Bored Boards? Not Anymore!

A Call To Action For Nonprofit CEOs: Put Your Board To Work During A Crisis: As part of the research Matthew Craig and I conducted for our forthcoming book, Building Smart Nonprofits, we interview more than sixty nonprofit leaders from across the United States.  In short, we learned…well, a lot.  One of these lessons is that it’s often difficult for nonprofit CEOs to strike a balance between making effective use of their boards and allowing staff the autonomy to manage their organizations without Big Brother poking his nose in every ten seconds. Some argue the solution is simply to let management and their teams run the shop, while safely quarantining board members in the waiting room and politely asking them not to scribble on any of the magazines. But failure to create and maintain an adequate power balance can have catastrophic impacts on all stakeholders – board, leadership, and staff – within an organization.  It can also erode mission success.  Planes, after all, need two wings to fly. To be clear, not using the board’s talents judiciously can lead to member apathy (“bored boards”), MINOs (“members in name only”), “bobblehead” or “rubber stamp” boards, and, equally as insidious, deprive the nonprofit of valuable (and free!) resources and “big picture” expertise.

One need only look at the current health and economic crisis to see a clarion call to CEOs to adopt an “all hands on deck” approach by empowering their boards. The “great man theory” of leadership begins to look increasingly anachronistic in today’s complex and interconnected world. This goes double during a global calamity, when nothing short of organizations’ survival and that of their many stakeholders is on the line. Unfortunately, that’s where we find ourselves. And no one, it seems, is immune to the challenges we face.

As was recently reported by Julia Halperin in artnet News, “The Metropolitan Museum of Art sent shockwaves through the museum world…when it revealed that it expected to lose as much as $100 million and remain closed until July as part of a global effort to fight coronavirus. Layoffs, its leadership suggested, were likely.  Many administrators at other museums immediately wondered: if an institution as wealthy as the Met, which has an endowment of more than $3 billion, will struggle to survive the pandemic without drastic measures, what hope is there for the rest of us?”

So, what to do? Apart from the immediate benefits of unleashing a team of highly experienced and dedicated people to help weather the storm, engaging the board in crisis management can also bring significant benefits when the turmoil passes.  To quote Rahm Emanuel, “You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things that you think you could not do before.”

One silver lining to the current COVID-19 conflagration may well be the teambuilding benefits that will likely accrue from the board, CEO, and staff working together to resolve the challenges arising from the crisis – in many cases ensuring survival of the organization and its mission.  Dr. Stephen R. Covey said it better than we can: “Synergy is better than my way or your way. It’s our way.”

You get the point.  Let’s look at some examples of how a few nonprofits we know are taking their boards out of the closet during these difficult times.

The Finance Committee

As finance folks, we’ll start with our favorite. Let’s face it – the bean counters (your humble authors excepted) are not exactly a barrel of laughs.  And finance committee meetings are often mired in what Richard Chait, William Ryan, and Barbara Taylor describe as the Fiduciary Mode in their terrific book on nonprofit board leadership, Governance As Leadership, where (in many organizations), “the board’s work becomes so predictable and perfunctory as to be tedious and monotonous.” This state of being tends to be centered on “good oversight of operations, legal compliance, and stewardship of assets.” Sure, it can’t all be rainbows and unicorns — (sorry, one of us has a young daughter). But the authors go on to describe equally important modes of operation – like determining where the organization should be going and what questions the board should be asking.

Today, many nonprofits are taking their finance committee team off the bench to help navigate the myriad sources of emergency relief available through the recently passed CARES Act. Funding programs such as the SBA’s Economic Injury Disaster Loans and the Paycheck Protection Program demand financial acumen to help organizations marshal resources and use them in accordance with government mandates.  Trust us: Having been through the process, we can tell you it requires considerable time, expertise, and minefield-avoidance skills.

Human Resources

During any crisis, an organization must go to great lengths to protect its most valuable assets. With nonprofits, this undoubtedly means its human resources. Apart from the obvious humanitarian concerns, staff cohesion, institutional memory, and knowledge of organizational processes may not appear on the balance sheet, but the costs of replacement are enormous! And who knows when the nonprofit will have the resources and bandwidth to rebuild this asset if personnel simply can’t survive on diminished incomes and depart for greener pastures?  Ensuring that employees receive reasonable compensation – including available government resources if necessary – is therefore another task where the members of the finance committee can assist.

The Sustainability Committee

Although few could have predicted the full impact of the coronavirus pandemic, the fact remains that nonprofits are woefully deficient in their reserves. Before the crisis, the majority had less than three months of operating expenses socked away, and many lacked contingency plans.  In short, most nonprofits hadn’t even saved for a rainy day.  There are many lessons to be learned, but here’s one that incorporates the theme of putting board members to work – not just in times of crisis but on a permanent basis: Now is the time to launch the sustainability committee – a new standing committee of the board.  Yes, we can hear the howls of protest:  Another committee? “Don’t we already have this? It’s called the finance committee.” To which we’d (respectfully) reply, “Emphatically not!” Sustainability goes well beyond the balance sheet, statement of activities, and cash reserves. Yes, these are all important, but this new committee should be a cross-functional enterprise that’s tasked with continuously exploring existential risks, funding model alternatives, and strategic restructuring options. In our rapidly changing world, no organization can be too sustainable. And therefore issues affecting sustainability have to be constantly investigated and debated. What better time to start then when events in the world have grabbed everybody’s attention!

These are only a few examples of how board members can be more effectively used to help get through a crisis and apply the lessons learned to future success. As Chait and his team explain, successfully toggling the work of the board repositions its role from that of traffic cops to co-leaders with the organization’s executive team. And individual board members feel revitalized and re-engaged because they are encouraged to contribute their specialized skills to improve sustainability and mission impact.

Written by David O’Brien, Have you read?
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