Five Myths About Nonprofit Boards
Five Myths about Nonprofit Boards
The work of a nonprofit’s paid staff is overseen by its Board of Directors. Nonprofit law and organizational bylaws designate the Board as holder of an organization’s power and responsibility, with ultimate accountable for the nonprofit’s performance.
Consistent with that power and responsibility, we expect Boards to render wise decisions, guide strategy and raise money. This asks a great deal—too much—from a group of volunteers. When they struggle to meet these expectations, we assume that these just aren’t the right people, that they need to better understand their roles, that they need to spend more time getting to know the organization. Or maybe it’s the Board book.
The real problem is unrealistic expectations—myths—about what Boards should be doing. These myths cause disappointment and frustration, while sucking up enormous amounts of time and energy. And they distract us from seeing that most Boards are doing just fine as they are, providing enormous value to their nonprofits. Before talking more about that value (next month), let’s dive into some of these myths. . .
Myth - Boards of Directors are all-powerful.
True story: A nonprofit Board bitterly disagreed with its Executive Director about the future direction of the organization. But as it prepared to fire the ED, the Board Chair received inquiries from a couple foundation program officers about this decision. Rather than even respond to the questions, the entire Board resigned.
How could this be? This Board unquestionably had the authority to fire the ED. But that authority—the Board’s formal power—coexists with other sources of power. Money, information, technical capacities and relationships are indispensable to a nonprofit’s ability to pursue its mission. Nonprofits are influenced by these and other elements of informal power as much if not more than by the Board’s formal power.
The limits of Board power are obvious whenever budget season rolls around. A Board approved budget may authorize a nonprofit to raise income or to spend when no funds are available, but this formal authorization means nothing without the capacity to make these things happen; capacity that the Board does not control.
Board power is strongest in the negative—the authority to say no. Requests can be denied, budgets can be rejected, plans can be stopped. But taking positive steps requires alignment and collaboration with other sources of power and other stakeholders.
Truth – Boards hold only a limited amount of organizational power.
Myth - Boards know what’s best.
Ideally, an organization’s senior most decision-makers are those best equipped to make hard choices on its behalf. This is rarely the case with nonprofit Boards, which usually lack the necessary information, judgment and experience. To be clear, this is not the fault of Board members, who may be extremely talented, but can only offer limited time and energy are often selected for their ability to fundraise, make connections, review financials or otherwise contribute necessary skills. Again, the problem is more about our expectations than the inadequacy of a Board or its members.
Board decisions are grounded in the information they receive, but for better and for worse, most information is filtered by staff leaders. Board packages are necessarily curated to focus Board members’ limited time and energy on matters of consequence. Staff leaders naturally prefer to share information that reflects well on themselves and their teams, and to contextualize less complimentary information. Most Boards lack the expertise, contacts and even the time to balance the information they’re given against independent sources.
Decision-making requires that information be appropriately understood and applied. Meaningful choices invariably require trade-offs, balancing constituent needs, business risk, external relationships, reputation, and the interests of staff and other important stakeholders. Boards commonly do not deeply understand these trade-offs, and so they’re likely to misperceive the consequences of their choices. Most often, they have no way of knowing what they don’t know.
Group dynamics and relationships with each other and other stakeholders also interfere with decision-making. What feels like thoughtful questioning to one Board member may feel meddlesome, aggressive or irrelevant to others. For Boards that meet infrequently with packed agendas, there may not be sufficient time to process the information or discussion, to consider alternatives. The trade-offs inherent in the decision are subordinated to the compromises that get made amongst Board members to arrive at consensus.
Truth – Boards cannot be relied upon to make good organizational decisions.
Myth - Boards should guide strategy.
The same challenges that undermine a Board’s ability to make tough decisions also impedes its capacity to guide strategy. But even if we set these limits aside, and assume that a Board could create strategies, that doesn’t mean it should. Doing so undermines a nonprofit’s ability to reach its goals.
Strategy is an intentional approach to accomplish goals. Sometimes, strategies will play out the way that they’re envisioned, but usually they need to be adjusted and often completely tossed when assumptions turn out to be wrong, future events intervene or when bad luck strikes. So an effective strategy is contingent and iterative, able to incorporate changes in the environment and learning.
A strategic plan is the starting point for accomplishing goals, but it’s either going to evolve or it’s going to sit in a drawer. Board guidance means essential adjustments become far less likely to occur, primarily because Board involvement increases the costs of making those changes:
Strategy adjustments can upset the trade-offs and compromises that went into creating the initial strategy.
Boards may suspect the desire to change strategy is a cover for staff failure to implement that strategy effectively. (Sometimes, they’re right...)
Practically, the logistics of moving a strategy change proposal through the Board to a decision can be daunting, leading staff leaders to look for an easier road.
These costs might be worth it if the value of Board engagement is high, but this will often not be the case. Small wonder that the drawer is often where Board guided strategic plans end up.
Truth – Strategy decisions should generally be made by staff, not the Board.
Myth - Boards need to raise money.
Some nonprofits rely on Board fundraising. But many do not. Government contracts, foundation grants, or sales to the public may either individually or collectively constitute the vast majority of income. Even when individual giving is indispensable, many nonprofits are supported by donor networks that dwarf any support the Board could possibly provide. Board giving certainly has important symbolic value, but it may not be economically meaningful.
Adherence to this myth can make Boards less inclined to welcome those who could otherwise contribute their expertise and capacity to represent various constituencies. Overvaluing fundraising by the Board can lead members to believe their organizational power should correlate with their financial contributions.
Of course, individual Board members may be indispensable donors and fundraisers, just as major donors seeking greater engagement may want to join a Board. This is all wonderful. But there’s a good reason why Bylaws almost never require financial support from the Board: while the overlap can be extremely positive, directly linking Board membership with financial support limits the success of both.
Truth – Boards and fundraising do not need to go hand in hand.
Myth - More Board development and Board engagement is better than less.
Nonprofit EDs (and Boards) commonly believe that in order to have a successful Board, they must do more: more development (growing the skills of Board members or adding new members) and more engagement (everything from participating in the work of the organization, to fundraising, to increasing meeting attendance).
Unfortunately, effort and energy devoted to the Board is not available for other urgent purposes—management and support of staff, fundraising, community relationship building. The counter-argument is that greater support of the Board strengthens the nonprofit and ultimately contributes to greater impact. While this may sometimes be the case, we know enough about “trickle-down” justifications for applying resources at the top to be skeptical.
So long as we believe that Boards are underperforming their potential, the logic of more—engagement, training, development—is compelling.
Truth – Resources dedicated to the Board do not necessarily benefit the nonprofit.
Debunking these myths allows us to stop worrying about how best to support the Board’s success and instead to focus on how the Board can best contribute to the nonprofit’s success. Of course, each nonprofit, each ED, will need something different. Next month. . .