Effective Governance: Community Development Summit May 14, 2014 Kevin Kearns, Professor and Director Johnson Institute for Responsible Leadership
There are some tensions in nonprofit governance What level of policy and management are appropriate for the board? What level of information should be provided to the board?
The roles of board and staff are not clear-cut Board Staff Policy: Makes policy in areas such as finance, investments, personnel, legal, systems Legal: Ensures agency is properly managed in compliance with the law Planning: Approves mission and strategy Program: Approves program ideas, especially when they are strategically relevant Develops and proposes new policy initiatives. Keeps board informed of policy developments Anticipates and plans for compliance issues. Develops board capacity to manage itself Catalyzes and supports the planning process. Ensures that board has the capacity to competently assess programs and portfolios
Modes of Governance Chait, et. al. Governance as Leadership, 2005 The Fiduciary Mode: Stewardship of tangible assets, faithfulness to mission, legal accountability, etc Bedrock functions Strategic Mode: Create strategic partnership with management, focus on long-term direction and goals. Generative Mode: Engaged in creative, out of the box thinking. Values, innovation, new paradigm rare for most boards. Boards should work in all three modes
Four dimensions of effective governance Kevin Kearns (2014) Dimensions of Nonprofit Governance, Johnson Institute for Responsible Leadership, working paper in progress Tactical Concerns (Immediate, reactive) Strategic Concerns (Longer term, proactive) Managerial oversight Ensure that there are adequate resources for predictable programming Approve and monitor programs Budget approval Provide financial oversight, especially the annual audit Review CEO performance Policy oversight
Four dimensions of effective governance Kevin Kearns (2013) Dimensions of Nonprofit Governance, Johnson Institute for Responsible Leadership, working paper in progress Tactical Concerns (Immediate, reactive) Strategic Concerns (Longer term, proactive) Managerial oversight Ensure that there are adequate resources for predictable programming Approve and monitor programs Budget approval Provide financial oversight, especially the annual audit Review CEO performance Hire the CEO Assist with Fundraising Impact assessment Affiliations, alliances Location and facilities Policy oversight
Four dimensions of effective governance Kevin Kearns (2013) Dimensions of Nonprofit Governance, Johnson Institute for Responsible Leadership, working paper in progress Tactical Concerns (Immediate, reactive) Strategic Concerns (Longer term, proactive) Managerial oversight Ensure that there are adequate resources for predictable programming Approve and monitor programs Budget approval Provide financial oversight, especially the annual audit Review CEO performance Hire the CEO Assist with Fundraising Impact assessment Affiliations, alliances Location and facilities Policy oversight Review and approve mission Engage in strategic planning for the future
Four dimensions of effective governance Kevin Kearns (2013) Dimensions of Nonprofit Governance, Johnson Institute for Responsible Leadership, working paper in progress Tactical Concerns (Immediate, reactive) Managerial oversight Ensure that there are adequate resources for predictable programming Approve and monitor programs Budget approval Provide financial oversight, especially the annual audit Review CEO performance Strategic Concerns (Longer term, proactive) Hire the CEO Assist with Fundraising Impact assessment Affiliations, alliances Location and facilities Policy oversight Make and oversee policy in areas such as personnel, investment management, bylaws, compliance Fees and tuition Review and approve mission Engage in strategic planning for the future
Four dimensions of effective governance Kevin Kearns (2013) Dimensions of Nonprofit Governance, Johnson Institute for Responsible Leadership, working paper in progress Tactical Concerns (Immediate, reactive) Strategic Concerns (Longer term, proactive) Managerial oversight Danger of Micromanagement to the exclusion of effective leadership and governance Policy oversight Danger of aloof and distant governance to the exclusion of diligent oversight and accountability
The Consent Agenda The Consent Agenda: A Tool for Improving Governance, Washington DC: BoardSource, 2006 Effort to preserve precious time in board meetings for the essential business of governance Dispense with routine issues to focus time on what matters most What might have taken 45-60 minutes for the board to review is dispensed in moments
These are items commonly found on the consent agenda The Consent Agenda: A Tool for Improving Governance, Washington DC: BoardSource, 2006 Minutes of previous meeting Confirmation of decisions discussed previously (items that require a minor administrative touch before the final vote) CEOs report (if routine and uneventful) Financial report (if routine and uneventful) Committee reports Informational materials Updated organizational documents
These are items typically NOT on the consent agenda The Consent Agenda: A Tool for Improving Governance, Washington DC: BoardSource, 2006 Audit report CEO report if there is an issue for discussion, not just a routine update Financial report if there is an issue for discussion May depend on financial acumen of the board May be assigned to the finance committee Approval of annual budget Executive committee decisions
Consent agenda requires discipline The Consent Agenda: A Tool for Improving Governance, Washington DC: BoardSource, 2006 Set the agenda (board chair and CEO) Distribute materials well in advance of the meeting, with appropriate documentation Read materials in advance of meeting Provide pre-meeting venue for questions about the consent agenda (e.g., office hours ) Introduce consent agenda at the meeting Remove items from the consent agenda if requested Approve consent agenda as a bundle Document approval of consent agenda
There are some challenges Break with tradition Requires collaboration between board and executive staff Might be best to ease into the consent agenda with obvious items, then grow it later Be explicit about criteria for what is and what is not on the consent agenda Monitor and adjust as needed
Additional Resources Kearns, Kevin, "Attributes of Nonprofit Board Members as Perceived by Chief Executives and Board Chairpersons," Nonprofit Management and Leadership, vol. 5, (1995) no. 4, 337-358. Chait, Richard,et. al. Governance as Leadership, Washington DC: BoardSource, 2005 Carver, John, Boards That Make A Difference: A New Design for Leadership in Nonprofit and Public Organizations, San Francisco: John Wiley, 2006 The Consent Agenda: A Tool for Improving Governance, Washington DC: BoardSource, 2006