Board development, governance stands as major issue with nonprofits
Published in the May 22, 2009 edition of Columbus Business First
A number of colleges and Central Ohio grantmakers have become interested in supporting the management and governance of nonprofits. Training programs for managers are most common, but many professionals who work with nonprofits say board development is needed.
The W.K.Kellogg Foundation and the Evelyn and Walter Hass, Jr. Fund recently sponsored a study to strengthen the governance of their grantees. The report, Advancing Good Governance, makes a case for investing in. A copy of the study is available at www.linkingmissiontomoney.org/board_resources.html.
Data on the quality of board governance is not encouraging. The Urban Institute found significant percentages of nonprofits reported their boards were not active or only marginally involved in core board duties such as setting direction, fundraising, and financial planning. Another survey found that only one-third of nonprofit executives viewed their boards as providing effective leadership.
Seeing these reports, many grantmakers are investing in leadership development with board effectiveness as a fundamental component of organizational capacity. In 2006, funding for capacity building exceeded $1 billion, more than double what it was in 2000.
Some grantmakers have concluded their money is better spent on board development than on program funding. Others view board development as a way to ensure the effectiveness of their other grants. One foundation leader noted, “We look at board engagement as a risk mitigation strategy.”
Getting on Board
The Advancing Good Governance report reviews approaches being taken to enhance board governance. One grantmaker provided grantees with a consultant who worked to develop their leadership strategies. It provided each organization with four consecutive annual grants of more than $50,000 to implement its plan.
Another approach is to have due diligence conversations with grantees about board composition, the relationship between the CEO and the board, and emphasis on strategy and financial health.
Rather than focus on individual nonprofits, some grantmakers have targeted the community of nonprofits in a particular geographical area. Common approaches are high-profile conferences or an ongoing series of training programs.
Fundamental to any successful board is populating it with qualified, enthusiastic members. As a result, foundations have sponsored community board-matching programs. The programs enroll people interested in nonprofit board work and train them. The program staff then meet with nonprofits to identify their board needs. The culmination is to match the board candidate with the nonprofit.
One benefit has been that the matched board member is likely to rise to board leadership and connect the board with further board development training. Corporations often run similar programs with their own employees to train them and place them on nonprofit boards.
Building a Program
Some grantmakers have been wary of board development because it can be misunderstood as a way to control rather than as a way to help. The Kellogg-Hass report helpfully includes an appendix listing 34 foundations that operate board development programs along with a brief description of each program and contact information.
It also provides three suggestions for how a grantmaker can constructively begin a program:
- First, begin with the grantmaker’s own board. Credibility suggests that a grantmaker should consider and develop its own governance practices before promoting governance development to others.
- Second, listen to the nonprofits. Design programs based on what the nonprofits say they need rather than on what the grantmaker thinks they need.
- Third, start at a small scale. Don’t make large-scale impact the measure of success. It takes time to develop comfort and proficiency in working on governance issues. Some grantmakers develop their expertise through attending training programs themselves while others encourage their staff to serve on boards as the best way to learn.
The best reason for a grantmaker to get involved in supporting board development is summarized in the foreword to the report: “Some things we do as grantmakers get more attention than others. They are easier to explain in a press release, or in a short conversation with community members, colleagues, and friends. Supporting good governance is not one of these things. This is silent and sometimes invisible work. But it is critically important to the future of nonprofit organizations and the sector as whole.”
Allen J. Proctor was formerly chief financial officer of Harvard University and is the author of Linking Mission to Money® Finance for Nonprofit Board Members. Subscribe to his free newsletter at www.proctorconsulting.org.
Copyright 2009. Reprinted with permission, Business First of Columbus Inc.
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