Board Term Limits

An interesting posting on The Chronicle of Philanthropy blog site lists Five Reasons Board Leaders Should Have Term Limits. The author's reasons include:  recruitment, new leadership development, fundraising, healthier boards, and best of all, a way to phase out underperforming or difficult board members.

In addition to the above benefits, I would add that setting term limits avoids founder's syndrome - particularly when implemented at the time of agency formation. However, this is likely a primary reason why a surprising number of nonprofit boards do not establish term limits on board member years of service.* From a BoardSource posting on a nonprofit accounting site:

Term limits may seem threatening to founders. A founder often has limitless devotion and attachment to the organization and easily becomes fearful of losing control.

Board Training Motivation

Depending on board culture, a proposal that the board take advantage of more training development opportunities might be met with groans, grimaces, cheers, unblinking stares, or even a suggestion that it might be a nice day for you to go take a hike.

That doesn't erase the fact that board training is important to organizational health. Board training covers a broad scope of topics, from basic govenance functions such as writing policies and bylaws, to skills and knowledge such as budgeting and finances, or to workshops and conferences related to the agency's mission and services. Boards may also benefit from training on more generative, resource-based functions, such as grant writing, fundraising, and resource acquisition.

It is up to the the CEO and/or the board to seek out opportunities that best fit the board's development needs. Considering the aforementioned common reactions to training in any sector, our class brainstormed a list of ideas for motivating board members to participate in training:

Board Grant Governance

When considering positive and negative consequences for nonprofits due to expanded government reliance on nonprofit organizations, the effects are usually double-edged. Depending on the context, the consequences seem like benefits for nonprofits, but over time may hurt the organization. Despite whether the benefits outweigh the problems, most nonprofits would still choose government funding over raising all of their own funds. And whether for the effects are positive or negative, government funding brings change.

The primary positive consequence for nonprofits relying on government funding is a decreased reliance on fundraising. It is this benefit that motivates nonprofit leaders to keep filling out grant applications for public funds, despite the potential drawbacks. Unfortunately, decreased reliance on fundraising means the nonprofit agency may not be able to sustain their currently level of programs and services if the grant runs out and is not renewed. This is true with any major source of funding. As the government contracts with more nonprofit agencies, it creates situations where that many more agencies are operating based on a major source of funding. And if the nonprofit agency has been focused on meeting grant requirements as opposed to fundraising, there could be major fallout when all of a sudden they have to seek donors again. As Morduant and Cornforth write in The Role of Boards in the Failure and Turnaround of Non-Profit Organizations, “both the withdrawal of funding, and paradoxically, suddenly receiving large grants are often both triggers for crises in non-profit organizations."

It is in managing the “crisis,” or at the very least the necessary adaptation to relying on government funding, that boards of directors start to change how they govern.

Board Essentials

The first post on this blog is about board roles. In class we have since discussed many areas of nonprofit board governance. Of the roles discussed, I consider the following to be the most essential for a board of directors to perform. I also consider these applicable to all types of nonprofit and not-for-profit organizations. Accompanying each role, I added suggestions of appropriate tools for implementation, some of which have already been discussed on this site.

What has been your experience? Are there other essential board roles you think are essential and apply universally to nonprofit governance? Are there additional tools board members can use to successfully execute these roles?

Board Accountability

One of the journal articles assigned to our class was Placing the Normative Logics of Accountability in “Thick” Perspective by Alnoor Ebrahim, as published by the American Behavioral Scientist. In it there is a table that breaks board responsibilities regarding accountability into three areas:  governance, performance, and mission. When talking about board accountability, the conversation often surrounds board fiduciary responsibilities and internal controls for financial management. According to Ebrahim, establishing internal controls and financial oversight falls under the board's "governance" role.

Even though we would like to think fraud is not be a common problem among nonprofit organizations, unfortunately they are ripe for it. Part of this is due to increased trust among nonprofit boards and staff, and that laws such as Sarbanes-Oxley do not place the same restrictions and requirements on nonprofit organizations. This video by a nonprofit consulting group speaks to the issue of fraud in nonprofit organizations (minus the part at the very end where he talks about his kids listening to Cyrus and Bieber):

Board Service Dread?

I wanted to share a posting I came across a few weeks ago that uses humor to remind us of what is sometimes the not-so-great reality of board service. If you follow nonprofit related tags on Twitter, you probably saw someone re-tweeting the link. It's an entertaining (and accurate) short narrative from a guy who is about to join the board of his daughter's school. Oh, and he's also the President and CEO of a nonprofit consulting business, who has served previously on six nonprofit boards.

It's called, Why People Hate Nonprofit Board Service. Check it out.

Although horror stories of nonprofit board service can be demotivating, my optimistic outlook is that the ideas being discussed on this blog can contribute to improving boards and the board service experience. Then again, I think those of us who are passionate about and drawn to nonprofit service keep returning, even after bad experiences. I don't know what that says about us!

Board Self-Assessment

A trend in nonprofit governance is the use of board self-assessment tools. It is common for boards to assess the performance of their CEO, executive director, or other top paid management staff, but less common for boards to assess their own performance as a governing body for the nonprofit. However, it seems the number of boards who use self-assessment is still more than half.

Some nonprofit boards may not even be aware that this is a role to consider taking on. I think some of this may be attributable to the fact that most nonprofit board members are volunteers. If you perform volunteer work with an organization, would you then think to assess, or ask the group to assess, your performance? Likely, not.

Board Diversity and Representation

Nonprofit board diversity is an important issue for leaders to discuss. I emphasize important to discuss rather than immediately saying important to attain, because research findings are rather conflicting on this topic. Some describe diversity as a necessary component of successful board leadership because diversity leads to diversity of opinion, which leads to broader input, which leads to better decision-making outcomes. Many of us are inclined to believe this, partly because we want to believe it. However, other studies have concluded that homogenous boards are more quick to come to consensus, have less conflict, and therefore operate more efficiently and effectively.

These studies will likely continue to have conflicting results because there are strengths and weaknesses both in purposeful diversity and in maintaining homogeneity. This is not likely to change, which is why I think it is important for nonprofit boards to first be clear on who they are serving and who has a stake in the organization. The discussion should be centered around these questions, and then form a diversity plan or at least set diversity goals for the board and other areas of leadership and participation in the organization, based on the answers.

Board Pay

You may have read the news this month that Massachusetts lawmakers are in the process of possibly putting limits on pay for nonprofit board members. This could mean big changes for how some larger nonprofits - particularly those in the health and education sectors - operate. It is no surprise that students and professionals of nonprofit organizations have been monitoring the issue closely.

From The Chronicle of Philanthropy State Watch blog:

The measure arose from a proposal backed by Martha Coakley, the Massachusetts attorney general, that followed a public outcry over five-figure stipends for directors of the state’s four nonprofit health insurers, two of which voluntarily suspended board compensation.

The proposal is not attempting to do away with all nonprofit board pay, but the limits on pay will affecting a wider scope of organizations than just those paying individual board members five figure salaries. As an alternative, organizations will be able to apply for exemptions to the pay limits with the state attorney general, but the proposal is still causing a great deal of concern among organizations that may be affected. As described in the posting, some agencies are concerned over maintaining board diversity, socio-economic representation, and engagement if there are limits on pay:

Board Gleeks?

On the lighter side, I discovered this entertaining posting from the Nonprofit Law Blog on lessons for nonprofit boards from the TV show, Glee. Never know what a few internet searches and a rabbit trail or two will turn up! Now if we can just get Glee to do an episode on NPO governance. Maybe the club becomes its own nonprofit organization and Sue is the board president...

Board Planning Cycles

Nonprofit boards are typically expected to be involved in planning. This may include the agency's annual planning meeting, as well as any long-range and strategic planning sessions. Annual and strategic planning have very different goals, but as I found when I interviewed a nonprofit board member for a class project, various types of planning are sometimes referred to interchangeably, depending upon the board member's background and experience with different types of planning.

Here is a brief excerpt of the conversation:

Q:  Tell me, what is the board's involvement in strategic planning? 

A:  Oh, we are heavily involved in the strategic planning. At the annual planning meeting each January, we always review our goals from the last year to see how we did, and then decide what our goals will be for the next year. We always choose goals that have something to do with our mission.

On the surface this sounds good. And it is good. This level of structured and focused annual planning would serve most organizations very well. But an annual meeting where the past and upcoming years are reviewed in detail isn't the same as strategic planning

Board Roles

You've been asked to join the board of directors of a nonprofit agency. This is the first time you've been asked, or maybe it's the tenth time and you are already currently sitting on two nonprofit boards. Either way, the experience of being a nonprofit board member is likely to be greatly varied from one agency to the next, and you may find yourself seeking guidance on what is expected of you and of the board as a whole.

You are probably already familiar with the typical roles for board members, such as president/chair, vice-chair, secretary, treasurer, committee chairs, etc. If as a kid you and your friends ever formed a club, or participated in student government, you probably made similar role assignments (and then things deteriorated from there because everyone wanted to be president or no one wanted to chair the trash cleanup committee). This method of hierarchy and assigning individual roles is a mainstay in American organizational culture.  

However, in order to be a more effective board volunteer and use your term of service with an agency to its full advantage,