Insights That Will Drive Your Year-End Giving
November 5, 2020Today’s Talk with Jared Fenton
November 10, 2020Nonprofit Volunteer Boards Have to Go – Jimmy LaRose
Nonprofit Volunteer Boards Have to Go is industry renowned author Jimmy LaRose’s take on what every charitable executive secretly knows…NONPROFIT BOARDS DON’T WORK AND NEVER WILL.
“God first made idiots (that was for practice) then He made boards.” ~Mark Twain
After spending twenty-five years in nonprofit management (having worked with over 700 boards) I’ve determined, broadly speaking, there are three types of boards…
…mediocre ones, useless ones, and really bad ones.
It’s not the fault of the individual volunteer (most of the time), it’s simply a flawed business model that never had a chance to succeed. Here’s what your contemporaries have to say:
“Effective governance by a board of trustees is a relatively rare and unnatural act. Trustees are often little more than high-powered, well-intentioned people engaged in low-level activities.” ~Thomas Holland
“There is one thing all boards have in common…they do not function.” ~Peter Drucker
“Ninety-five percent (of boards) are not doing what they are legally, morally, and ethically supposed to do.” ~Harold Geneen
“Board members are usually intelligent and experienced persons as individuals. Yet boards, as groups, are mediocre. Boards tend to be, in fact, incompetent groups of competent individuals.” ~John Carver
“Boards have been largely irrelevant throughout most of the twentieth century.” ~James Gillies
Nonprofit Volunteer Boards Have to Go
By and large, the vast majority of volunteer board members do not have the time, experience, or skills necessary to manage a good CEO. So inevitably, instead of the members managing the CEO, the CEO is tasked with the annoying responsibility of managing the board. It’s a complete waste of time and effort.
By the way, great leaders are not “managed” in the first place! Furthermore, it doesn’t matter how big or small the organization may be (e.g. major universities vs. the local animal rescue) boards don’t work and never will because…THEY’RE MADE UP OF VOLUNTEERS WHO HAVE A LIMITED KNOWLEDGE OF NONPROFIT ENTERPRISE.
So here’s what civil society has decided is the best way to grow a nonprofit enterprise. Let’s saddle a CEO with a group of disengaged volunteers, who may or may not regularly gather to share their opinions. Each board member is equal to the others and gets a full hearing, regardless of their competencies. This group is all-powerful and is accountable TO NO ONE.
It’s unnatural. It’s never worked. It never will.
Simply put, THE EMPEROR HAS NO CLOTHES and no one is discussing effective alternatives. How is it that the oversight of our sector (upon which society relies for safety, health, and provision) could be left to the mediocrity of disengaged volunteers?
But Jimmy, what about those successful nonprofits? Don’t they have great boards?
Don’t kid yourself! Successful nonprofits are not run by boards; they’re run by strong CEOs, in spite of the board. Another way to look at it goes something like this…what would GE, Apple, or Amazon look like today if they had been managed by a disengaged volunteer board of directors?
Here’s What Boardsmanship IS NOT!
I’ve figured this mess out. First, let me tell you what good boardsmanship IS NOT:
Boardsmanship IS NOT Governance.
Don’t kid yourselves. UNPAID BOARD MEMBERS DON’T GOVERN. Actual governance occurs when a person (with a full-time salary) supported by various paid staff (the formation of a government) is empowered to perform the daily tasks of
decision-making and oversight. Strong CEOs GOVERN!
Boardsmanship IS NOT Visioning.
VISION is the way MISSION is achieved and is never the responsibility of the board because the board isn’t being paid to accomplish it. STRONG CEOs ARE TRUSTED TO CREATE VISION. (I agree that board members hold their compensated
leader accountable to achieve MISSION.) Here’s what you do. Hire a strong CEO who has a history of designing VISION that accomplishes MISSION in ways you never dreamed possible. Believe me, strong CEOs are already doing it their way even if they feel the need to label their activities as “BOARD VISION.”
Boardsmanship IS NOT Policy-Making.
Hire a CEO whose depth of experience and formal education has already equipped them as a management expert. The right CEO has been properly trained to oversee the creation of policies that work. Board Members never write policy
anyway. Someone else does the heavy-lifting and they rubber stamp it.
Boardsmanship IS NOT Volunteerism.
Eliminate the special events committee. Eliminate the fundraising committee. Eliminate the public relations committee. Eliminate the strategic planning committee. (Here’s a good rule of thumb – remove everything from your by-laws that’s not
related to IRS compliance.)
OK, OK…What is Great Boardsmanship?
Great boards do two things. They provide ADVICE & ACCOUNTABILITY!
The STRONG CEO is named chair of the nominations committee and fills these SIX POSITIONS (yes, you only need six [plus]):
1. Business Expert (Chair) Entrepreneur
2. Program Expert (Secretary) Specific
3. Finance Expert (Treasurer) Accountant
4. Legal Expert (Member) Lawyer
5. Communications Expert (Member) PR/Marketer
6. Nonprofit Expert (Member) Consultant
THAT’S IT! (add other experts as needed eg. personnel, etc.) However, don’t forget, working group theory states that any “working group” with more than seven people is no longer a group that works!
Here are their ten ADVICE & ACCOUNTABILITY functions:
1. Comply with IRS Regulations
2. Hire strong Chief Executive Officer
3. Approve Meeting Agenda
4. Approve and Amend By-Laws
5. Choose and Review Independent Financial Audit (annual)
6. Choose and Review Independent Program Audit (annual)
7. Evaluate strong Chief Executive Officer
8. Attend Three Meetings Per Year with Recorded Minutes
9. Support the CEOs Vision (not the boards vision)
10. Provide CEO their expert advice
Strong CEOs Are The Key To Building Capacity (NOT STRONG BOARDS)
After years of applying countless board theories to real world nonprofits, one could suppose that John Carver came close with his model, but ultimately failed nonprofit enterprise. Even Carver saddled the strong CEO with responsibilities to volunteers who never should have been in authority in the first place. Unfortunately, the data indicates that boards who embraced the Carver Model are as useless today as they were thirty years ago.
Allow me to cite, yet again, our collaboration with Clemson University. NDI, in partnership with Clemson, performed a study using a clinical sample of 470 executive directors who participated in a 90 question survey regarding capacity building. The focus of the study was to investigate the relationship between the efficacy of capacity building and the intentions of the organization’s leadership to embark upon capacity building. This was a necessary behavioral study, in that previous works failed to show any empirical data regarding the relationship between a nonprofit’s ABILITY TO BUILD CAPACITY and the actual return on the investment made in time, human resource, and monies spent on capacity
building.
Here’s what we discovered:
Organizations that were successful at demonstrating a measurable return-on-investment in capacity building were led by extraordinary executives (CEOs/Presidents/Executive Directors). These executives possessed specific attitudes, beliefs, and skills sets. They also took personal responsibility for project implementation and outcomes.
Here’s what successful CEOs accomplished:
a. They built more capacity over a five year period than those nonprofits who indicated they stagnated or declined during the same time period.
b. They grew budget, programs & donors, despite the recession.
c. They grew their nonprofits regardless of the size or involvement of their board.
d. They externalized the mission of their organization for the purpose of fundraising.
e. They developed board members who evaluated the chief executive and promoted the goals and values of the CEO.
The greatest contribution we can make to the nonprofit sector is to do whatever it takes to attract, pay and empower great CEOs.
In closing, please re-read this article. Let’s end the insanity.
Your Champion In All This,
To learn more about Jimmy please visit JimmyLaRose.com. To contact Jimmy email [email protected] or call 800-257-6670.
Nonprofit Volunteer Boards Have to Go was first posted at INSIDE CHARITY
For more articles like Nonprofit Volunteer Boards Have to Go VISIT HERE
9 Comments
Thank you for the time and effort writing the NVBHG how succinctly you exposed the situation.
I am UK based and have set up and run a very successful charity for over 30 years and you just wrote my life story.
The UK system seems very similar to yours and has exactly the same problems.
All the very successful UK charities (non profits) seem to be run by ‘benevolent dictators’ with Trustees effectivly appointed by them just to provide the credibility for the ‘authorities’.
As a non profit executive with over 30 years experience and many years as a volunteer board member for various organizations, I no longer serve on any board because I have found them ineffective, time-wasting, and in some cases malevolent toward the organization they are charged to manage. CEO’s and management staff at organizations have far more vested interest in growing the organization and in managing it well than any non-profit board.
I have been working in the nonprofit sector for close to 25 years and agree 1 zillion percent with everything you say. I joined the nonprofit where I serve as CEO 3.5 years ago. It was carrying significant debt and it was making its way toward almost certain demise . I accepted the challenge, particularly because the Board said they wanted someone to take them to the next level. I thought they were ready for change. When I got there, I was met with resistance all around regarding changes that needed to happen. Fists were pounded on desks, I was told I didn’t understand the agency, fingers were pointed, unrealistic ideas were floated so we could avoid change, it was suggested that I was overinflating the financial problems, etc. etc. I found a few allies on the Board and was able to move my plans forward. What could have been accomplished within the first year dragged on for the better part of 3 years. We ultimately paid off debt, sunsetted under-performing and under-resourced programs and have established healthy reserves for the first time in the organization’s almost 5 decades in business. It would have been so much easier to have a structure that you describe. As I look to the future and rebuilding, I’d love to reconstruct the Board. Question is how does a nonprofit CEO move the needle toward rebuilding an entrenched Board with no term limits as you suggest?
Love to talk this over with you Janet (moving the needle with entrenched boards.) GREAT COMMENTS!
Give us a ring at 803-808-5086
Will do… when I am done completing a final review of materials for tomorrow’s Board meeting! 🙂
This is fascinating. i really enjoy your insights and look forward to hearing more.
Happy New Year!
Great read. I am learning the hard way and must say you are absolutely correct. The issue I see is that non-profits are usually stated as some sort of goundroots movement that eventually becomes organized. For the vast majority of organizations there is no templates or how to transition from a full volunteer based non-profit to hiring employees. That is my struggle now.
So Jimmy you’re unfortunately spot on about all of this. Nonprofit boards tend to draw the folks that have been successful in their companies within their respective industries. They are geared over their professional lifetimes to focus upon their successful business and customers, and frankly in many cases are not required (or allowed) to cooperate or coordinate with their competitors so the very nature of cooperative mission-based work is unnatural. It’s almost hard to blame them, and this problem is more acute in certain fields than others. They take their expertise that worked for their company and many times realize this does not translate to nonprofit board work. Faced with their imminent failure the question becomes – do I stick with what I know and plow through as the “disruptor”, change for these people, or get frustrated and wait out the term or resign in frustration. In particular at the board level the relationship to their servant-leader staff CEO and management team is almost always unclear despite any efforts to address, and the nature of the relationship changes every new board term forcing the CEO to be a chameleon for the people that think they know better. (Caveat – there are good board members out there) In my experience this makes the member fall back on what they knew – likely operations and direct management of resources, basically inserting themselves into the CEO role. These are not the wheelhouse of nonprofit board members unless there is no full time staff, but successful people don’t like being told that their approach is not appropriate no matter how gently. People that have not really needed to be accountable to anyone other than their customers don’t like structure that they feel restricts them, or a CEO that says they can’t, or should do something. Big picture strategic directions, actual governance and compliance (which are important and very time consuming yet the role of a board or executive committee to free up the critical bandwidth of the CEO to get on mission), capture and use of valuable perspective/input from the industry that the nonprofit serves to drive future value, and authority in direction/decision making all suffer drastically. Board of Directors should direct, support, and drive, not act as a board of micromanagers. There is literally no way for a member to know all that the nonprofit CEO does – the who’s and what’s and where’s and how’s of getting things done, the precarious value of the hard-cultivated and maintained relationships and partnerships, the personal connections that make things happen on behalf of the nonprofit, and the accommodation of all the sensitivities and unintended consequences of action (or inaction) the CEO knows lurk in the shadows of the mission’s challenges. Of course all of this, and your words, sound to the common ear like marginalization of the board role which we all know is not the intent. The Board is essential. The intent is to create a supportive and symbiotic rational relationship so that the nonprofit can be empowered by the members that know the respective industry it serves better than anyone, and bring that guidance to bear on programs and services and support through the CEO that make the nonprofit a valued and critical resource of community to the people that depend upon it. Does that happen often? Not so much. 🙁 Sorry for what became a bit of a rant I’ve watched this train wreck over more than two decades and it just stings. Your article got me fired up. FYI to any board members reading this: You are extremely appreciated, but you are not a corporate majority shareholder, you are a leading stakeholder to the organization and the industry/interests it serves, and your job is to shepherd both to the next level of success and impact by relying upon and supporting your staff. That’s it, and your efforts will come back to you in spades if you know how to identify and market it. Check your alpha personality at the door (really) and get on the team. Success is readily shared by everyone, but failure is often the sole domain of the CEO…that needs to change, and when it does it will instruct the expectations, decision process and desires of board members who will realize they are also accountable.
I’m currently writing an article about the flawed nature of non-profit board structure myself, with a focus on how boards get in the way of diversity, equity and inclusion/anti-racism work in the organization. I’m pretty sure most CEOs will agree that if we are successful it is in spite of our boards, not because of them.
But here’s the thing: how do we change this? I’ve read several articles lamenting the ineffectiveness of boards, but none of them outlines how to fix it, only how to deal with it in its current form. IMO one answer is to eliminate the restriction on the number of board members that can be paid, which is currently less than half. If boards could be comprised of slightly more than half staff, or all staff even, then the true leadership of the organization could be the decision-makers.