Should Nonprofit Boards Be A Boot Camp for Corporate Executives?
By: Eugene Fram Free Digital Photo
Alice Korngold, President of Korngold Consulting, suggests, “Nonprofit board service is the ultimate leadership opportunity, giving business executives the personal and professional skills they need… .“ * She suggests that the following abilities can be developed from such experiences. But the neophyte director can become attuned to some inappropriate nonprofit practices and promote them on subsequent nonprofit board assignments.
- Oversight Not Leadership: Except for a startup period, when a nonprofit board has to be involved with operations, the board has to make certain it is delegating proper responsibility to the CEO without micromanagement. Board members also must be alert to the danger that nonprofit boards can retain a micromanagement culture long after it is needed. Occasionally CEOs like the arrangement because when something goes wrong, they can tag the board with responsibility.
- Duty of Care: Board members must read briefings and other materials critically, learn to ask pertinent questions, take time to become familiar with the mission field of the organization, finances, cyber security needs and overview the staff for its long- term bench strengths. But the penalties for not proactively learning are not very stringent as a volunteer nonprofit director, except where serious malfeasance is involved.
- Duty of Loyalty: To place the organization’s interests above personal and professional ones, and to sign a conflict of interest statement. But the loyalty to a friend or colleague can take precedent when voting.
- Duty of Obedience: To avoid conflicts of interest, making sure all decisions are in the best interests of the organization’s mission, long-term and short-term. If a director does not agree with the majority of the board, he/s has an obligation to vote “no” on the issue. Otherwise he/s may encounter a personal financial peril.
- Duty of Imagination: Although not a legal duty, Korngold suggests, “ It is imperative for boards to imagine the greater potential in service to the community, (profession or association), and build the path, including the revenue model for success.” Boards must motivate management by generative thinking—asking “what if” questions related to the unknown risks that will always be present in a decision.
The new nonprofit director’s learning experiences also can go astray when he/s accepts the following common faults found within the cultures of nonprofit boards.
- Go Along To Get Along: Nonprofit boards need a consensus to operate. But often this evolves to a culture where directors agree to a decision in order to avoid board conflict. For example a university trustee, when asked for comment on a faculty curricular proposal he felt lacked quality, hesitated to speak against it and voted with others to avoid board conflict.
- Engaging a “store minder” to become the CEO: The nonprofit director may only have his/h reputational risk at stake, not a financial risk, if the nonprofit encounters a serious problem. As a result, there can be a strong cultural tendency to engage a CEO who seeks modest growth and does not seek change to improve client impacts.
- Underestimating the management abilities of the CEO: It is not unusual to encounter a nonprofit CEO who has risen from a line positions to the CEO position, for example, having begun his/h career as a direct service social worker. Business executives on nonprofit boards often fail to assess the real management backgrounds nonprofit CEOs have acquired via experience. Many have had more significant management backgrounds than business individual contributors serving on their boards, such as accountants, physicians, attorneys or professors.
- Be wary of the “silent” Board Room: Never underestimate the limiting power of a nonprofit board’s culture. Business directors who want to serve on high performance boards need to stay alert to the significant decision-making deference directors give to one another, the board chair and sometimes the CEO. When carried to an extreme, it can be financially costly to the volunteers involved, if an excess benefit is unwittingly provided–See Intermediate Sanctions Act: IRS Code Section 4958.