haas alumni dynamic nonprofit boards apr30 2011

Click to edit Master text stylesSecond level

Third levelFourth level

Fifth level

Dynamic Directors, Dynamic Nonprofit Boards

Discussion Outline

April, 30, 2011

Haas Alumni Weekend



Fifth level

BOARD EFFECTIVENESS OFTEN ARISES AS A NONPROFIT CONCERN

“The motion has been made and seconded that we stick our head in the sand”

2



Fifth level

OUR DYNAMIC AGENDA

• Dynamic boards• What are they?• What do they do differently?• How do you create one?

• Dynamic board members• Where do they come from?• What do they do?

3



Fifth level

McKINSEY RESEARCH FOCUSED ON 3 MAJOR QUESTIONS

• How important is a high-performing board?

• What are the characteristics of a high-performing board?

• What are the best practices in building a high-performing board?

5



Fifth level

THE GOVERNANCE GAP

• 97% said that a high-performing board was important to a high-performing nonprofit.

–However, only 19% said they were tapping their boards’ full potential

• 94% felt that their boards provide the appropriate level of strategic guidance, however…

–However, only 46% thought that their directors would be able to summarize both the mission and the vision of their organizations

• 77% of respondents indicated a desire to improve board fundraising, but …–Just 21% set individual board member fundraising goals–Just 38% provided fundraising training–Moreover, a mere 16% reported having individual board members receive

formal feedback on their performance at a regular interval

Source: McKinsey survey of social services organizations

6



Fifth level

THE DYNAMIC NONPROFIT BOARD FRAMEWORK

Sha

pe m

issi

on a

nd

stra

tegi

c di

rect

ion

Monitor and improve performance

Monitor external and internal environment to highlight areas for board attention

Environment

Ensure leadership and resources

Ensure quality performance across 3 key board roles

Develop set of enabling practices around board composition, size, structure, and processes

Enablers

7



Fifth level

SHAPING THE MISSION AND STRATEGY

Scenario 1• Board has common understanding of

the mission• All agree on where organization wants

to be in five years• Staff develops strategic plan for board

review• Plan describes specific targets and

actions to achieve goals• Management and board agree on

distinction between board-level and management-level decisions S

hape

mis

sion

and

stra

tegi

c di

rect

ion

Monitor and improve performance

Ensure leadership and resources What’s strong or missing in

this approach to the shaping role?

8



Fifth level

ENSURING LEADERSHIP AND RESOURCES

Scenario 2• Board has shared belief that CEO is doing

a good job despite a weak “bench” of functional managers

• Board has some understanding of funding needs from discussions of annual budget

• All board members support the organization financially and work with staff to introduce prospective donors

• Directors participate in community outreach

• Board members actively bring expertise to board discussions.

Sha

pe m

issi

on a

nd

stra

tegi

c di

rect

ion


Monitor and improve performance What’s strong or missing in

this approach to the leadership and resources role?

9



Fifth level

MONITOR AND IMPROVE PERFORMANCE

Scenario 3• Board approves annual financial plan and

monitors results quarterly• Board funds independent audit of

financials annually and oversees regulatory compliance efforts as needed

• Board evaluates members performance as part of bi-annual renomination process

• Board annually assesses its own performance and uses results to inform multi-year plan to address deficiencies

Sha

pe m

issi

on a

nd

stra

tegi

c di

rect

ion


• Monitor and improve performance What’s strong or missing in

this approach to the monitoring and improving performance role?

10



Fifth level

9 RESPONSIBILITIES OF NONPROFIT BOARDS

Sha

pe m

issi

on a

nd

stra

tegi

c di

rect

ion

Monitor and improve performanceE

nsure leadership and resources

• Select, evaluate and develop CEO

• Ensure adequate financial resources

• Lend expertise; provide access to people

• Enhance reputation of organization

• Oversee financial management, ensure appropriate risk management

• Monitor performance, ensure accountability• Improve board performance

• Shape, clarify mission and vision

• Engage actively in strategic decision making and policy decisions

11



Fifth level

Perceived importance for next 2 years• External changes• Internal factors

Performance• Self assessed• Capability

ACTIVE PRIORITIZATION IS KEY TO BEING A DYNAMIC BOARD

Poor Distinctive

Lo

w

Hig

h

Finance and risk

Measure performance

Ensure financial resources

Provide expertise

Shape mission

Build reputation

Source: Board surveys

Board composition

Strategic decisions

Select and evaluate CEO

12



Fifth level

DYNAMIC LESSONS FROM OUR RESEARCH

– There are 9 clearly defined roles of a nonprofit board, with a gold standard of performance for each

– Lots of ways boards, as entities and individuals, can help. Pick your spots carefully to allot valuable time where needed most

– Recognize performance management as one of the nonprofit board's core roles

– Invest significant time in board evaluation and continuous improvement

– Good governance is execution, so sweat the little things: good meeting agendas/materials, open communication, having fun.

13



Fifth level

WHAT MAKES A DYNAMIC BOARD MEMBER?

– Join for the right reasons

– Understand responsibilities

– Define a valuable role

– Avoid the pitfalls

– Enjoy the people, the mission and representing the institution

– Give (or get) lots of money and leave us alone!

– Attend and rubber stamp

– Work, wealth or wisdom

14



Fifth level

4 AREAS TO CONSIDER BEFORE JOINING A BOARD

Board composition and working arrangements

Stage and quality of organization

Your interests Board’s expectations of you



Fifth level

16

10 THINGS YOU SHOULD KNOW ABOUT YOUR NONPROFIT

1. Core activities, who, what, where, for how long?

2. Mission, Theory of change

3. Organization chart/profile of key leaders

4. Revenue mix/trends

5. Key cost components

6. Board composition/committees

7. Key peers/competitors

8. Other stakeholders

9. Recent events/public profile

10.Results against mission



Fifth level

ACTION REQUIRED TO FULFILL LEGAL DUTIES

– Be informed e.g.• Attend meetings regularly • Seek and review necessary information

– Exercise independent judgment– Ask questions, rely only on judgment of dependable sources

– Avoid self-dealing transactions– Where directors’ firm provides services or products to nonprofit

• Make conflict known to board• Recuse yourself from discussion and voting• Encourage board to get comparative perspective (by

seeking other bids)

Duty of Care

Duty of Obedience

Duty of Loyalty

– Ensure decisions consistent with charitable mission – Oversee use of funds entrusted by public

17



Fifth level

COMMON PITFALLS FOR NONPROFIT DIRECTORS

• Failing to learn the 10 things you should know about your nonprofit

• Checking business knowledge at the boardroom door – or - assuming business perspective is the only way to look at issues

• Confusing the role of director with the role of volunteer

• Failing to take into account the resource and capacity constraints that limit nonprofits ability to execute all your good ideas

• Forgetting why they wanted you in the first place

18



Fifth level

DEFINING A VALUABLE ROLE AND HAVING FUN

What “business types” bring to the board?

- Business skills in finance, strategy, sales and marketing

- Entrepreneurial experience

- Performance management mindset

- Personal and corporate networks

19



Fifth level

HOW TO BUILD YOUR GOVERNANCE KNOWLEDGE

Nonprofit Boards: Governance and Leadership in Nonprofit Organizations

Two Saturdays 9-5:

October 22, November 5, 2011



Fifth level

Q & A

21

haas alumni dynamic nonprofit boards apr30 2011

Education

board fundraising

board discussions

better board

board review

board effectiveness

board member4

board servicesurveydiscussion

board surveys12