, which helped to nurture an entire generation of activist-fundraisers.