Governance as Leadership: Reframing the Work of Nonprofit Boards

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1 Governance as Leadership: Reframing the Work of Nonprofit Boards

2 Tradi<onal Expressions of the Du<es of a Board from quick internet search: Duty of care: Board members are expected to ac0vely par0cipate in organiza0onal planning and decision making and to make sound and informed judgments. Duty of loyalty: When ac0ng on behalf of the organiza0on, board members must put the interests of the nonprofit before any personal or professional concerns and avoid poten0al conflicts of interest. Duty of obedience: Board members must ensure that the organiza0on complies with all applicable federal, state, and local laws and regula0ons, and that it remains commided to its established mission. In addi0on to its legal responsibili0es, the board acts in a fiduciary role by maintaining oversight of the nonprofit's finances. Board members must evaluate financial policies, approve annual budgets, and review periodic financial reports to ensure that the organiza0on has the necessary resources to carry out its mission and remains accountable to its donors and the general public.

3 Three modes of Governance: All Created Equal; All Are Necessary Governance as Leadership Type III Genera0ve

4 The board s du0es of loyalty and care Financial Discipline: Prevent them, waste or misuse of resources Informed Oversight: Ensure resources are deployed effec0vely and efficiently to advance the mission Mission Fidelity: Safeguard the mission against uninten0onal drim & unauthorized shims in purpose Primacy of Organiza<onal Interests: Require trustees to operate in the best interests of the organiza0on

5 Oversight: of audits, budgets, investments, compensa0on, facili0es, fundraising enact policies & prac0ces to discourage waste, prevent abuse, promote efficiency Performance Measurement: Ask whether & how effec*vely programs advance the mission Evaluate execu0ve performance Promote lawful & ethical behavior: Ensure compliance with standards of safety, legality, honesty Avoid even the appearance of conflicts of interest Direct or indirect financial benefits Rela0onships with compe0ng organiza0ons

6 Fiduciary Oversight Can we afford it? Did we get a clean audit? Is the budget balanced? Should departmental budgets increase by 2% or 3%? Will the proposed program adract enough clients? Is it legal? Fiduciary Inquiry What s the opportunity cost? What can we learn from the audit? Does the budget reflect our priori0es? Should we move resources from one program to another? How will the program advance our mission? Is it ethical?

7 Reflec<ons on Fiduciary Issues: What do we hold in trust, and for whom? What are the fiduciary, but nonfinancial, roles of our board and commidees? How do we know the organiza0on is fulfilling its mission? What is the evidence that we are a trustworthy organiza0on? What are some examples of 0mes when we earned the 0tle of trustworthy? What are our major financial vulnerabili0es? What are we doing as an organiza0on and a board to address them?

8 Oversight: of audits, budgets, investments, compensa0on, facili0es, fundraising enact policies & prac0ces to discourage waste, prevent abuse, promote efficiency Performance Measurement: Ask whether & how effec*vely programs advance the mission Evaluate execu0ve performance Promote lawful & ethical behavior: Ensure compliance with standards of safety, legality, honesty Avoid even the appearance of conflicts of interest Direct or indirect financial benefits Rela0onships with compe0ng organiza0ons

9 Discussion: Ques0ons for clarifica0on or deeper understanding? Are there basic fiduciary tasks missing or incomplete in your board?

10 In the face of widespread disillusionment with strategic plans that have too omen produced lidle or no visible benefits to organiza0ons: What does strategic governance look like? strategic thinking (not strategic planning) Set priori0es Review and modify strategic plans Monitor performance against plans.

11 The board aims to construct consensus about what the organiza0on's strategy should be. To do this new work trustees and management need to work differently: The board s commidee structures, mee0ngs, channels of communica0on must foster strategic thinking and cul0vate a true strategic partnership with management

12 the realm and role of the board on one hand, and management on the other hand, cannot be en*rely disentangled. Like partners on doubles tennis, neither party in Type II governance can afford to be par*cularly territorial or both will lose. This shic from board as monitor to board as partner spawns three major changes in prac0ce.

13 Flexible Adapted to strategic priori0es, not administra0ve opera0ons Fiduciary commidees remain E.g., finance, investments More task forces / ad hoc work groups E.g., staff development, technology, marke0ng, community image

14 Avoid too many pro forma reports make room for more conversa0ons to set and tackle strategic priori0es Use techniques for robust discussions: e.g., suspend the rules, silent starts, role plays/simula0ons, etc. boards should find and focus on the strategic bull s eye while management lays plans to gather the bows and arrows and to shoot straight.

15 To think strategically, trustees must understand what influen*al internal and external stakeholders think. (p. 73) Conversa0ons with cons0tuents, experts, line staff, community members, etc. Access to unfiltered informa*on and unfelered opportuni*es to ask ques*ons precipitate greater insight and beler ques*ons. (p. 74) Data linked to strategic priori0es permit a board to assess progress, spot downturns, and ul0mately rethink strategy.

16 TYPE I Governance Management defines problems and opportuni0es; develops formal plans. Board listens and learns; approves and monitors. Board structure parallels administra0ve func0ons. Premium on permanency. Board mee0ngs process driven. Func0on follows form. Protocol rarely varies. Staff transmits to board large quan00es of technical data from few sources. Type II Governance Board and management think together to discover strategic priori0es and drivers. Board structure mirrors organiza0on s strategic priori0es. Premium on flexibility. Board mee0ngs content driven. Form follows func0on. Protocol omen varies. Board and staff discuss strategic data from mul0ple sources.

17 Discussion: Ques0ons for clarifica0on or deeper understanding? Where does this understanding of strategic governance affirm your present prac0ce? Where does it challenge your present prac0ce?

18 Genera<ve Thinking: is the essen0al founda0on for genera0ve governance is how trustees make sense of the world of informa0on/ data/knowledge they bring to the board room is a cogni0ve process for deciding what to pay aden0on to what it means what to do about it

19 What does it look like? How does it work? No<cing cues & clues Selec0ve percep0on: we see what we focus on/look for Learning to look for the unexpected/working at the boundaries Choosing & using frames Frames = the filters we use, the perspec0ves we adopt E.g., Structural, Human Resource, Poli0cal, Symbolic Thinking retrospec<vely Emergent strategy involves discovery Review the past to spot paderns/themes that make sense The power of those who shape the dominant narra0ve

20 When/where does it happen most oxen? Organiza<on encounters challenge Problem is Framed Strategic Response Iden<fied Plans/tac<cs formulated Execu<on

21 When/where does it happen most oxen? Organiza<on encounters challenge Problem is Framed Strategic Response Iden<fied Plans/tac<cs formulated Execu<on Genera<ve Thinking

22 Where are boards most frequently involved? Organiza<on encounters challenge Problem is Framed Strategic Response Iden<fied Plans/tac<cs formulated Execu<on

23 Where are boards most frequently involved? Organiza<on encounters challenge Problem is Framed Strategic Response Iden<fied Plans/tac<cs formulated Execu<on

24 Opportunity for Genera<ve work Cues, clues, framing, retrospec0ve Plans Strategies Time

25 Amount The Genera<ve Curve Typical Board s Involvement Curve Time

26 Opportunity for Genera<ve work 1. Look for Genera<ve Landmarks Ambiguity High Stakes Strife Irreversibility 2. Search out the embedded issues e.g., reasons for high staff turnover 3. Spot Triple Helix situa<ons All 3 modes involved in a single issue Plans Strategies Time

27 EXECUTIVE ENGAGEMENT high TRUSTEE ENGAGEMENT low 1 Governance by Fiat Trustees displace exec. 3 Governance by Default Trustees & exec. disengage 2 Type III Governance Trustees & exec. collaborate 4 Leadership by Governance Exec. Displaces Trustees

28 Discussion: Ques0ons for clarifica0on or deeper understanding? Where are you feeling affirmed in your present prac0ce? Where are you feeling challenged in your present prac0ce?

29 Type I Fiduciary Type II Strategic Type III Genera<ve Nature of Organiza<ons Bureaucra0c Open System Non ra0onal Nature of Leadership Hierarchical Analy0cal/visionary Reflec0ve learners Board s central purpose Stewardship of tangible assets Strategic partnership with management Source of leadership for organiza0on Board s core work Technical: oversee opera0ons, ensure accountability Analy0cal: shape strategy, review performance Board s principal role Sen0nel Strategist Sense maker Crea0ve: discern problems, engage in sense making Key ques<on What s wrong? What's the plan? What s the ques0on? Problems are to be SpoDed Solved Framed Delibera<ve process Parliamentary & orderly Empirical and logical Robust and some0mes playful Way of deciding Reaching resolu0on Reaching consensus Grappling and grasping Way of knowing It stands to reason The pieces all fit It makes sense Communica<on with cons<tuents Limited, ritualized to legi0mate Bilateral, episodic to advocate Mul0lateral, ongoing to learn Performance metrics Facts, figures, finances, reports Strategic indicators, compe00ve analysis Signs of learning and discerning

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