The Debate: Should Boards Raise 10% of a Nonprofit’s Budget?

It seems I raised controversy with my recent post, “Is Your Nonprofit Board Avoiding Their Money Role?”. The hot button issue, not surprisingly, was my assertion that boards should be charged with raising 10% of a nonprofit’s budget.

As I put it:

I know it’s heresy, but I believe that a board should be charged with raising at least 10% of a nonprofit’s annual budget. But that doesn’t mean they all have to write personal checks (or get their friends to write them). Rather, there is an endless list…of ways board members, who are fundraising shy, can bring money in the door. Because why should the entire financial burden be left on the shoulders of the staff? That’s just not sustainable. And if you can’t get your board to step up to the financial plate, how will you have any hope of getting others to do so?

Several people disagreed, and consultant Gayle Gifford (who very respectfully argued with me in the past about my take on nonprofit events) took real issue, commenting (in part):

In my 30 years of experience, the most sustainable organizations financially are those that rely little on their board of directors for their financial success. I just wonder why it is that these governing volunteers, who are charged with so many more weighty responsibilities for sustainability, are held to such a double standard when it comes to revenue development. Imagine the absurdity of you pronouncing: The Board of Directors must be responsible for managing at least 10% of the organization’s programs.

I argued back that we must define board contribution to the financial model of a nonprofit much more broadly:

The point is that board members should not be allowed to ignore the financial realities of the organization, and it is impossible to ignore something when you have a responsibility for a piece of it. In the examples you give, I would wager that if you calculated board involvement in a much broader way, you would find that at least 10% of that money could be attributed to board involvement. And if not, yikes! Because that means it is all resting on the shoulders of the staff, and that simply is not sustainable. The board must be much more supportive of the nonprofits they serve, and in my mind that means they need to show up, and show up in a significant way, to the financial engine of their organization.

But Gayle was not having it. She responded that just as the board should not be expected to deliver on programs, they should also not be expected to contribute to the financial model:

In very brief, the role of the board as governors is to ensure that the organization is delivering on its mission, that it has a business model that supports its ability to deliver its social impact and that the organization has a human resource and operation plan to make that happen. That it is trustworthy and worthy of support. This is the absolutely best fundraising work that they can do. Boards are totally within their governing role to decide that the way to meet the organization’s revenue needs is hire professional staff and have them do what they are in fact trained to do. I would hypothesize that organizations that do that are more likely to successfully achieve their revenue goals (actually, there is research data to back this us -see “Nonprofit Fundraising Study” of Nonprofit Research Collaborative 2012 ) than the wishful and largely unmeasurable objective of 10% standards pulled out of a hat. BTW, I don’t understand why it is unimaginable to say that the board is responsible for delivering 10% of programs, or 10% of operations, if you set up a standard of attributing 10% of revenues? What makes one different from the other in terms of sustainability or professional expertise?

But in my mind, there is a critical role for the board in both mission and money, and you cannot have one without the other, as I replied to Gayle:

I completely agree with how you characterize the role of the board (“to ensure that the organization is delivering on its mission, that it has a business model that supports its ability to deliver its social impact and that the organization has a human resource and operation plan to make that happen. That it is trustworthy and worthy of support”). However, the missing link (so very, very often) in nonprofit organizations is that the board thinks that showing up to meetings and hearing the development report is enough. Raising money requires that the board take an active role. And that active role means opening doors, making connections, providing intelligence, offering insight. This can actually also be true in delivering programs — the board should not only help provide the overall program strategy and theory of change for the organization, but also help to open doors and make connections to key decisionmakers, advocates, or others outside the organization walls who are critical to effective delivery of the organization’s mission. In all of this, I am simply asking that the board step up and take an ACTIVE role, as opposed to a passive role of “hiring professional staff and have them do what they are in fact trained to do.” There must be an effective partnership between the board and staff in developing and executing on a robust financial model, just as this partnership between board and staff must exist in delivery on mission, because at the end of the day there is no mission without money. Maybe 10% isn’t the right number, but I believe you have to set a significant goal if you truly want the board to take notice and actually step up.

You can read the full debate here.

To me, this is such an important topic because it helps uncover our underlying assumptions about the role of the board versus the role of staff. In my mind, we must elevate the expectations we have for the nonprofit board of directors, and one way to do this is to set clear, specific, and lofty goals for them.

What are your thoughts?

Photo Credit: Ron Cogswell