As we lift the veil on the intricate dance of nonprofit board governance, Ken Berger and Peter York guide you through the maze of challenges and solutions that keep these crucial entities afloat. Prepare to have your assumptions about wealth and wisdom in nonprofit leadership challenged while gaining insights into the delicate balance of board member engagement, financial oversight, and strategic direction. With a nod to our global listeners, we delve into the realities of board member exhaustion and the need for expert guidance in navigating these waters.
This isn't just a conversation; it explores the nuanced roles within nonprofit leadership, from the CEO to the board members, and the fine line they walk between governance and operation. We tackle the sticky issues head-on, like the influence of financial contributions on board relationships and the struggle against role confusion. We also emphasize the transformative power of data in board assessments and the significance of community representation in governance, ensuring that the voices of those served are heard in the boardroom.
Finally, we wrap up with actionable steps for enhancing board efficiency and effectiveness. Resources like BoardSource take center stage as we underscore the impact of thorough onboarding, active working committees, and regular performance reviews. From the ground up, we dissect the importance of board accountability and impact measurement, concluding with the resolute belief that the true measure of a nonprofit's success lies in the positive change effected within the communities it serves. Join us on this mission to empower nonprofit boards toward accountability and impactful governance.
As we lift the veil on the intricate dance of nonprofit board governance, Ken Berger and Peter York guide you through the maze of challenges and solutions that keep these crucial entities afloat. Prepare to have your assumptions about wealth and wisdom in nonprofit leadership challenged while gaining insights into the delicate balance of board member engagement, financial oversight, and strategic direction. With a nod to our global listeners, we delve into the realities of board member exhaustion and the need for expert guidance in navigating these waters.
This isn't just a conversation; it explores the nuanced roles within nonprofit leadership, from the CEO to the board members, and the fine line they walk between governance and operation. We tackle the sticky issues head-on, like the influence of financial contributions on board relationships and the struggle against role confusion. We also emphasize the transformative power of data in board assessments and the significance of community representation in governance, ensuring that the voices of those served are heard in the boardroom.
Finally, we wrap up with actionable steps for enhancing board efficiency and effectiveness. Resources like BoardSource take center stage as we underscore the impact of thorough onboarding, active working committees, and regular performance reviews. From the ground up, we dissect the importance of board accountability and impact measurement, concluding with the resolute belief that the true measure of a nonprofit's success lies in the positive change effected within the communities it serves. Join us on this mission to empower nonprofit boards toward accountability and impactful governance.
Welcome to the Nonprofit Fix a podcast about the nonprofit sector where we talk openly and honestly about the many challenges that face the sector where we will discuss current and future solutions to those challenges where we explore how the nonprofit sector can have much more positive impact in the world.
Speaker 2:A podcast where we believe that once we fix the nonprofit sector, we can much more dramatically help to fix our broken world.
Speaker 1:Hello again everyone. Ken Berger here along with my co-host colleague and friend, peter York, and Peter says hi, hello everybody. So just two things before we get into the real details here. One is just to let you know that we, like many of you out there, are enjoying all of the coughs, colds and related. I don't know. It seems like more people right now are not doing well, so if you hear some coughs or any kind of weird sounds in the background, just bear with us.
Speaker 2:Yes, thank you.
Speaker 1:The other thing is I just wanted to say on behalf of both of us, we want to thank you all so much for listening, and we want to let you know that we recently learned that our podcast is now in the top 25% of podcasts that are out there, and I recently was at a conference speaking on these kind of issues and within an hour after the presentation we had a whole boatload of additional people who downloaded the episode. And the other interesting statistic is we've also learned that our podcast is being listened to in six out of the seven continents on this planet. So once we get one or two people from Antarctica to join us, we will have covered all seven continents. So thank you Europe, asia, africa, south America, north America, et cetera, and Antarctica someday too. So what that also tells us is that if more people knew about this podcast, who work in the nonprofit sector or who support the work of organizations, we could have a lot more listeners.
Speaker 1:We're not looking for listeners to be in the top percent of whatever. We're looking for a richer, deeper and more honest and nitty gritty conversation about the challenges of working in this sector and what we do. So we hope that, if you have a chance. Please share this podcast with your friends, colleagues, please spread the word. We'd really appreciate it and it will really help us to get that conversation going out there, even beyond what we've done so far.
Speaker 2:And share on social media. For many of you that are following us, maybe on LinkedIn and other types of stuff, and subscribing or hitting the date that you want to stay on top of and track when we release new episodes. Thank you there, but all that would be great. Yes, there's a good plug for us, but again, it's because we very much as you just said, can we very much believe in what we're trying to do here and really dig deep into a lot of these issues and not just skim the surface or be the typical podcast.
Speaker 1:Great. Well, with all of that in mind, we now want to return to a topic that we started in episode seven, which we refer to as the exhausted sector. So, whatever we're calling the episode, this will be part two of that topic, and in the first episode you may recall if you listen to it we laid the groundwork about the exhaustion and we discussed three out of the 10 areas of challenge for nonprofits and what to do about them. And so now we're going to move on to problem number four, which is an integral part of managing nonprofits, which is nonprofit boards. Before we begin going too far into this, I just want to say two things One, for me, this is a scary topic. And two, for, I think, many of us who are in leadership positions in nonprofits, it's a scary topic because we're talking about our bosses and having a frank conversation about the challenges of working with them. It can be difficult and uncomfortable and, at the same time, just as a. It's like the Surgeon General's warning, or whatever. I just want to say I've got a great nonprofit board, so whatever I say here is not meant to besmirch or criticize my board today at Spectrum 360. Having said that, here are some of the challenges of nonprofit boards.
Speaker 1:Recently a consultant that was working with me and is an expert on nonprofit boards.
Speaker 1:I thought he encapsulated the challenge very well when he said that a typical nonprofit board member will spend between 24 to 48 hours annually on the work of the nonprofit.
Speaker 1:You figure they have a meeting for two hours four to six times a year. So maybe that's what is that? Eight to 12 hours. And then you might have a committee meeting of a similar number. That gets you to 24 hours, let's say, and maybe there's a couple of events and things, and so that's the typical commitment level of a nonprofit board member. And then you have the people who are running the organization, who spend thousands of hours, thousands over 2000 hours a year on the work. And so that disparity board members spending one to 2% as much time as the staff on the work of the organization. That in and of itself is a difficulty because the traditional purpose of a nonprofit board is to set the direction, is to supervise the work of the CEO or executive director, and these are volunteers that may not have any expertise before joining the board in nonprofits and yet they are in this leadership role and the ultimate control of the organization so that by its nature can lead to problems.
Speaker 2:All with only 24 to 48 hours, on average, of time that they've spent with the organization. So they're making direction, setting decisions, hiring, firing, recruiting leadership CEO in particular. They're also, obviously, providing financial oversight.
Speaker 1:Right and they are responsible for the fiscal integrity and accuracy of what the organization is doing. They have that fundamental responsibility, which is one of the reasons why directors and officers liability insurance is often of great concern to nonprofit boards, makes sense. So related to that, and somewhat similar, is that many board members have a lack of expertise at being in the role of nonprofit governance and so that lack of clarity number one it can hinder decision making because they're not entirely sure who's on you know what their role and decision making role is and what kind of guidance. So they're not entirely sure, and that plays into a very related challenge, which is role confusion. So now for this one, and I say this with 40 something years of doing this stuff with boards if I had a nickel, even a nickel, even with inflation and everything else, find a nickel for the number of times a nonprofit board member has weighed into the territory of day-to-day operational matters. That falls squarely into the role of staff I'd be wealthy. And this becomes particularly acute if you have a board member who has what you might call control issues and wants a level of control of operations that far exceeds best practice and just common sense about who should be in charge of what, based on their knowledge, expertise, et cetera.
Speaker 1:So this happens a lot and I can tell you that it can lead to some very uncomfortable conversations that have to happen and for a CEO or an executive director you have to say to their board member hey, you're stepping into my turf back off. That's really not appropriate. That's a tough one. That's a tough conversation to have to have and unfortunately it happens a lot in my experience. Another challenge absence of candid conversations.
Speaker 1:Again, there often is a reluctance just like I said at the beginning here where to engage in honest conversations about the tensions, all that we're talking about here within the structure. It because it's so uncomfortable, a lot of times it just doesn't happen, and so what that does is it leads to unresolved issues, inefficiencies, and then what can often happen, like so many things in life where you avoid these kind of things, eventually it reaches a boiling point and it blows up because you've been avoiding it, because it's been so uncomfortable, and it just gets worse and worse. So, for example, if you've got a board member who's weighing in on day-to-day operational matters, the more that you avoid that, the more likely it is that they will go even further into that and it becomes more and more untenable and inappropriate and problematic. Another challenge go ahead.
Speaker 2:No, it's okay and keep going, list the challenges and then I'll jump down.
Speaker 1:Yeah, I've only got three more.
Speaker 1:That's all what has been called Founder's Syndrome.
Speaker 1:This is something that has been in some of the literature out there about nonprofit boards, where you have somebody who's very passionate about an issue and founds an organization and begins to build it from scratch, and or a board chair who's been in the role for a long time and has that passion, even if they might not have been the original founder, and then this issue of control over the organization and what the direction of the organization is can become even more extremely difficult.
Speaker 1:And related to that, you can have a board that's really not a board. It's basically friends, colleagues and sycophants of the founder or the board chair, that basically they're not really truly independent volunteers but they're essentially rubber stamping whatever the founder wants to do and thereby putting the CEO or executive director in a very uncomfortable position if they don't also just rubber stamp and follow that lead. And I've seen, by the way, personally on boards that I've sit on in places where I've worked, I've seen this thing play out more than once in a very dramatic and disturbing way, where the mission is secondary to the founder's ego or the founder's own interpretation of what should be done, rather than what the rest of the board and the knowledgeable leadership staff know is appropriate because of their issues. So that's a big one too.
Speaker 2:Along those lines. It bears stating something very obvious, which is that and it's just a reminder board members in the nonprofit sector do not own the organization. There is no ownership of nonprofits, there's no shareholders. So it's interesting the way the governance of the nonprofit organizations are really structured. I know there's a lot of stuff that's being borrowed, kind of borrowed from the private sector, but it's very interesting because there is no ownership.
Speaker 2:You talk about founder syndrome. It's an interesting challenge because of the fact that, technically speaking, it's not owned and also, as a result, there's not a typical kind of like we own 51% of the shares of this company, so we have 51% of the votes. That's not the case. So the fact that you can have a founder board member exert a lot of control over it, a lot of control over a nonprofit, is very fascinating from just a social dynamic standpoint because, technically speaking, it's not like their vote counts more, unless for some reason there's some weird bylaws that somebody passed along those lines. So it's very fascinating that you can have these strong founder syndromes in a founding board member. By the way, you also have executive director and CEO founder syndrome, as well.
Speaker 2:And, by the way, they typically are on the board not always, but the CEO. They aren't on a board, but they have a position on the board sometimes.
Speaker 1:I can answer that.
Speaker 2:It's just very fascinating because again there's no ownership.
Speaker 1:Just one data point on that last point and then I can respond to the other things you said. But a CEO executive director can be a voting board member and the board has the option of having that be the case. The vast majority let's say it's at least two thirds, maybe even 75% of the time the CEO executive director is not a voting board member. However, they are, I think, best case scenario, but also weird and awkward. You're like, on the one hand they are your bosses, but at the same time, if things are working well and the trust is there and the respect for knowledge is there, you're also their colleague, you're their peer at the same time, and it's an awkward kind of dance to have both of those things going on at the same time.
Speaker 1:But I do want to get back to your point about ownership, and you're completely correct. However, there's two variables that I'll throw into the mix here from my experience. One is there's financial ownership, which clearly you cannot have in a nonprofit, and then there's what you might call psychological ownership, and that whole thing is part of what we're talking about here, that, yeah, you may tell me, financially I'm not the owner, but, dagnabbit, I'm the owner when it comes to where we're going and what we're doing, and I'm calling their shots here. The other thing about it is that I've also seen situations where the founder is basically bankrolling the place. So their donations are critical to the organizational's functioning. So even though they're not technically the financial owners, their financial contributions make their influence almost like a sort of a kind of ownership with that financial twist. And again, I think and this is not just founders it can sometimes just be a long time board chair, but in any case it's a big deal and it happens more often than is often discussed, that's for sure.
Speaker 2:Agreed and I think that you may be going here in a moment, but I do want to touch on some of the research out there in terms of board effectiveness and kind of their role. So keep rolling through your challenges, let's get those to making care of. And then I just want to talk a little bit because and you're going to bring it up, I think just around kind of where they are functioning like and what the research is saying, and so we'll get to that here in a moment.
Speaker 1:Yeah, great. And after the two, I do want to make a quick comment on the research or the literature out there more generally, as opposed to just the research which the next to the last one is. I have it sort of captured as wealth of a board member, as an indicator of smarts and knowing what's best. You know, one classic is you know, I've run this incredibly successful for-profit or I work in this for-profit and you, pesky bleeding heart nonprofits, I'm gonna show you how to do things, I'm gonna teach you best practice in management and fiscal management and all the rest of it, because I'm coming to you with that expertise. So a person comes with a set of baggage and assumptions based upon what their impression is of the way the nonprofits work and, as a result of that, impose and will you know a lot of these other things. We're talking about role confusion. You know who's in charge what's. You know it gets into that and I think it's a lack of appreciation for the differences. And, by the way, there's a book called Good to Great and the author of that book then did an addendum for nonprofits and made some observations about some of the differences, and then you know it also gets into ego and whatnot. And you know, of course for a nonprofit boards you typically want to have at least some of your board members to be people of wealth, because more often than not a lot of nonprofits have to raise private dollars and it's the donations of those board members or the contacts of those board members can be very important to the organization's survival, which again makes oftentimes a CEO or executive director deferential to those board members and afraid at times to be completely frank about things, because they are reliant upon that wealth of that individual. So that's a problem.
Speaker 1:And then just to round it out, just to bring us to the end of this inspirational conversation about the challenges here, I would just say another wild card is just personality issues. We sort of touched on it already, but it goes beyond that. So one personality type that can be a problem for a nonprofit board is somebody you might call a control freak. So that person that because of the nature of their personality and their orientation, just by their nature, is going to want to get into a level of detail and get into a level of control that's inappropriate. Or you also have some board members that are just sort of very indifferent, or this is a social club, they see it as a social club and they don't see anything, they don't take it seriously.
Speaker 1:But I think sometimes and this gets to my last point when I've looked over the years at the literature on best practices for boards, I have found that a lot of what I have just said is not always as prominent, as significantly emphasized as it should be, and that the challenges are not as, yeah, they're just not really discussed as frankly and fully as they should be. And so when you read the literature about the best practice, you form committees, you have the biologes, you have the this, you have the that. Those are all great things, but if we're not also talking about these problems and trying to find some innovative new ways to address these additional problems, those things are technically right and good, but they're just not enough.
Speaker 2:So, along these lines, let me add to this a little bit and just bring in some things in addition to what you're talking about, which I think is so important. I think that when I think of boards and so my background and experience with all of this is, I've evaluated nonprofit organizations, investments and capacity building, including board development as one of the elements of capacity building that funders have funded. And then I've come in and tried to evaluate and what's the impact of these kind of efforts to strengthen boards, to make them stronger, and through that work, there's certain themes that come up that are very important, that I think are foundationally important from a board standpoint One and it's one that actually there is research on where a strong board helps from a standpoint of financial performance and really, through the lens of financial accountability, being able to make sure the dollars are being spent the way it needs to be. I will argue and point out that I do think that different board members who come in, especially board members that don't have experience running nonprofits themselves they're not executives of nonprofit organizations or working within nonprofit organizations sometimes come with a very different framework for finance. That's the.
Speaker 2:We have an episode talking about growth for growth's sake, where you know what is an effective financial oversight of an organization. I think one of the things that gets often lost in that financial discussion it's always about financial security. You know, we've got enough cash reserves. We've got enough to carry us into the next year. Maybe we're carrying a little surplus over so we can do some extra things. We're not in debt. You know. It's the classic kind of like things. You know, liquid, unrestricted net assets and all the things balance and we're good, and that's a core element of what boards need to do. But in addition and I think this is really what boards are also established to do and I think that the public, given that these are organizations that are receiving public funding, whether it's through individual donors or through grants or government or whatever the case may be there's also accountability for mission and I don't think, and I think one of the biggest challenges in the nonprofit sector is, I don't think, board member boards and, in my experience of evaluating different efforts and board investments and things, they're making strategic decisions along those lines. We're gonna talk later about things like mergers, acquisitions, other kinds of structural kind of work that they might be helping with. They definitely, you know, do the performance, reviews of their executives, et cetera.
Speaker 2:But one of the things that I don't see enough connection with and there's no research that I could find in preparation for this episode I don't see a lot of connection between the mission accountability that the board is holding the leadership of the organization accountable for achieving outcomes you know from achieving the results of what their programming is intended to do. Everything is filtered through a financial lens which is very private sector oriented in terms of how you think about governance. Also, they do a good and an appropriate job around the ethics of a nonprofit. So we hope a board is accountable if that nonprofit is doing anything you know untoward or doing something that they shouldn't be doing. But mission accountability, I think of metrics like cost per outcome. I think of metrics of like how many lives we've served and how many, more importantly, how many lives have improved as a result of our programming.
Speaker 2:Boards often only get information that speaks to their anecdotes and stories right. They show up in their board books in that way, but where is the mission accountability? And I don't, and when I was trying to do the research on this, I still don't see a lot. And yet it seems to me, because these are publicly funded organizations. There should be some accountability for our standpoint, because these are tax dollars that could be used for other purposes. You know where's the accountability and what's the board doing on that end, and I still don't see it. So that's another challenge that I just wanted to share, and I know we're gonna get to again and you're always gonna hear my soapbox and Ken, you're right there with me, I know. You know we've gotta do a better job of understanding what impact these organizations are making, and I think leaders need to be held accountable. I think performance reviews as executives should be just as much about the financial wellbeing, but it's been much more about the impact of the community that they're serving.
Speaker 1:Wow, I completely agree with every single thing you just said, and it's interesting because you triggered in that conversation a few more challenges that I want to emphasize. One thing you mentioned is when a board doesn't have people with nonprofit experience and the difficulties that that can lead to. That can be true, but then there's also the other side of that and I've seen this happen as well which is they have nonprofit former or current nonprofit leaders on the board and then it becomes a battle between the CEO of the organization and the person that they consider the authority, that's the board member that's in the nonprofit, and they defer to that person sometimes and sort of have a lower role for the CEO. There's an old joke that a lot of nonprofit leaders share, where you can come to a board 10 times with an idea and then a consultant or perhaps another board member comes up with the idea and the board says, god, why didn't we ever think of that before? And you're sitting there like, well, wait a minute, I've just said that 10 times so that it can also go the other way.
Speaker 1:Another thing that is a big problem and I've seen this happen a lot also is that because of this dynamic, another way that a nonprofit can go wrong. A lot of times it has, and my time over the years is you have a corrupt CEO and because the board doesn't have the knowledge, doesn't have the expertise, and because there are these incentives to, the CEO has the information and if the CEO wants to distort, restrict, manipulate or just not tell the board, there's ample opportunity for them to do that because the board is so reliant upon them and so and they can be in cahoots with all kinds of people. So this CEO, for example, can be in cahoots with the firm that's doing the audits. This CEO can be in cahoots with some of the contractors that are big donors. I mean, there's all kinds of opportunities for corruption on the nonprofit CEO side as well in this dynamic, because of the challenges of this structure.
Speaker 2:Yeah, yeah, no, I see that and I totally understand that, and I think that there's and this brings me to something too, which is, as a researcher, I often want to put things into typologies or taxonomies and there are different types of nonprofit boards. There are boards of very grassroots organizations, or ones that don't have a lot of staff, for which the board are doing a lot of stuff on the ground. I was a board member of an organization that had one staff member and that staff member was the executive director, but the board was doing everything from volunteering on the weekends to doing all kinds of programming, other types of things, because of its stage of development. And I think there are a lot of grassroots organizations where we have to acknowledge that the boards are volunteers in a traditional sense and really helping to run things, and that's going to be very different. There are a lot of boards, too, I've experienced in the nonprofit sector, that are as small as possible because the executive director or CEO pretty much just wants them to be there for the purposes of meeting the IRS requirements, that you have to have a board of governance in certain amount of meetings and et cetera, et cetera, et cetera. Check off the boxes and they bring on their friends and usually those friends are somebody that really don't know anything, don't ask questions. They just want to put on their own little bio that they basically you know their LinkedIn feed, that they volunteer in their board member of this organization, and I think that happens a lot.
Speaker 2:I think the one that's also right for corruption, because obviously, if an executive director or CEO or the leadership of a nonprofit has got a board, that's pretty much just kind of a rubber stamp board. That's just there. It's small in size just to be able to manage. So there's a lot of different dynamics and then you have a lot of what we're describing. You were describing is kind of the essence of what I would call the top 25% of the sector, where you've got these traditional boards and they are involved, but in that 24 to 48 hour range, and they're doing very specific things really financial performance and accountability, less omission, accountability. And I think it's good to note these different types of boards. And this is part of the problem in our sector we don't do enough to study contextually what kind of board is needed for what kind of context, what kind of organization and what kind of setting and what it does.
Speaker 1:And I think that's going to be really important as we continue this conversation, because you know, I think you know my orientation is, from my experience, which is, more than anything else, direct service, whether it's educational, human service or healthcare, but it's direct service to people in need.
Speaker 2:And it's also scale.
Speaker 1:That's scale Right and it's of organizations of a certain size. So a lot of the things that I said here may not apply or they apply differently. And since we know that over half the nonprofits out there are super small and, by the way you know, the fact is I wouldn't be surprised, if we really looked at the data, that we found that the vast majority of these little organizations are having a board that's made up of friends and colleagues and in the beginning, when there's no money involved, it really is a labor of love and it's really okay. It's just that as the organization grows, the board needs to mature.
Speaker 2:And the key thing there to I'm sorry to interrupt the key thing there too, is that and this is really fundamentally important we have to remember that nonprofits are tax free, so what that means is donations and investments in it. Once they start taking on money, the board plays a different role. So if you're a purely kind of like bare bones grassroots, all volunteer, you only take on donations so that you can do your next event, you know, put on your next play, okay, whatever the case may be, maybe it's a play in a local school, whatever the case may be. The point is that's a very different model than when, all of a sudden, you start asking other people to write checks right Donors, grant makers, funders, private philanthropies, united Ways Once you start getting up into the level, or you're getting government funding like can your organization?
Speaker 2:You know, there's state funding for tuition, there's other types of things. So once you reach to those levels, we've now reached a different developmental stage, and that's really kind of what we're talking about, too is there are board developmental stages and there are different board configurations depending on what you do and where you do it and how you do it. And I think that part of our challenge in our sector is, if we're ever going to solve the challenges of the board, we again have to stop the one-size-fits-all what's the average, because what we end up talking about is the top 25% of direct service providers and what we don't realize is all the other variety that's out there and try to figure out some of what the problems really are, uniquely to those settings.
Speaker 1:Yes, but at the same time, if we were able to identify solutions for that 25%, since we know that that 25% gets virtually all the money of the sector, that would be a big deal. But I agree with you, but it would be a really big deal if we could hit that group. And so I think we're going to now move to the solution section, and I think it's great that, Peter, that you helped to frame it in the context of scale. So some of these things may apply, may be helpful to an organization or the organization's, just not at a level yet where these things resonate. But I do think that typically for organizations that are beginning to get some reasonable amount of funding, some or all of these things would be helpful. So the first one that comes to mind is engaging external experts the joke about if you get an external person to come in and make a suggestion it could resonate in a way Well, so okay, if that's the way it is, then let's get them in here, Because a lot of times those experts can provide some very powerful advice, and independent third party advice Unbiased, frank can be invaluable and help to overcome also some of the difficult conversations that a CEO might be uncomfortable or an executive might be uncomfortable having so.
Speaker 1:I think that can be a powerful tool when an organization has the resources to do that. But I think it's also very important that the staff leadership are very actively involved in interviewing and selecting those experts, Because there are all different kinds of experts out there with all different kinds of perspectives. Some of this is as much an art as it is a science, and some of the experts out there I mean this goes back to the time at Charity Navigator for me where a lot of the experts that I ran into when I was on the mountaintop there they were expert in name but they had never really worked in a nonprofit. Their whole career they were consultants or they were in academia, and so you got to be careful that you get an expert that really knows what they're talking about, that ideally that's been in the trenches in some way similar to what you're doing, if possible, because those are the people who are most likely to give you the kind of expert advice that you need most.
Speaker 2:Along those lines. I'll emphasize, with respect to those external experts, there's also an element of this and you're going to hear this theme from me all the time which is that they have to also be able to help you objectively assess where you are. It would be a good idea to have benchmarks of similar organizations to compare an organization against. There are data sets now that people need to start tapping. There's amazing amounts of governance data that we haven't even tapped yet and things like the 990 that have nothing to do with finances but just the behaviors and structure of the governance and board models. You could be benchmarking against those. So when you're doing these assessments, part of the challenge with some of the experts cannot push back a little bit, because the experts, even with their experience consultants, coming out of formally being on a lot of boards or running a nonprofit as an executive director they don't often come with.
Speaker 2:What I think is also another requisite piece, which is how do you objectively assess the organization with other data, information and research?
Speaker 2:Oftentimes they come through a very specific expert lens and they bring their frameworks and then they assess everything and if that expertise is as an expert in large-scale human service organizations, that may be totally apropos for one kind of setting, but in other times, and even there, you need to be able to bring in data, research, and I just want to encourage all our listeners to understand there is a lot of research and data out there.
Speaker 2:The idea that you can't benchmark or that it's really difficult to do these things, I think is getting weaker and weaker all the time. And so when you bring in an expert one of the things you should actually be consuming as a part of that expert filtering and when you recruit and hire those experts, what kind of data are they going to bring to the exercise? How objective are they going to be in bringing that data? Do they have benchmarking, like what assessment tools they have? Are those assessment tools validated? Are they things that are just coming out of their heads? So, the better you can get, because if you don't have the data and the assessment data, then what you're really doing is banking on that expert and please do your job to make sure you vet those experts and get referrals and references and everything else.
Speaker 1:I would want to just add to that, and I agree that that is best. What you just described is best and should be best practices, so I'd say that up front. However, I do think, even though there's a lot of data out there, as you say, I think that Experts using that data and being data-driven is still an emerging part of the toolbox for many of the experts. They're starting to get there, but it may be easier said than done for you to find a truly data-driven expert, depending on what the it is that you Like. I mean, we've already. Actually, before we started the podcast today, peter and I were talking and it's like there's just not a whole lot of data, for example, around boards using impact measurement and assessing board efficiency based on the impact that they're having. So it's an emerging field. I completely agree with Peter. It's just that you may have some difficulty at times finding people that are as data-driven as you'd like them to be.
Speaker 2:So just be forewarned that it's an emerging area and along those lines I would just also say this is that if you're going to do this well and you're an organization in that top 25%, in that case you also need to invest a little bit of money in this work, because you can get the data. You can buy the data. You can get the 990 data. You can get other stuff. So, at the end of the day, I don't disagree with you, ken, that it's sometimes easier said than done, and there are challenges around getting the data you need. That said, you should be investing in getting that data, and there are experts who know how to get that data, even if they're just a supplemental expert. They're not the one that actually does the work with you, but they're a resource to your expert to make sure that you've got the data you need. You can buy data from GuideStar. You can go on ProPublica to get some other data. There's other things you can do that you really should be doing. You should try to find benchmark data.
Speaker 2:Part of the reason and this is the thing that I while I completely agree with you that the capacity to use data in this type of work, with board assessments, things like that that it's not always easy, not all the experts know, and everything else.
Speaker 2:I would also tell you this it's also too often too easy to basically say exactly what you said as a way of not trying first and so pump in $2,500 to go get the data. You need $5,000 to get the data, and if you're not willing to, you sometimes have to ask yourself the question. So is there any bias in the reason why you haven't examined whether there is data to inform your board assessment? This goes for your financial assessments, even the audits and things like that that we need to do to make sure that all of that's happening in the right way with the investment of dollars and stuff into it. So I completely agree, and I don't disagree, that it's not always possible, it's not always feasible, even if you want to. But you should challenge yourself to the question are you saying that you can't do it? The classic thing, as a data person that I am, is always like we don't have the data. It's too expensive to get the data you can't get the data.
Speaker 2:Sure, and I'm always like you know what. Give it a whirl, give it a try, see what you can find out there. If it's too expensive, okay, no worries, but give it a try.
Speaker 1:But see, there you go. See, there's an expert that's frank and honest. He's telling you straight up Yep, easy. So there you go. So another thing is training, train, train, train your board. If they've got 24 hours a year, I would recommend at least 10% of that time. 20% of that time should be for training. If they don't know how to govern, if they don't know what the best practices are, if they don't understand their roles, for goodness sake, find some experts out there, data-driven experts with best practices. That will help your board to get there. And, by the way, I'm not saying that that training is going to resonate for anybody. If you've got a control freak on the board, you can train up the wazoo, and there's still going to be a control freak, but at least for the majority one would hope that the majority of board members. If you're doing training, I think the level of knowledge and expertise and depth of knowing where the boundaries are and everything else, it can really help a lot. So I really urge you to look into that kind of support.
Speaker 2:Agreed and training is so important. I just want to also speak to the training element as well, in that a lot of board members come in into the nonprofit sector again with all kinds of private sector experience and may not always be amenable to or feel like they should train you and at the end of the day, so, depending on the roles and functions as they're coming in one of the things that that touches on, and something we talked about with the founder syndrome issue as well I do think that there are a lot of cases where and this happens both in volunteering on boards but even volunteering for organizations to help them out there is sometimes this feeling like, oh, these poor, poor nonprofits and these leaders really need us because they don't know what they're doing. It's almost like it's like by virtue of what they're trying to do and solve problems in the world, they're somehow automatically kind of at a deficit, if you will, and I just wish there was more of that, and this is why I think people that actually have been in nonprofits, run nonprofits, make some of the best board members because they understand the context and they're not coming in or on a board position because they perceive like if anybody comes into a board position, they're receiving look, I know marketing and I know this. I can help you with your fundraising or whatever. You have to really begin to ask the question do they really understand what we do? Do we really understand what donors are going to be looking for? Just because you're a marketing expert or you've sold products in the private sector and you've been a leader doesn't mean you're going to be a great fundraiser.
Speaker 2:It's a very different endeavor and it depends on what's going on, and so it's these assumptions that a lot of board come in with to your training point, ken, that we've got to. And, by the way, there really are fantastic organizations out there working to train and help board members. There are nonprofits that do this work that can really help board members learn what they need to do. But I guess what I'm trying to say is there's a certain amount of humility that board members coming from the private sector need to bring into their work when they join a board of a nonprofit. Of absolute importance is their expertise and skills, but you need to know how to frame it and bring it together and understand you're not just the expert leader. You also have to really follow in some ways and learn what to do and how to bring those skills to that organization and that time. And so I think it's humility in that, because I do think there's some resistance to the perception of a needing training.
Speaker 1:So that is a great segue into another one of these solutions, and that is when I've worked with boards that are thinking about recruiting new board members. They'll have a list of things like, well, we don't have enough people with a fiscal background, or we don't have enough people with a legal background, or we don't, and then also, when it comes to DEI, that we don't have an adequate diversity of representation on the board. So all those things are important, but I also think there's another element that's also important in recruiting board members, and that is certain basic personality traits, and I think Peter's already hit on one of them, which is humility. We talked about people from wherever wealth, a certain knowledge base that they come from nonprofit, expert, whatever but a certain humility about what they know and what they don't know. And then, related to that, an openness to learning, an openness to seeing other ways of doing things, realizing that there are differences here and appreciating that. And then the third quality, which I don't think ever gets emphasized enough, which is that once your CEO or executive director has been there for a period of time, you've done your initial assessment of that person and you have some rudimentary trust in your leadership. You've got to have their back, that part of the role of the board members is to have the back of the CEO or executive director.
Speaker 1:You know, one of the things in the Good to Great book in terms of what they said was the difference between nonprofits and for-profits is that typically nonprofits have a lot more stakeholders, like in the case of my organization. We have families, we have different state agencies that we're accountable to, like a hundred different districts all kinds of stakeholders, as well as the students, of course, that we serve, and on and on it goes, the point being that you have many more stakeholders than a typical for-profit and sometimes, invariably, you're going to have challenges and problems that are going to arise. And if the board finds out about those problems and its initial reaction is to show a lack of confidence in the CEO or executive director and wanting to again micromanage into the situation, that can be a real problem. If you've got the basics there and you know that the person is honest and is providing you with the information that they should be on an ongoing basis, they're open with you and giving you what you need as a board member, you need to return that trust and that amount of sharing the other way and making sure that you're there for them.
Speaker 1:I can't emphasize that enough, peter. Oh, you want to add something there? Yeah, yeah, I do.
Speaker 2:I'm sorry, I yes Hesitation there. I want to add another dimension to the conversation that you said, something that sparked for me I think would be remiss not to talk about when it comes to the board stuff. So you were talking a lot about. You mentioned the word diversity, right, and talking about the importance of diversity, I want to just share one other thing that I think is really important to our conversation. It speaks to the you know what people bring to this work when there are board members, which is I, there's, there's. We need to mention how important it is that there's community. You try to get community representation of some kind on the board as well.
Speaker 2:Organizations work within a community and as a part of that, there's a real push and a need to start to get better community representation and engagement on the board of nonprofits that are serving the same community. Too often the board and the executive staff, quite frankly, don't live in the communities that these that are being served, and the reason that's important from a board standpoint, a board makeup standpoint, is there's a few things when you can make sure that you're trying to then recruit from the communities that are being served for a board is that enhances, obviously, the community representation and engagement, you're going to get more diverse perspectives and skills that reflect the work that the mission work is trying to affect the community. Within that that, that, that that community, there's actually increased accountability and transparency. I have seen boards where, when they intentionally do better recruitment and engagement of community members as a part of their boards, what happens is that it becomes more mission accountability comes in, not just financial right.
Speaker 2:It's often easy to come in and kind of fulfill your financial role, your financial stewardship role and all that type of stuff, no matter where you live. But if you really are a part of the community, there's an element as well of increased accountability for mission. We talked a moment ago about how sometimes the mission accountability isn't always there. You can strengthen community relations and you can even do better fundraising within the community, which brings the community more accountability of your organization, where there's a quid pro quo, where they begin to really engage. One of the things we'd be remiss to say is if we talk all about boards and we don't talk about the diversity of the board, the community representation of the board and how important that is, I think we'd be missing a big piece of the puzzle here.
Speaker 1:I agree, but I've also seen situations where community representation was a disaster, and it's not because we shouldn't have it, it's not because we shouldn't have the diversity of views, perspectives and being on the ground in the community. I agree with all of that. But I have also seen organizations that have abused that. So I'll give you an example. It was an organization that was even required by federal funding to have a majority of its board as community representatives and in fact they had to be from the community that was being served and some of them were even served by the organization and, for whatever reason what, the board ended up and the board was scared. It was hard for them to make that change. But when they did make that change, I think somebody I don't mean to do it anyway insult anybody, but they referred to them as the little old ladies that they got a bunch of people who were very deferential to the board and basically became rubber stampers. Basically, they did the wrong thing in terms of how they did the recruitment in the community.
Speaker 1:Yeah, and I know let me finish the thought and again, I'm not taking away from what you're saying, I'm just saying anything can be abused if you have people in leadership positions that they can take something that, on the face of it, makes perfect sense, and then they can twist it in such a manner that it actually can make things worse than they were before in terms of best practice and making sure.
Speaker 1:So I mean, I also have seen situations where, like I've been in meetings with some community members where they are so respectful and honored by the fact that this organization is helping them or their community that they become like that CEO where they're reticent to truly speak about what's going on and or their focus is this is what I need, as opposed to thinking organizationally. I've seen that challenge and then that deference, and so it's like and then they have the other challenges that the other board members have too, but this is overlaid on top of that. So it's really important. I think again, it's like the profile of the individual. They're making certain that that individual is going to be truly able to express their independent view and they're not beholden to the organization.
Speaker 2:Yeah, I appreciate your points. I think that it's a delicate dance. I think there's nuance here, and what I'm describing is this is that, first of all, whenever you bring on a board member, you need to have some intentionality as to what the role and function of that board member is to serve, and you have to think a little bit more operationally, financially, governance wise what are the different roles of different board members? And you need to bring on board members who have the skills, the capacity and the knowledge to fulfill those roles. That's first and foremost. And so when I'm talking about community representation, I think you went where I think a lot of organizations go and they don't think of the roles and functions they need first and try to recruit for that. What they do is they turn to their client base or people that are connected to their client base, and I do believe there's an important role advisory role, input role. You can create committees and functions for your clients. I think it's critically, critically important, and if a client fulfills a role that is needed on the board, with intentional articulation of what those roles are and what the criteria are, it's totally fine and I think that's an ideal world. However, what you're describing oftentimes is this idea that we're just going to invite our client, some client representatives, as full voting members of the board, having no experience. Again, that training issue we talked about with some of the private sector folks is the same problem we're going to have if you bring in clients that don't have the requisite knowledge and expertise and training and understanding of what to do either. There are programs that try to affect a change so that they come on those boards and are ready. All I'm trying to say is part of this is not an attempt to change what the board roles and functions are and the need for assessing and evaluating recruiting based on skills and capacity.
Speaker 2:When I say community representation, you can't forego. You can't just bring on a community member to just have a community member. You can't just bring on a client to have a client because you like the client. They have to fulfill a role and function and they have to understand overall what the board's functions and roles are to be, what they're to play. It's a setup. It's a bad setup if we don't do that all around. I don't think of that analogously any different from whether you should bring on a client, as to whether you should bring a private sector expert who knows nothing about nonprofits. It's the same problem. That requires a whole different intentional conversation. If they meet the requirements, for goodness sake, we need a lot more community representatives. I know that's our old name of our podcast. There we go. That's my two cents on what you were saying, ken.
Speaker 1:A couple of things there, the particular example I was giving there are certain organizations that are required by the federal funders to actually have clients being served. In this case, they were required to have a majority of clients being served.
Speaker 2:I do think that actually, by the way, that's a problem we talked about on a previous episode, which is when your funder's getting your kitchen and I have a part.
Speaker 1:Yeah, I'm with you, I'm with you, I'm with you. So, sort of related to that. It actually segues into the next solution, I think as a part of that, which is there is a lot of literature out there and a lot of good resources out there. I'll even mention one, boardsource, where there are some really great tools for best practices, how a board can operate the right way and the certain structures. And I think part of that related to our conversation about community representation is. Well, you know, there may be a need for the training of board members to be tailored to each board member's needs and, for example, if you have board members that have never sat on a nonprofit board before or they're not familiar with that format, then there may be certain trainings that those board members go through. And if somebody else has been on nonprofit boards, it may be somewhat. You know, there may be some modifications to it, but I think I'll tell you quickly.
Speaker 1:I have been on a number of nonprofit boards that were just and all kinds. I mean boards that presumably were of organizations that were seasoned and had lots of expertise and the boards were just doing everything wrong. I had one board where the board chair would sit there and read off articles they read in the New York Times that had to do with certain topics that were of concern to the nonprofit. That was it Like there was no committees? There was no. It was just unbelievable.
Speaker 2:Along those lines. I do want to put in a more of an emphasis to say BoardSource is a very awesome organization to know from the standpoint of understanding more about boards. They have so many educational resources, consulting, assessment tools we were talking about. You know they have even a lot to say around the whole community representation piece. So I just want to say that BoardSource for those listening you should be plugging in, going through their website, taking a look at them. Imagine it's BoardSourceorg. I don't have their URL right out the top of my head, but please look them up.
Speaker 1:But so things like making sure that you have an onboarding process for new board members, where they are familiarized with the mission, the programs, the whole mix of services, as well as how the board operates. Who's on the board, what are the committees of the board? There should be a board manual, and the board manual should have some of the key source documents, up to and including the articles of incorporation, as well as minutes of recent meetings, financial audits, program materials. You know, there's a whole host of things that are of value, and every committee of the board first of all, there should be working committees, and each committee should have a charter. What is our purpose? How do we operate? How do we support the board as a whole?
Speaker 1:There's a lot of important elements here, especially as you get to that 25% that we talked about. It's really important to have the board as efficient and effective as it can be, given the limited number of hours that it has, and so you know, the idea that you have a board that has no committees, for example, and that everything has to be debated and discussed in four or five-hour board meetings is wildly inefficient, as opposed to having working committees that deliberate in more depth and then bring recommendations to the board so that you can have a more efficient use of the time, and there are a variety of practices for how to make those meetings efficient and effective so that you get to the substantive conversations, rather than getting into technicalities and things like that that can just spin out time when you really want to use it for talking about matters that are of most important to the organization.
Speaker 2:Down these lines too. I just want to mention something that I think is very apropos to what you were just saying and puts teeth into what you're saying, which is we also need to conduct board member performance reviews. So I think it's really important that board members get reviewed as well. You know you can develop evaluation criteria. You can develop a structured review process. It's important to try to set goals, offer training and development, as you've been pointing out, ken. It really is important, whether it's at the end of the term, annually, you can have ad hoc reviews At some point. Board reviews and performance reviews are also fundamentally important. They should be held accountable for their roles and functions as well, and so they're not just there to basically performance review the executive director and other executives. In some cases, they should also, in turn, be performance reviewing each other, and there should be a role and function towards that end.
Speaker 1:Again, I would refer you to board source for some good resources there, and I hope that in the case of the vast majority of boards, they understand. In most cases they have one employee that is accountable to them, not the leadership team, not the chief financial officer, no, the CEO executive director, dag Nabot and yes, I'm doing my Looney Tunes references here. Now the other thing is the CEO's role with the board. I think it's important for leadership of nonprofits to understand in most cases in that 25% that a good third of your time may need to be dedicated to working with, supporting and addressing the nonprofit board. The care and feeding of that board is a big part of your responsibility to make sure that it's functioning at top performance and also to make sure that it's functioning in such a way that it doesn't become a problem because you're not paying attention and then it goes awry. So you really need to understand that role and I also think you got to have a certain amount of boldness and assertiveness that there are going to invariably be times where you're going to have to push back, as I said earlier.
Speaker 1:As I said earlier, if I had a nickel for every time, there's a delicate place between what is the role of the board and what is the role of the staff. I had a conversation at a board meeting. I had a board where one of the places of tension is do you have a program committee on the board? And that in my experience, if you're going to have that committee and I generally don't recommend it I think that the program stuff you can report as the CEO to the full board. You need to give them reports on the program. But typically in my experience with those committees, unless you have somebody who really really understands and doesn't get into operations that really understands the boundaries between what's the role of the board and what's the role of the CEO, that is a place where a lot of times I've seen that boundary overstepped, and so you know it.
Speaker 2:Yeah, go ahead, peter, it's so important. I just want to emphasize what you were just saying too. Like we've had before, we said funders shouldn't be in your program kitchen. The board really shouldn't be in your program kitchen. They should be holding you accountable and the leader accountable for the performance of those programs, and that needs to be measured, by the way. But at the end of the day, it is really important. Now there are times that a board may have subject matter experts in the program programming they're doing, in which case, like you were saying, ken, a program committee. But there really needs to be some intentionality about what that is. Because, again, and I just want to emphasize this, people on the front lines and I used to be a person on the front lines and the people that are running the programs, managing the programs, developing the programs, supporting the programs, assessing the programs, evaluating the programs these folks live, eat and breathe this. What is it? 1880 hours or 2,080 hours a year?
Speaker 2:You're basically coming in 24 to 48 hours, and once you start to get in that program kitchen you better bring a whole lot of gravitas, experience and expertise to be able to do that. And I would argue oftentimes the differential position of the board should be we're not the program people. That's like being on a board of a for-profit company and expecting to get involved in how you make the product, and so at some point you've got to be very, very thoughtful and careful with respect to that. Board members actually join because they love the program, they love the mission, they love hearing the stories, the anecdotes. They gave checks because of these wonderful stories and anecdotes and they want to make a difference and they want great your heart's in the right place. Then what you need to do outside of your board role is go be a volunteer and you follow our directions and we'll tell you what to do. But don't bring that to your board governance role.
Speaker 1:And that's another place where the boundaries can get lost. If you've got a board member who's also volunteering in the organization and their ability to say, okay, over here the CEO and their staff is the boss and over here on the boss, generally, I would say most of the time, that can be a problem too, unless somebody is really sensitive. So you might want to volunteer at another sister organization, but you can I'm not saying you don't volunteer there, but you really got to be sensitive to those roles. Clearly I'm going to come to the end of so I got.
Speaker 1:Yeah, I'm aware. So yeah, just two more quick things and then we're going to wrap it up here. I can't believe we spent the whole episode on this one topic. Oh my gosh.
Speaker 2:I can't the more we unpack it. This could be a multiple episode, as everybody knows.
Speaker 1:So, anyway, two last things, and these are really sort of I think Peter's touched on one of these, and as we always get back to this, as we always circle back, the future we think of the sector in so many ways is about impact measurement. And one of the things that the boards should be all about, and one of the things that the board should be assessed upon, is impact, the impact of the organization, and we believe that's the future, and we hope that nonprofit boards and CEOs will increasingly realize how important that is, that this is why we're here. We're here it's not to have a mission, it's to have an impact. You have an outcome, and so that the boards that that will become the North Star, not just an alignment between the staff and the board, an alignment that this is the Holy Grail, this is the final metric and motive and driver of all that we do. I think that's critical.
Speaker 1:And last, I'm going to say one last point, and then I'll pass it over to you, peter which is, I also think, for the future we need more experimentation. There is a traditional model of nonprofit functioning where you've got this board of X and then you have the staff under it. We talked in an earlier episode about the hybrid model of open AI, but I think there needs to generally be more experimentation, different designs as to how it's structured and, for example I'll give you a quick theoretical example A board says, okay, we're not the experts, let's farm out to a group of nonprofit leaders to do the evaluation of our nonprofit leader, because they're in the field, they're the experts. We don't know how to do this. Let's hire them to help us in some fashion. I mean, I'm not saying it's a good idea, but it's out of the box. Thinking like that that we need more of Peter.
Speaker 2:Yeah, along the impact measurement piece. I just want to put in a plug to boards who might be listening or people who might be on boards or people who might, who can affect boards and influence them. The other thing we need to do from an impact measurement standpoint, boards do need to hold, I believe, the executive director, ceo accountable for outcomes, and if you don't have the metrics of outcomes, you need to invest in those outcomes. And I just want to make an argument A lot of boards need to be trained and understood about how an investment in impact measurement is not. Think of it almost as a part of the program, as a part of the operations. That needs to be brought in the idea that this is something we might do once in a while. It's an extra. We have to go after funding for it.
Speaker 2:I just want to encourage more and more board members to hold themselves and everybody else accountable to make the financial investment on an annual basis in measuring and then holding the leaders accountable to impact. It doesn't happen, and we're never going to change this if we keep trying to basically say it's just about the number served and the board is just there to make sure the finances are right. You're just acting ethically and that's where our jobs end. So impact the impact, but invest, and the boards have a say. So many nonprofit leaders that I talk to will say we can't do it. We can only do it this year, we can only do it once and that's only if we get a grant. You know what that's an indication of? It's the indication of a board that doesn't value impact measurement. And yet mission accountability not just financial accountability and stewardship should be the purview of the board. I think the public demands it. I think that's what our expectations are, so please start investing in it. It drives me absolutely nuts that this is not happening.
Speaker 1:I'm fine with that, along with the proviso, as long as we have all the provisos I said earlier, which I think for a lot of us that are in the early stages of this and the early development of our impact measurement efforts, the key in the early stages, in my opinion, is you got to be a learning organization. You may have crappy impact initially, but you never even had data, you didn't even know what your impact was. So in the initial part the board's got to understand hey, we're holding them accountable or her accountable, but you know it's like, don't let perfection be the enemy of the process. Thank you very much and I think that is where I will end, and I can't believe how much we had to say on this. My God, I hope you're not bored. We're not bored with our conversation about boards.
Speaker 2:No, we try to pack in a lot too. I noticed on this episode I was talking a lot faster, so forgive me everybody, oh too fast, but there's a lot to pack in on this and I'm sure there's a lot more to unpack. Thank you very much. We alluded to another one of our a number of our other episodes. Please listen If you haven't done so before. I want to encourage you. The OpenAI is a very interesting board structure. We have an entire episode on the OpenAI nonprofit structure and its purpose and function, which relates to this topic, but I would encourage you all if you haven't listened to it, you're listening to this listen to that episode.
Speaker 1:And you really need to, because there will be a test on all of this later and it's important for you to know about all the truth, justice and the nonprofit best practice way. So get out there and listen to those episodes.
Speaker 2:Thanks for listening to another episode. Everybody of the nonprofit fix. Thank you, ken. Thank you, peter See you later.