Do Nonprofit Boards Have Viable 21st Century Options?
By: Eugene Fram
Based on what has transpired so far in the 21st century, the typical nonprofit board in the United States appears to have acquired more constraints and fewer options to maneuver. Although charitable giving rose moderately in 2012, financial options remained constrained as increased operating costs and increased client needs cloud future prospects. State and federal procedures are being expanded which require nonproductive board or management time. In some states, like New York, boards now must have substantial compensation review processes for executive compensation. Whistle blowing programs are now being mandated for larger nonprofits. At the Federal level, the enhanced 990 Form requires more of board and management engagement, and the IRS Intermediate Sanctions Act can cause personal liability concerns if not fully understood.
With these added constraints, what can be done to increase operational options for nonprofit boards?
More board driven fundraising. As of 2012, according to BoardSource, 46% of nonprofit CEOs grade their boards “D” and “F” on their ability to fundraise. Recruiting experienced directors with comfort in fundraising will be even more important than it has been in the past. Smaller nonprofits are not in a position to recruit “heavy hitting” board members, but they will need to seek directors who, with some management support, can make moderate fundraising differences. They also will need a few directors who are creative and can suggest and implement nontraditional types of fundraising events.
Developing a viable long-range plan. Board members have been humorously described as being ‘birds of flight” over a nonprofit organization. They traditionally only serve one or two three-year terms. Board chairs in some nonprofits only serve for a single one-year term. Consequently, it may be difficult for most to develop a long-term perspective of the organization’s future, unlike those visionary leaders working in the field full-time. It becomes management’s task to make certain that board members have some contact with state of art changes in organization’s field. Encouraging volunteer leaders to come in contact with national experts at conferences, on webinars and at other educational venues will be an additional management challenge. Otherwise, what passes for long-term planning will become pedestrian tactical actions.
Risk Taking. Nonprofit boards are not noted for their risk taking attributes. If a board wants to increase its operating options, against an increasingly constraining economic environment, this attitude will need to change. Specifically, boards will have to consider these types of actions:
• Allocate budget for experimentation with new programs that will enhance mission impact.
• Seek foundation support for new programs that require moderate risk experimentation.
• Join with other nonprofits in experimentation or assessing new operational options.
• Merge two nonprofits to form a new one with stronger options.
• Engage a visionary chief executive with a track record and build a trusting relationship between the board and the chief executive, knowing there will be “bumps in the road” to be traveled.
If a nonprofit board concludes its organizational options are totally constrained by the variety of internal and external forces cited above, it is likely headed for extinction. However, within the three key areas cited above, there are pragmatic actions that can be taken to increase an organization’s options. As a board member and consultant, I have seen it happen!