- WHAT IS A GROUNDBREAKING BOARD?
- TEN TRAITS OF A GROUNDBREAKING BOARD
- DEFINES ITSELF
- ASSEMBLES THE RIGHT PEOPLE
- DRIVES STRATEGY
- ENSURES MISSION, MONEY & COMPETENCE ALIGNMENT
- CRAVES IMPACT
- RAISES MONEY
- WIELDS THE MONEY SWORD
- PURSUES EXCELLENCE
- BUILDS THE ORGANIZATION
- ASKS HARD QUESTIONS
- GETTING STARTED
What is a Groundbreaking Board?
Again and again, I’ve heard people say that innovation will never become part of the nonprofit sector — that nonprofits are too set in their ways. Or that the sector is too broken to emerge anew. And a particular area of dysfunction that people point to is the volunteer group that leads the nonprofit sector: the board of directors.
But that attitude is unacceptable. There is great danger in dismissing the sector and the board.
Sure, boards tend to be inefficient, dysfunctional and broken. Yet there is tremendous potential for innovation. Indeed, without innovation, the broader movement to solve social problems is doomed.
The ineffectiveness of many boards of directors probably stems from the fact that they are a group of volunteers who have other, higher priorities in their lives. But they can become more engaged, more energized, invested and committed to the nonprofit they serve. If so, that nonprofit can then expand its network, increase its revenue, strengthen and expand its programs, and ultimately provide more positive change in their community.
That would be groundbreaking.
Let’s admit it. Too often board members are one of two things: checked out or in the weeds.
A checked-out board member:
- Is bored and distant at meetings
- Is unresponsive when asked to do things
- Shows up only to benefit themselves or their career
- Brings little, if any, money in the door
- Doesn’t ask questions or understand what’s going on
- Isn’t invested in the success of the organization
And a board member in the weeds:
- Gets involved in the day-to-day operations of the nonprofit
- Works to move the organization toward their own personal gain
- Second-guesses decisions of the staff
- Bogs meetings down with discussions about minutiae
Not every nonprofit board member falls into these two categories. I have seen boards of directors that are engaged, invested, committed to making the organization more successful. They give significant financial gifts, devote many hours to the work of the organization, and leave the Executive Director and her staff to handle the day-to-day operations unobstructed. But this is the exception, not the rule.
A groundbreaking board can lead the reinvention of the nonprofit sector. A groundbreaking board demands more from itself, its nonprofit and the sector as a whole. It leads the nonprofit it serves to greater financial sustainability, more effective use of resources, and ultimately more social change. Through its excellence, a groundbreaking board can transform the nonprofit they serve, the community the nonprofit impacts, and ultimately the sector itself.
So instead of tossing boards aside, let’s reinvent them so that they can lead our great nonprofit sector to emerge anew. Let’s start by defining what a groundbreaking board looks like.
10 Traits of a Groundbreaking Board
There are 10 traits that define a groundbreaking board. A groundbreaking board:
- Defines Itself.
The board as a whole decides what it should do and how. It is crystal clear what the board is charged with accomplishing and what each individual member is expected to contribute, from fundraising to skills and expertise. And each board is different, so the groundbreaking board creates it’s own defining discussions and policies.
- Assembles the Right People.
A groundbreaking board doesn’t leave recruitment up to chance or circumstance. A groundbreaking board analyzes what skills, experience, and networks are required to achieve the organization’s bold goals. Then they actively work to research and network with candidates who fill the holes. The groundbreaking board runs a disciplined due-diligence process that ensures that they recruit and retain the best and brightest necessary to achieve their nonprofit’s specific goals.
- Drives Strategy.
A groundbreaking board leaves the day-to-day operations of their nonprofit to the staff and instead grapples with the big picture, strategic, visionary questions of the organization. They are debating things like: should we expand our operations, are we creating enough impact, where do we want to be in 5 years? A groundbreaking board is constantly thinking at the strategic level and is energized and engaged by the bigger picture.
- Ensures Mission, Money & Competence Alignment.
A groundbreaking board ensures that the nonprofit they serve is positioned for greatest success. That comes from an alignment of the organization’s mission, revenue engine and core competencies. If those three elements are not in sync the organization is destined to fail. A groundbreaking board constantly monitors and pushes the organization toward alignment.
- Craves Impact.
A groundbreaking board shows up because they care deeply about the change their nonprofit is making in the world. They don’t want to just “do good work,” they want to change the world. They have articulated an organization-level theory of change, and they work tirelessly to ensure that it comes to fruition. They focus, at every meeting, on the impact the organization is making.
- Raises Money.
A groundbreaking board understands that every single board member must be responsible for helping to bring money in the door. But they also understand that the definition of “raising money” can be as broad and varied as the skills and experience their board members possess. A groundbreaking board is strategic about putting each individual board member to their highest and best money- generating use.
- Wields the Money Sword.
Most boards don’t like to talk about money: either raising it, or how it is spent. But a groundbreaking board understands that it is absolutely critical that money is fully integrated into any conversation they have. The groundbreaking board continually analyzes the financial model of the organization and monitors the ability of that model to deliver on mission. They know that money can be the single most effective tool a nonprofit has to create impact, and they effectively wield it.
- Pursues Excellence.
The groundbreaking board never rests on its laurels, but constantly strives to improve itself and the nonprofit it serves. The groundbreaking board is constantly, and simultaneously, looking inward and outward. They regularly evaluate each individual board member, the board as a whole, and the Executive Director. They also are constantly analyzing their external environment to learn from other nonprofits, competitors, collaborators, and other industries. They know that it is their on-going responsibility to lead the nonprofit they serve to excellence.
- Builds the Organization.
In order for the nonprofit they serve to be effective and sustainable, the board must believe in and fight for the money to build. A groundbreaking board never stands in the way of organization building, in fact they are their nonprofit’s biggest advocates for that critical support. They are tirelessly convincing donors that a stronger more effective organization results in greater community change.
- Asks Hard Questions.
A groundbreaking board understands the harsh realities of the nonprofit sector and is honest and transparent about the state of their nonprofit. They are not content to sugarcoat reality or rubber stamp decisions. Their boardroom is host to vigorous debate, honest evaluation, critical analysis and tough questions.
So let’s take these one by one to truly understand what makes a groundbreaking board tick.
A Groundbreaking Board Defines Itself
A groundbreaking board has a very clear, common understanding of what they exist to do and how they organize themselves to achieve success.
The first step is for a board to create a board by-laws document, or defining document, as a group. Together they should decide the answers to the following questions:
What is the level and limits of the board’s authority to guide the nonprofit and its staff?
What are the ultimate responsibilities of the board, for example:
- Determine and lead the organization’s overall strategy
- Determine and lead the organization’s impact (program) strategy.
- Make the organization accountable to the community
- Provide fiduciary oversight for the organization
- Determine and lead the financial model of the organization
- Make key external audiences aware and supportive of the organization
- Increase external investment in the organization
- Recruit and evaluate the Executive Director
- Regularly evaluate the board and its member’s effectiveness Indemnification
- What are the limits of the personal and group liability of the board?
Number of Members
What is the maximum and minimum number of board members?
Terms and Term Limits
What is the length and limit of board member terms?
Will there be a chair, a secretary and/or other officers? If so, how and when are they elected? And what are their specific duties?
Removal of Board Members
Will there be a process for removing advisory board members who are not meeting their requirements? If so, how will that process work?
How many times per year will the board meet?
Conflict of Interest Policy
What is the process of determining and handling conflicts of interest between individual board members and the organization?
What committees, if any, exist and for what purpose? How will committees, if necessary, be formed?
How are board members suggested, vetted and elected to the board?
Once the board as a whole has defined itself through decisions about these items, each individual board member should sign an agreement document every year that signifies their personal commitment to execute their specific responsibilities.
This agreement should include:
- Their general roles/responsibilities as a board member
- What committee (if any) they will serve on
- The give/get money-generating requirement
- The minimum meeting attendance they will meet
A board that doesn’t define itself, how it operates and what success looks like is destined to fail.
A Groundbreaking Board Assembles the Right People
Far from letting just anyone join the board, a groundbreaking board is strategic and systematic about getting the right people to the table. Those right people provide skills, experience and networks that are specific to the strategic plan of that nonprofit.
The first step is to create a group of board members (perhaps called the “Board Affairs Committee”) that:
- Finds, vets, and nominates new board members on an on-going basis
- Trains new and old board members about how to be a groundbreaking board member
- Evaluates, on a regular basis, the effectiveness and productivity of each individual board member and the board as a whole
- Enforces board responsibilities and requirements
- Manages the annual evaluation of the Executive Director
The next step is for the Board Affairs Committee to brainstorm a list of skills, experience, networks that are essential to the fulfillment of the organization’s strategic plan. For example, an early childhood education nonprofit may need people who have expertise and ties to the early education community locally, regionally and nationally. They may also need people who have expertise in their various revenue lines (government grants, individual donors). They might also want local school district representation.
Once the list of skills, experience and networks is created, the nominating committee should develop a matrix that compares each current board member’s skills, experience and networks to those required.
A board matrix might look like this:
Each board member of ABC Nonprofit has knowledge of, experience with, or connections to:
In doing this exercise, the Board Affairs Committee, and the board to which they report, can see where the holes are in the board’s ability to achieve the nonprofit’s strategic goals.
In the very simple example above, this board needs to focus on recruiting people with marketing and program evaluation knowledge, experience or connections.
Once the holes on the board are revealed, the Board Affairs Committee can focus their recruitment efforts on getting the right people on the board.
A Groundbreaking Board Drives Strategy
The fact is that to be truly effective at creating social change a nonprofit MUST have a strategy for the future and a plan for how they will get there. A groundbreaking board is strategic and focused on the big picture. A long-term view gets people excited and engaged. Understanding where the organization is going and how they fit into that direction will inspire board members to step up and take action.
A groundbreaking board is driven by a great strategic plan.
There are some very clear ways that a great strategic plan differs from a poor one:
- A great strategic plan starts from an in-depth understanding of the outside community marketplace in which the nonprofit operates (trends in clients, funders, competitors, etc.). Whereas a poor strategic plan is created in a vacuum among only board and staff. A nonprofit board member once told me that at a strategic planning retreat years ago board members were asked to write their goals for the organization on post-it notes, which were then tacked around the room and voted on. And like that, their strategic plan was born.
- A great strategic plan forces the organization to articulate its value proposition, i.e. how the organization uniquely uses community inputs to create significant social value (change to a social problem). A poor strategic plan fails to articulate a value proposition and assumes that everyone outside the organization loves it and understands its value just as much as everyone inside the organization.
- A great strategic plan puts everything on the table and allows no sacred cows. Board members with pet interests are reigned in and staff members who are not contributing are encouraged to realign themselves with the new plan. A poor strategic plan only deals with the easy or non-controversial issues and leaves the difficult questions aside.
- A great strategic plan makes sure that the strategy for programs is aligned with the organization’s business and financial model so that the resulting strategic plan includes programs, financing and operations in an integrated way. A poor strategic plan focuses only on programs and assumes that the money will somehow follow.
- A great strategic plan includes a tactical plan so that the broad goals are broken down into individual steps to get there. This allows the organization to monitor and revise the plan on an on-going basis. A poor strategic plan has no tactical plan or monitoring system attached to it. Once approved, staff or board never see it again and it certainly doesn’t drive the day-to-day activity of the organization.
- A great strategic plan is inspiring and compelling to potential funders. It sets forth a bold vision for the future and a specific road map for getting there, which inspires confidence and investment. A poor strategic plan is boring, maintains the status quo, and elicits only nominal external support.
It’s not enough to go through the “strategy” motions. A real strategic plan is bold, compelling, tactical, well-financed, integrated and inspiring. It gets a groundbreaking board moving forward in a common direction from which real change flows.
Once you have a great strategic plan in place, the groundbreaking board can regularly monitor whether their nonprofit is delivering on it.
A Groundbreaking Board Ensures Mission, Money & Competence Alignment
A groundbreaking board understands the critical importance of aligning mission, money and competence in your organization. The most successful nonprofits balance their mission (their reason for existing), with their core competencies (what they do better than anyone else in the world), and their resource engine (how they sustain the organization financially).
A nonprofit in alignment looks like this:
The mission is supported by the organization’s core competencies which both feed into how it brings money in the door.
A groundbreaking board understands that the mission does not and cannot exist in a vacuum. They know that their mission is contingent on both their capacity to deliver on it and their resources to support it.
When one of these three elements is out of alignment, chaos can ensue. For example:
Mission is misaligned: An organization that can generate money and operates great programs, but can’t bring it all together in a coherent single purpose. This is otherwise known as “mission creep.”
Core competencies are misaligned: An organization that has a great, clear idea of what they do (mission) and can raise money around it, but can’t deliver because their physical and human resources are unable to translate the mission into action.
Money is misaligned: This final misalignment is the one with which nonprofits are most familiar. An organization has a great mission and can produce great results, but they can’t find a way to make the organization financially sustainable.
Worse yet, two of the three areas can be out of alignment. For example a nonprofit might:
- Pursue strategies that are based on mission, but are not feasible to carry out nor able to find funding.
- Find strategies that are driven by funders, but are not connected to their mission or feasible to carry out.
- Take on actions that are operationally feasible, but are neither attached to the mission nor financially supportable.
- Be so strongly committed to their mission that it leads to both poor operational and financial judgments.
- Focus on operations and short-term achievements so much that mission and funding are not weighed very carefully in the rush to get things done.
- Work so hard to appease funders that mission and capacity considerations fall by the wayside.
The symptoms of misalignment at a nonprofit can include:
- Financial crises
- Collapsing buildings
- Community upheaval
- High staff or board turnover
- Legal problems
- Donor dissent
- Poor program results
A groundbreaking board understands that in making decisions and taking action, they must consider all three important areas of alignment and make sure that any new proposed course of action simultaneously meets these three critical areas.
A groundbreaking board is ever vigilant to make alignment a reality.
A Groundbreaking Board Craves Impact
A groundbreaking board knows exactly what change in the world their nonprofit is working toward. They know this because they have articulated a theory of change.
A theory of change is a nonprofit’s argument for why they exist — what change they seek to create in the world. It articulates how the nonprofit takes resources from the community (inputs), performs activities with those inputs and in so doing creates changes to people’s lives (outcomes) and changes to larger systems and communities (impact).
A very simple theory of change for a childhood literacy nonprofit might look like this:
A board that understands this argument for why their nonprofit exists can much more easily:
- Create an organizational strategy based on this theory of change
- Monitor whether the nonprofit is delivering on this theory of change
- Make adjustments to the model if it is not
- Articulate to potential donors why the organization does critical work
- Get excited and inspired about making this theory a reality
A groundbreaking board not only understands and embraces their theory of change, but also insists that their nonprofit track outcomes and impact so that the board can analyze whether the theory is becoming a reality.
A Groundbreaking Board Raises Money
It’s a point of debate in the nonprofit sector whether all board members of a nonprofit should be required to help raise money. I often hear from nonprofit leaders and board members that requiring every single board member to participate in money-generating activities just isn’t realistic.
I strongly disagree. I’m a firm believer that every single member of a board must bring money in the door. It is a question of alignment. If you recall from the 4th trait of a groundbreaking board “Ensures Alignment,” mission, competence, and MONEY must all be integrated. A board can’t just focus on the first two; it needs to be intimately involved with the third element as well.
Therefore, a groundbreaking board gets every single board member involved in raising money. To do that, they have a give/get requirement for their board.
Let’s start by understanding what “give/get” means because it is often misunderstood. A give/get requirement of $500, for example, means that every board member must GIVE a donation of $500 personally and/or they must GET (or help raise) $500, or the balance remaining after their own personal contribution.
So, for example, a board member could give a personal contribution of $50 and then help raise the remaining $450 in order to meet his $500 give/get requirement.
The Give Requirement
It is unconscionable to me that there are still nonprofit board members who don’t make a financial contribution to their organization. A groundbreaking board makes it abundantly clear that a personal contribution is a requirement of service. No one can convincingly ask someone else for money if they aren’t giving themselves.
The “Get” Requirement
Nonprofits have to move beyond their many excuses for why every board member can’t help raise money. Here are the some of the most common excuses, and why they don’t fly:
“We want client representation on our board, but our clients don’t have money.”
Even though a client may not have access to large pools of money, they can still help bring money in the door. Because they have been helped by the organization they can provide an amazing testimonial to potential donors about the impact of the organization. Why not take that client board member on some meetings with prospects? Their presence and their story might be enough to turn a prospect into a donor.
“We need a specific skill set (legal, marketing, policy expertise) and those board members may not have a network that can give.”
A board member who doesn’t count potential major donors among their friends still has networks from which to draw. Everyone has co-workers, clients, vendors, neighbors, family, and/or social media followers. When you start to ask your board to systematically think through whom they know, you would be surprised about how vast your organization’s potential network is. Just because a board member doesn’t know the list of 50 donors every other nonprofit in town is going after, doesn’t mean they don’t know people.
“Some board members aren’t good at fundraising.”
Actually the vast majority of people aren’t good at fundraising. But so what? Provide your board fundraising training and have them practice on each other. Then pair greener board members with more seasoned ones to help them learn. Or ask another friendly nonprofit to have some of their effective board members come talk about their experiences raising money.
“Some board members are uncomfortable with asking for money.”
Yep. Actually most people are uncomfortable asking for money. Money is a taboo subject in our society. But instead of viewing money as a dirty thing, start viewing it as a critical component of what your nonprofit does. Reframe money as a great, necessary opportunity to help your organization do more and better. Bring everyone’s discomfort with money out into the open and turn it something positive. Get the board excited about raising more money so that more can be accomplished.
“We want board members with program expertise to focus on mission, not money.”
I suppose in an ideal world it would be great if you could have mission without money, but that is just not the reality. Your organization does not have endless resources. Money is limited and therefore your programs and activities must be limited by an understanding of that resource. A board member cannot adequately discuss or plan for programs without intimate knowledge of and experience with the money that makes those programs run. You simply cannot separate the two. And the sooner you get those “program experts” contributing to the financial bottom-line of the organization, the sooner you will have stronger, more sustainable programs.
Money is what makes a nonprofit and its work viable. It makes no sense to say that some board members should help bring it in and others should be excused. We have got to stop separating money, and the activities associated with it, from other aspects of a nonprofit organization. It makes no sense.
But the good news is that there are lots of things board members can do to bring money in the door. And if you are financing not fundraising your organization, your definition of “bringing money in the door” should be very broad.
Board members no longer have to fear raising money because there is an endless list of ways, beyond asking for money, that they can positively impact the financial bottom-line of their nonprofit.
It is up to the executive director and board chair to evaluate each board member’s strengths and then work with them to find the best way for them to raise money.
Here are some ways that board members who will not ask for money can raise money:
- Help create or evaluate a business plan for an earned income venture. If you have business leaders or entrepreneurs on your board this would be a great use of their time and add tremendous value to your organization. If they can help you create a more profitable business, they are directly contributing to your organization’s bottom-line.
- Advocate for government money. You may have a board member that can’t stand the idea of asking their friends for money, but they are well connected in city, county, state or federal government and could open doors to you for government contracts, grants, fee-for-service or other government monies.
- Provide intelligence on prospects. If you have a board member that seems to know everyone in town, but for whatever reason refuses to ask any of them for money, they can still be incredibly useful. You may be getting ready to ask a prospective donor for $1,000, and this board member can tell you what that person has already given to, at what level, who else might know them and so on. When you make an ask, the more information you have going into it, the more successful you will be.
- Set up a meeting with a prospective customer. If your nonprofit is engaged in an earned income venture, you probably always need help with new sales. If you have a board member who is part of, or connected to, the target customer(s) of your business, they could open doors to new customers. Or at the very least, they could help you think through your sales and marketing strategies and make them more effective so that you can attract more customers.
- Email, call or visit a donor just to say thanks. The stewardship of a gift is an often forgotten, but incredibly critical, part of the fundraising process. According to Penelope Burk’s annual donor survey, 84% of donors would give again if they were thanked in a timely way. And being thanked by a board member is a bonus. A donor who renews their gift to a nonprofit is providing more money for the organization.
- Explain to a prospect why you serve. A board of directors is a group of volunteers who care so much about the mission of the organization that they are willing to donate their time (a precious resource) to the cause. As a donor, it is affirming to see that a volunteer is contributing time, but it is even more motivating to hear, in the board member’s own words, why they feel compelled to serve this organization. That story can be enough to convince someone to give.
- Host a small gathering at your home. Over the course of a year, most people invite a gathering of friends and/or family into their home at least once. A board member could take a few minutes at their next dinner party, birthday celebration or Super Bowl feast to talk about something that is near and dear to their heart: the nonprofit on whose board they serve. They don’t have to ask people for money, but they could simply say, “If you’re interested in learning more, let me know.” And then the nonprofit’s staff could take it from there with those who are interested.
- Recruit an in-kind service. If a board member could remove an expense line item from a nonprofit’s budget, that would directly contribute to a stronger bottom-line. For example, if a board member works at an ad agency, could they convince their company to provide some pro-bono marketing services to their nonprofit? But keep in mind, these in-kind donations must be of value to the nonprofit and provide an offset to a direct cost that the nonprofit would otherwise have to bear.
- Negotiate a lower price from a vendor. Do you have a board member with great negotiating skills (think of all of those lawyers on your board)? Could they negotiate with your insurance providers, office space rental company, or printers, for a lower price? If so, that’s more money in the bank.
A groundbreaking board raises money because they know without it there would be no nonprofit to serve.
A Groundbreaking Board Wields the Money Sword
A groundbreaking board steps up to the plate and forces their nonprofit to develop a strategy for how money is used.
A board wielding the money sword:
- Ensures that the annual budget fully finances the strategic annual goals of the organization. A board cannot simply rubber stamp the annual organization budget. It is up to the board to make sure that the goals for the coming year have corresponding revenue lines.
- Asks for, and receives, monthly financial statements that are easily understood by all board members.
- Demands basic nonprofit financial management training for board and key staff so that everyone speaks the same language and understands the key ratios they should be analyzing.
- Stands up to board members and staff who dismiss or discourage deeper conversations about how the nonprofit budgets, uses financial vehicles, and handles financial reporting.
- Asks staff to calculate and report the net-revenue of every money-raising activity in which the organization engages.
- Persuades and inspires fellow board members to USE money to strengthen the work of the organization.
- Beyond practicing good financial management, a groundbreaking board is eager to explore all types of financial vehicles appropriate for financing the work of the nonprofit. Some that most nonprofits don’t typically investigate, but should, include:
Nonprofits have been shy about loans because they are so unsure of future cash flows that loans can be too risky. But in the right scenario loans can be an incredibly useful tool.
(PRIs), a fairly underused tool that foundations possess, are essentially loans to nonprofits at low or no interest rates that can be forgiven at the end of the loan period. But since few foundations employ PRIs, it is up to nonprofits to encourage their foundation donors to explore this opportunity.
Social Impact Bonds
Federal and state governments are just beginning to experiment with this idea where a government agency issues bonds bought by private investors. The money raised finances projects with social impact goals. The investors would be repaid, or even provided a profit, if the projects achieve certain outcomes agreed to in advance, like getting kids into college, reducing the high school drop out rate or decreasing teen pregnancies. This is still a very new idea, but something to keep an eye on.
A fairly new concept in the nonprofit sector (and discussed at length later in the “Builds the Organization” section), capacity capital provides the money so many nonprofits need to build their infrastructure (staffing, technology, systems).
A groundbreaking board is not afraid of money. To the contrary, they recognize the tremendous power of the tool and wield it in an effective and integrated way that helps their nonprofit ultimately achieve more.
A Groundbreaking Board Pursues Excellence
A groundbreaking board is never content with itself. They are constantly analyzing what other organizations (competitors, collaborators, other nonprofits, other industries) are doing and then encouraging their nonprofit to implement the best ideas.
At the same time, the groundbreaking board pursues excellence internally by regularly evaluating itself as a whole, each individual board member, and the executive director they recruited and hired.
Let’s take a look at each area of excellence.
A groundbreaking board encourages the nonprofit they serve to regularly conduct an external scan of trends, clients, competitors, funding, and industries to ensure that they understand their place in the market.
Because in an increasingly competitive landscape if you don’t understand the needs of your clients, who else is addressing those needs, what your funders are looking for, who else they are funding, where policy makers and decision makers are moving, you are sunk.
The first step is to map the marketplace in which your nonprofit operates. A nonprofit is best positioned where their core competencies (those organizational assets they have that cannot be easily taken or replicated) intersect with a community need, apart from where their competitors or collaborators are strongest.
The idea is that if a nonprofit organization can figure out what part of the solution to a social problem they offer and how that relates to the pieces their competitors or collaborators have to offer, then the nonprofit can (for a start):
- Better articulate to funders what their nonprofit is uniquely positioned to accomplish
- Forge partnerships with organizations who supplement weaknesses the organization has
- Stop wasting resources on “doing it all” and focus on the 1-2 things they do exceptionally well
- Reduce competition for funding
- Chart a sustainable future direction
But it is not enough to determine as a board and staff where you think your nonprofit fits in this marketplace. Once you’ve taken a stab at it, you need to get out into the marketplace and see if that assessment holds true. You need to find the answers to questions like:
- Is the need within your client population expanding or contracting? In what areas? Why? What does the future hold?
- How else are your clients getting these needs addressed or not addressed?
- What is the future strategy of your competitors and collaborators?
- What are the core competencies of your competitors and collaborators?
- Are there new competitors/collaborators entering the space?
- How do key decision makers (policy makers, funders, etc.) feel about your competitors/collaborators? What do they think your role in addressing the problem is?
A groundbreaking board is not just content with external excellence, however. A groundbreaking board regularly (at least annually) evaluates the board as a whole and each individual board member to see if they are meeting the definition of success the board established for itself (see the “Defines Itself” section above).
- Whole Board
The Board Affairs Committee sits down to evaluate each aspect of the board’s definition and determine whether they were met in the past year. Areas for concern are highlighted and recommendations are made to the full board for improvements.
- Individual Board Members
The executive director and chair of the board compares the signed agreements of each individual board member to their actual board service over the past year. The board chair and executive director bring deviations to the attention of the individual board member and agree together on an action plan (improvement, mentorship, resignation).
Executive Director Excellence
The chair of the Board Affairs Committee asks the entire staff of the nonprofit to complete an anonymous evaluation of the Executive Director. Those results are compiled and included when the board conducts an overall evaluation of the Executive Director. The board includes plans for improvement, if necessary, and measureable goals for the coming year (directly related to the organization’s strategic plan) in the evaluation process.
A groundbreaking board knows that nonprofit excellence does not just happen. It is the result of disciplined systems and a desire to pursue continuous improvement.
A Groundbreaking Board Builds the Organization
A groundbreaking board embraces the power of nonprofit organization building.
Capacity capital is the money most nonprofit organizations desperately need. It is a one-time infusion of significant money that can be used to strengthen or grow a nonprofit organization. It can be money that grows a successful program to other clients, other cities, and other regions. Or it can be money that strengthens the organization and makes it more sustainable.
But before a board can employ the concept of capacity capital, they must understand a critical distinction about money. There are two kinds of money.
- Revenue is the day-to-day money required to run programs. For a homeless shelter, revenue buys meals, beds, sheets, job training programs, staff time.
- Capital is the one-time infusion of money that builds or grows an organization. Again for a homeless shelter, capital could purchase a better system for gathering data on clients, a donor database, a Development Director.
A groundbreaking board helps their nonprofit organizations uncover, plan for and spend capacity capital.
We cannot simply leave it up to beleaguered, exhausted Executive Directors to push organization building forward. The EDs are often the ones balancing organization needs against funders and board members who have no interest in those needs.
A groundbreaking board puts their time, effort and resources behind organization building by:
Determining the True and Full Costs of Effectively Running The Organization
Groundbreaking boards don’t tell nonprofit staffs to get by with less, lower the salary they can offer a talented Development Director, spend less on technology, or use volunteers instead of staff or paid consultants to help them.
Encouraging the Organization to Create a Capacity-Building Plan
Nonprofit executive directors are often so caught up in the day to day that they don’t have the luxury of stepping back and figuring out what is required to make the organization more effective. Groundbreaking boards ask their executive director to spend some time coming up with a capacity building plan that will take the organization to the next level.
Making a Significant, Personal Financial Investment in the Organization’s Capacity
Groundbreaking boards don’t ask that their annual gift go to their favorite program. Organization building dollars are very difficult to find. So those closest to the organization, the board, should be the first to step up and invest in capacity.
Tapping Into Their Networks to Find Organization-Building Dollars
Groundbreaking boards think strategically about who they can convince to join them in strengthening the capacity of their nonprofit. Then they get them to invest in the nonprofit’s capacity plan. They make the case for why a Development Director, or a strategic plan, or an evaluation study, or new technology will expand the social impact that the organization is making.
A groundbreaking board doesn’t play games, they don’t underreport infrastructure costs, they don’t agree to funder requests to do more with less, they don’t tell the public that direct program costs are better than indirect program costs, they don’t ignore the infrastructure needs of their nonprofit.
A groundbreaking board frees their nonprofit from the vicious starvation cycle, for good.
A Groundbreaking Board Asks Hard Questions
It is critical that we move away from an unwritten rule that “charities” are doing good things that shouldn’t be questioned, to a place where nonprofits are asking themselves hard questions to ensure that they are effectively using resources and providing real solutions.
A groundbreaking board leads this questioning process. Indeed, a groundbreaking board meeting is riddled with hard questions and discussions, not boring reports.
Here are the top four questions groundbreaking boards are asking their nonprofits:
- Do we know if we are accomplishing anything?
Because nonprofit organizations can’t simply look at a profit and loss statement to see progress, determining success is much more difficult than in the for-profit world. Yet a nonprofit organization cannot just provide services and call it a day. Nonprofits are increasingly forced to demonstrate the change their work creates in the community. I’m not suggesting that every nonprofit conduct large evaluation projects. Rather, I’m arguing that a nonprofit must create a solid strategy for creating change and then find a way (as cheaply and simply as possible) to determine whether they are delivering on that strategy.
- Are we adapting to our external environment?
Gone are the days when a nonprofit enjoyed a core group of donors that funded delivery of the same services to the community year after year. In this ever-changing, increasingly competitive world, nonprofits must constantly analyze the trends in their external environment (funding, competitors, community needs) and effectively adapt to those trends in order to survive and thrive.
- Are we as a board helping or hurting?
A board of directors can be a nonprofit’s most important asset, expanding its footprint in the community, bringing in resources, driving a bold direction, ensuring accountability and transparency. Or it can be a group of people who show up to network, meddle in minutiae, and bog the organization down. A nonprofit’s board needs to take a hard look at itself to determine if they are an effective governing body, whether they are moving the mission forward, or just getting in the way.
- Are we raising money for the right things?
Time and again nonprofit organizations launch a capital campaign as a way to get their name out in the community, get the board motivated, bring big donors in the door, and seek significance and importance. But the result is often an organization crippled by resources draining away from the mission.
Board and leadership needs to ask themselves if a new building is directly tied to achievement of mission. There are other, better ways to build your brand, rally the board and donors, and raise big dollars, like a growth or capacity capital campaign (discussed in #9 “Builds the Organization above) which can actually result in more social impact and financial sustainability over the long term.
A groundbreaking board does away with safe, routine conversations and asks some hard questions. Because they know that questions are sometimes the only way to open up possibilities, try new approaches and find a better way.
Boards need to step up. They can’t think small anymore. It is up to the board of directors to be the nonprofit leaders they were intended to be.
A groundbreaking board understands and fully embraces their charge. They have extremely high standards, and they hold themselves, their fellow board members and their nonprofit to those standards. They are constantly pushing, striving, and building the nonprofit to whom they are devoting their service.
A groundbreaking board may be an anomaly, but it doesn’t have to be. You can make yours a groundbreaking board.
Here are some ways you can start:
- If you want to read case studies of other nonprofits that developed a groundbreaking board, go to the Clients page of our website.
- If you’d like to explore whether our Board Engagement Consulting Service, which helps create a more effective, engaged board is right for your nonprofit, email [email protected] to schedule a free consultation with Nell Edgington.
- Check out the other Social Velocity e-books, guides and tools at the Tools page of our website.
I hope you found this e-book helpful. As always, I welcome your feedback or questions about any Social Velocity tool. Please email [email protected] with questions, comments or feedback.
This e-book was designed to help you think about transforming your nonprofit. If you want a customized approach, or need help engaging more board, staff and donors in the change process, call (512) 694-7235 or email [email protected] to schedule a free consultation with Nell Edgington.
Social Velocity is a management consulting firm that helps nonprofits become more strategic, sustainable, and above all, more effective at creating social change.