Can Nonprofit Boards Learn from the Recent Carnegie Hall Disruption?

By: Eugene Fram

The costly upheaval between Carnegie Hall board and staff appears to be slowly moving toward resolution. * But, for decades, other types of large nonprofit organizations have imperfectly resolved the issues that have arisen at Carnegie Hall without similar spectacles. Examples: university boards know they have to fully rely on faculty to develop up-to-date curricula. Hospital boards know they have to retain skilled physicians or face the potential of due care failure liabilities.

I suggest that nonprofit directors need to consider three actions to help eliminate the type of spectacle recently evidenced by the Carnegie Hall organization.

Policy vs. Operations: Develop an understood difference between the policy/strategy development and managing organizational operations. While the borderline between the two, is not always clear in for-profit or nonprofit governance, practice can help define the line over time. What needs to be anticipated is that both board members and the CEO will occasionally overstep the boundary line, When this occurs, the incident is equitably reviewed. Then it can be used as a developmental opportunity and a guide for policy. But continual overstepping is a sign that the whole governance model needs significant review.

Governance Focus: Nonprofit directors need to be selected on the bases of their behavioral characteristics: critical thinking abilities, strategic understandings, leadership abilities, etc. as well as well as their fields of expertise. They are drawn from a much wider pool of candidates than for-profit directors. Director knowledge of and interests in the governance function are often modest. In addition, rigorous debate can lead to personal conflicts, an anathema in the nonprofit board environment. Not having a financial risk related to the organization, many can feel it best “to timidly go along to get along.”
Collaboration & Communications — Nonprofit directors need to collaborate to be effective. They also need to be in a position to seek information beyond that which management has provided. But meeting agendas are frequently oversubscribed, leaving little time for building directors’ interpersonal connections and developing information.

(Note: The Carnegie Hall board has about 88 directors, many internationally known in their own right.)

What may be needed for other nonprofit organizations are directors who:
1. are willing to develop off-line communications channels with others on the board, especially when important issues are being discussed.
2. can articulate complex issues clearly to their peers.
3. are willing to attend social and staff events to become better acquainted with peers and staff. In most nonprofits, the board is only several organizational levels away from the staff.
4. are curious and willing to gather information from other sources than management. They feel they are in a position of strength and are willing to call for the board to engage its own legal counsel if a dire situation arises.
5. have their egos in place and can quickly realize what they don’t know and move quickly to fill the knowledge gap.

Nonprofit directors will never have the breadth or depth of information possessed by management. To be effective in the 21st century, they will need to trust but verify in their governing overview responsibility and to proactively seek information from atypical sources, such as staff below the management level. Nonprofit boards need to come to these understandings. Those who don’t can eventually suffer upheavals similar to Carnegie Hall.

* http://www.nytimes.com/2015/12/29/arts/music/wish-list-for-a-new-chairman-at-carnegie-hall.html