“Board Paradox” was the name of the third report for the 2011 Daring to Lead Study (undertaken by Rick Myers, CompassPoint Services and the Meyers Foundation, San Francisco, 2011) with relation to the ongoing dilemma between top leadership in nonprofit organizations and their board of directors.

Nonprofits have been growing at a breakneck speed.  The number of all nonprofits in the United States grew 25 percent while the number of for-profit businesses rose by half of 1 percent, according to the most recent figures compiled by the Urban Institute.

Roughly 1.6 million nonprofits employed 10 % of the domestic work force in 2010 and accounted for 5% of G.D.P.  While approximately 40% are NOT charities and include the likes of the National Football Association, the growth has been attributed to charities that have responded to the needs of individuals during a recession. 

As a society, we are also becoming more aware of the needs of citizens who have fallen on hard times; or someone has decided to form a charity because a related family members illness.

Daring to Lead: The Study

In 2011, there were more than 3000 executive directors who responded to the survey.  Two other briefs, Leading through a Recession and Inside the Executive Director’s Job contain equally as compelling information.

Over the course of ten years, this study found that nonprofit boards are neglecting their responsibility of governance, while focusing on financial oversight; despite these challenges the majority of executive directors are not spending the necessary time to invest in their board development; and those that do spend more time on this critical function, demonstrate higher satisfaction with their boards.

Satisfied with Board Performance

In 2011, there were 959,699 IRS 501 (c)(3) registered nonprofits in the US and 100,337 private foundations.( https://nccs.urban.org/statistics)    Guidestar today, recognizes 1.8 million nonprofits, which includes all of the 28 sub-categories for assuming that status:  professional trade associations, educational groups, civic clubs, granges, research facilities etc. (www.guidestar.org)  The Daring to Lead research series pertains strictly to the charities mentioned in the first line of this paragraph.

These findings outline a distinct departure from the Daring to Lead study 2006 when more than three quarters of executive directors indicated they had planned on leaving their  posts within the next three years.  Board performance was one of the critical factors leading to those decisions.  Less than half had alerted their boards; nor moved towards succession planning.    

Because of the economy, many stayed on to complete their work; yet, the lackluster performance of their boards which exacerbated executive director burnout suggests that not really much had changed during that time.  

A Snapshot of Board Performance

Let’s look at some of the other findings.      

When engaging your board, there are critical components for relationship building.  Key to all of those components is communication and in particular, a clear articulation of what expectations of both bodies are and how/who will be held accountable by whom.

Here’s how executive directors perceived their board development.  Board performance was underwhelming.  The relationships were good.  So what else could you do to assure that board performnce is stellar?

Board performance evaluations have become an essential piece for all nonprofits, equally, if not as important as a viable executive director’s performance review.     

Forty-five percent of NPO leaders never had an evaluation by their board.  Of those that did, here’s what was determined.

Thirty-two percent found them useful; while 62 % found them either hardly useful or not useful at all.  Startling.  It lends oneself to think about the wealth of talent sitting around a board table and what the average salary of those individuals are.  Are board members not held accountable in their own place of employment?  Why would they forget to review the work of the executive director in a way that was meaningful and more importantly useful?

Survey monkey does not provide an adequate means for you to divert the responsibility of a leader’s evaluation. A Likert scale asking questions such as: how effective do you believe so-and-so’s performance is?  On a scale of 1 to 5 tell us how much you like the executive director. Of what significance are those questions?

Board members should determine outcomes in cooperation with the executive director and align them with their annual budget.  Who is responsible to do what piece is equally as important and can be outlined in their annual plan.    

Executive directors did find significant support in these areas:

Financial oversight is the overwhelming area of board support; I would challenge many of the local nonprofit board members to recite what the last financial report stated.  Fund development, one of the key areas of most working boards (some are exclusively governance or advisory), ranks below 50% in significant support.  Why do you believe that is?    

Here’s how the fund development support broke down:

Of the 47% that were assisting in their area, more than 60% made a personal contribution.  Does your board have a minimal amount of dues for each member to donate?  Waiving this responsibility verges on complete irresponsibility and disregard for the mission of the organization upon whose board, you happen to sit.  As part of your board vetting process, you should ask each individual are they able to contribute a minimal amount and then what else?  What else can that perspective board member bring to the table?

Evidence

“Focus groups for this and previous Daring to Lead studies discovered evidence that some executive directors do view their boards as a necessary nuisance, are skeptical of boards’ ability to add value, and therefore put forth the minimum required effort to help the board function. However, the results of this survey suggest that time invested by executive directors in supporting and working with the board contributes to improved board performance and increased board member engagement.” Rick Myers

An Interlude of Questions

If you are presently serving on a board, and some of this information speaks to you here are a few questions for you to raise at your next meeting.

1.      How are we held accountable?  Review the “secret agreements” those where someone can’t make the required number of meetings, but it’s important to have their name on the masthead. Or, if someone can’t make the monetary pledge, why is it that they deserve a seat at the table?

2.     How do we rate the performance of our executive director?  Get a clear picture of performance evaluation and realize that it’s not a once a year job.  Just as in your own workforce, employees should be held accountable every single day, every month, and every quarter to certain standards.  You can’t wait until an annual review to inquire about a particular program performance that occurred 9 or 11 months ago. 

3.     Take a hard look at expectations.  Are you asking too much of your executive?  Is it realistic for you to presume they can do all of this work with their limited staff?  How do you know that to be true?

4.     Along with the rights of becoming a board member, comes the responsibilities.  Titles are so unimportant.  If you are a board member, prove it.  Recite the mission, understand the programs that are mission related and be prepared to articulate your impact.

Calls to Action from the Study

1.      Invest time in the board.  Board development should be on the agenda for every board meeting.  Again, weigh the value of each board member’s time.  Why would you want to waste that much money arguing over the color of the logo; the placement of an ad; the hiring of a staff person?  Realize the differential between administrative and board responsibilities and stick to them.  Have conversations about what is important and relevant to your mission, your clients, and your impact.

2.     Seize Best Practices.  Look to see what other well-run, successful organizations are doing in your community, or beyond your community.  Stretch yourself to achieve excellence in service both to your clients and to your board.  Create realistic job descriptions for your boards, your committees, your volunteers and provide orientations regularly.  Do you grasp everything the first time that you hear it?  Are you speaking in a language that all board members understand?  Understand how all performances will be evaluated.

3.     Develop and Implement New Strategies.  Again, building on what you know you don’t know, go exploring. Provide time for hearty discussions that are mission related and leave the committee work to the committee until it’s time to make a decision.  Then, if it’s outside of the budget, then and only then, bring it to the board. Your budget sets policy.  Policy has to do with spending of your money and is discussed during your annual planning retreat. 

For more information about the Daring to Lead studies, contact Kayte Connelly CCT at Kayte@bestprincipledsolutions.com.   Connelly is a certified, professional leadership coach and organizational development consultant.  She has written a critically acclaimed book, “Engaging Your Board: It’s Raining Yen.”  You can subscribe to a series of tips for how to better your board at www.engagingyourboard.org  Connelly was the only coach/consultant in the Eastern/Southeastern PA region to participate in the Coaching and Philanthropy research project through 2008-2010 undertaken by CompassPoint and the Meyers Foundation.  Call 484.769.2327 for more information.