Organisational Governance: Nonprofit boards – Mean machines or Tactical crowbars

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As I exhaled a lungful of corporate stiffness and took in the soothing vibes from the nonprofit world, a sense of wellbeing arose from within. I could sense more freedom; and the possibility of varied notes emanating from my core. I was now in the realm of do-gooders and philanthropists.

The new life beckoned and I got started. I asked for the governing document, financials, budgets, list of trustees. However, what precise role was I to play?

  • Watch from the sidelines?
  • Be a cheerleader?
  • Jump in head first and ask a lot of questions?
  • Drill into spending patterns? Or Revenues?
  • Focus on specific issues?
  • Raise funds or enable fund raising?
  • Review past performance patterns or peer into the future?
  • Play a strategic role or get a grip on the day-to-day?

It was important I find answers to these questions, to be meaningfully engaged. I started to explore and understand the intricacies of this big new world ‘with a socially conscious heart and soul’.

I found that multiple challenges exist for non-profits.  Starting with the resource crunch of the recessionary era, new technology, shifting trends in fund-raising, rise of social media, new regulation, insufficient financial incentive, outdated board practices, inability to measure outcomes, the rising threat of cyber-attacks, effective engagement with shareholders: in short there is enough to grab the attention of a new trustee.  Trustees are not always able to grasp the magnitude of the issues facing the executive team.

In my opinion, it is important to have a financially savvy board that contributes positively to financial and operating strategy. To take an example, in order to evaluate competing requests for funding or grants, a charity would also need to understand which of the options aligns best with its future course / strategic direction. Fund raising being at the heart of all non-profits, they should be able to measure the return on investment for the various fundraising options: finance and strategy are ultimately inextricably linked. Donors and shareholders are also beginning to ask for greater transparency into the way funds are spent; furthering the call to action.

“Boards need to be engaged with the major strategic options and must measure outcomes,” says Alnoor Ebrahim, in an interview with Forbes, ‘…….If we’re ever going to solve the most difficult problems facing our society, we need non-profit boards to be relentless in pushing their organizations to measure their progress, to be honest about failures, and to learn from them.’

CEOs of non-profits today also vocalise their need for an engaged, enlightened board that they can partner with. Non-profit boards often do not have a good understanding of the ever growing challenges facing them. “It is imperative non-profit organisations scale up to meet the current dynamics,” echoes Geoffrey Hand, UK based non-profit consultant. “Board education, focus on financials and measuring board performance are crucial.”

The UK Charities Commission has clearly laid it out about managing resources, acting with reasonable care and skill, in the Essential Trustee.

Given the growing demands placed on this sector, the more informed and strategically aware the board is the greater their chances of survival; and bigger benefits are likely to accrue to the communities they serve. This is especially true in current times when economies are struggling and loose change may not be as readily available as it used to be. Trustees will need to up their game and be ready to move at the pace expected of them.

While nonprofits don’t exist to make profits their mantra cannot be to make losses either!

 

© Anu Maakan 2016

(Disclaimer: all views published here are the personal views of the author and do not represent those of any organization).