Nonprofits must re-examine what their boards can, should achieve

Published in the August 29, 2008 edition of Columbus Business First

A number of readers have asked how boards can spearhead development of an effective strategy. 

This question brought to mind Governance as Leadership, Reframing the Work of Nonprofit Boards,  a provocative book published by Richard Chait, a highly regarded Harvard professor.  The book challenges what it is we want boards to do.  Chait asks, “Why do nonprofit(s) go to such great lengths to recruit the best and brightest as trustees but then permit these stalwarts to languish collectively in an environment more intellectually inert than alive?”

Chait starts with three reasons why a nonprofit should want to have a board.  First, a nonprofit acquires legitimacy by recruiting board members who are respected in the community. 

Second, a board meeting provides a deadline for management to pull together a sensible and coherent account of how and what the organization is doing. 

Third, a board provides an incentive for managers to attend to their duties. 

While these are good reasons for having a board, they are not very compelling reasons for becoming a board member.  To address this, Chait delves into how a board can appeal to a board member.

The fiduciary duties of a board are essential.  The board must ensure money is used properly, mission is the focus of effort, and services are effective and in compliance with laws and regulations.  Chait cautions against overemphasizing this role because meetings become overly narrow, and “the board develops such a limited sense of the organization that the board’s ability to challenge and enrich organizational thinking atrophies.” 

The strategic duties of a board are essential, particularly in fostering a dialogue on new concepts.  The board must not leave this up to the chief executive, Chait argues, because mandating and monitoring a strategic plan deprives the board of a key governing role and it deprives board members of being engaged. 

Chait criticizes boards that focus on how to get to a goal rather than on what the goal is and why it is important. 

“Boards are better suited to think together than plan together, to expand the essence of a great idea rather than elaborate the details of a plan.” 

Board should pose fundamental questions, Chait says, such as:

• What will be the consequences to this university now that others have made knowledge free on the Web?
• Can we flourish in a neighborhood in decline?  If not, do we relocate?
• Is the business model of this and other performing arts organizations viable over the next 20 years?  If not, what has to change? 

To emphasize this point, Chait coins a new term:  generative governing.  By this he means governing that focuses on thinking and making sense of the past, present, and future of the organization.  A board does this by questioning assumptions, probing feasibility of activities, and identifying obstacles and opportunities.  This corrals the power of a diverse board to use their multiple perspectives for disciplined thinking to develop strategy. 

Chait challenges us to question the structure of our board meetings.  Rather than fixed agendas with presentations and votes, he urges board meetings to become discussions of fundamental issues, in many ways adopting the tone of board retreats for a portion of every board meeting. 

Ideally, the board needs to maintain balance among all three roles: fiduciary oversight, strategy formulation, and open-ended thinking.  Acknowledging this is pretty abstract stuff, Chait provides three short, yet useful exercises for boards to use to make sense of what governance is and what kind of trusteeship is most beneficial to their nonprofit. 

The value of Chait’s book is his challenge to us to make our boards into thinking boards that consider questions such as how we have succeeded in the past and why, what is happening in our industry and will that strengthen us or challenge us, what was the community need that brought us into existence and how has it and will it change?  If we can do this, the board will have an effective way to spearhead development of a strategy.

Allen J. Proctor was formerly chief financial officer of Harvard University and is the author of Linking Mission to Money(R) Finance for Nonprofit Board Members. Subscribe to his free newsletter at www.proctorconsulting.org.

Copyright 2008. Reprinted with permission, Business First of Columbus Inc.