Strategic selection of directors key to growth, fundraising, experts say.
By Todd Cohen
Picking board members can be the toughest, most important job a nonprofit faces, experts say.
Expected to play a critical yet different role at each stage of its nonprofit’s evolution, they say, the board can mean success or failure in developing an organization’s operations, programs, culture and growth.
“The biggest issue in the nonprofit sector is the role of the board,” says Karla Williams, principal of The Williams Group in Charlotte, N.C. “The role of the board is the most complex, the least understood dynamic of the nonprofit sector.”
So recruiting a board requires a strategic approach that aims to match the know-how, interests and attributes of prospective board members with the needs, direction and goals of the organization, experts say.
“The most important [board] committee is the nominating committee,” says Tim Plumptre, president and founder of the Institute on Governance in Ottowa, Ontario. “Your board is only as good as the people who are on it, and many nonprofits do not pay attention to recruitment strategy, having a strategic approach to it.”
And with growing scrutiny of nonprofits by donors, regulators and the public because of reports of charitable scandal and excess, experts say, boards face even greater pressure to be actively engaged in leading and overseeing their organizations.
While the federal Sarbanes-Oxley law that spells out rules on disclosing financial and accounting information applies to publicly-traded corporations, similar rules “will be coming” for nonprofits, says Carter McNamara, a partner in Authenticity Consulting in Minneapolis.
“If boards do what they should be doing,” he says, “they’ll be fine.”
In putting a board together, a nonprofit should think strategically, looking for board members who can provide the know-how to meet the organization’s needs.
“You want to build a board based on the expertise you need based on your priorities or strategic planning,” says McNamara, author of Field Guide to Developing and Operating Your Nonprofit Board of Directors. “You should staff your board with the expertise to achieve your goals rather than big names.”
While nonprofits just getting started require “working boards” and nonprofits that are more mature may be focused on issues like policy or fundraising, McNamara says, all boards are responsible for governing the organization.
In reality, however, governance requires a partnership between the board and the executive director, he says.
“If an executive director doesn’t want an active board,” he says, “there isn’t going to be an active board.”
The key tasks of a board, he says, are setting the organization’s strategic direction, managing risk, providing oversight, reporting to funders, measuring performance, and raising money.
So boards typically need a mix of members who between them have expertise in finance, fundraising, marketing, personnel and administrative programs, and the boards typically should organize themselves by committees that address those issues, McNamara says.
“I always encourage clients to look at board members as just a set of tools,” he says.
Nonprofits should recruit board members who are willing to roll up their sleeves, McNamara says.
“Most board members want to be a strategic, useful board,” he says. “The best way to get good board members is to give them something to do. The best way to get rid of board members you don’t want is to give them something to do.”
A nonprofit’s growth and effectiveness depend on boards with expertise that is in sync with the organization’s strategic needs at each stage of its development, says Williams.
Just as it needs “big thinkers” on its board when it is getting started, she says, an organization that is beginning to create a management structure needs people who understand how to run a business.
Then, as a nonprofit develops and expands its programs, its board needs members who represent the community the organization serves and possess expertise in setting and overseeing policies, procedures and goals, and measuring outcomes.
Finally, as a nonprofit seeks to renew and change itself, it needs a board with members who are innovative and possess high-level expertise in the program areas that are the focus of the organization.
Boards should be “recruited to help the organization reach its full potential at every cycle,” Williams says.
What’s more, she says, with a board that is aligned with its evolving strategic needs, a nonprofit can grow in sync with the evolution of its fundraising program.
“The rationale for raising money, the role that philanthropy plays, is tied to the focus at each stage,” says Williams, author of Donor Focused Strategies for Annual Giving.
If the board’s agenda at each stage in the organization’s life cycle is crafted to address the needs of that stage, she says, “then the board members will be naturally inclined to want to raise money for what’s needed at each stage.”
Boards typically do “not get” fundraising or participate in it “because they don’t know what they’re raising money for, why it’s needed or what others are doing or what they should do,” Williams says.
“If the board does not see philanthropy as the answer to a gap in funding, at the highest possible level, they’re not going to be involved in it,” she says. “When people complain about their boards, it’s not the board’s fault, it’s the staff fault. It’s the executive director.”
Sadly, Williams says, nonprofits and groups that advise them on board issues often use a “cookie-cutter” approach that fails to account for the nonprofit’s evolving and specific needs.
A big mistake nonprofits make is to select board members “purely because they are someone important in the community,” Williams says.
And in selecting board members for their expertise, she says, a nonprofit should be thinking ahead about the strategies it will be addressing in the future as well as in the present.
A growing issue in the nonprofit world is the need for boards that reflect and represent the communities that nonprofits serve, experts say.
“Boards should be embracing cultural competency, looking at diversity from ethnic, geographic, age and gender perspectives, and possibly sexual orientation, religion and politics,” says Tangie Newborn, executive director and CEO of the Alliance for Nonprofit Management in Washington, D.C.
Cultural competency is a “vital component for nonprofits to be effective and to realize their missions and understand each other culturally,” she says.
McNamara, the Minneapolis consultant, says boards need diversity of “perspective, values and opinions.”
Plumptre, citing “Governance as Leadership: Reframing the Work of Nonprofit Boards,” a book developed in a project co-sponsored by BoardSource in Washington, D.C., says board members bring different types of capital to a nonprofit, ranging from intellectual and “reputational” capital to political and social capital.
A useful approach to assembling a board, he says, is to consider the constituencies, skills and “assets” that the board needs.
“Board members don’t just bring money or fundraising capacity but bring other assets,” Plumptre says. “One doesn’t just need to think about skills, but the assets that are needed, and how to bring those onto the board.”
Williams says a board ultimately is responsible for its nonprofit’s “culture of philanthropy,” a culture she says should pervade the organization and is critical to its success.
“Everybody in the organization shares the responsibility for philanthropy,” she says, “for creating it, sustaining it and celebrating the philanthropic culture.”