Today, non-profit organisations in the United States control upward of $1.5 trillion in assets and are increasingly relied upon to help address society’s ills.
Corporations are not alone in focusing on governance; rigorous oversight of management and performance is increasingly important for non-profits too.
The corporate-governance debate globally is spreading from the for-profit to the non-profit world.
To improve the governance of non-profits, boards must venture beyond the traditional focus on raising funds, selecting CEOs, and setting high-level policy.
The litmus test of the chief executive’s leadership is not the ability to solve problems alone but the capacity to articulate key questions and guide a collaborative effort to formulate answers.
Theory and law dictate that the board of directors is responsible to govern your organization. Typically, new boards of directors in a new organization work hands-on, almost as partners — or as a “working board” — with the chief executive. A wise CEO will see Board members almost as strategic partners, rather than as a necessary evil that corporations must have.
It is important if you are building a board with the right set of tasks in mind. Boards have multiple roles, from fundraising to caretaking, governance, and oversight. Just like any company or corporation, it is important to do an assessment. Understand the skills that your particular non-profit needs to fulfil your mission.
Putting together an outstanding non-profit board is easier said than done, and it takes a lot of precision. Not everyone makes a great board member, so it’s acceptable to be picky when it comes to putting together a non-profit board.
Board challenges are something that many non-profits struggle with, and there’s no easy solution. We often hear horror stories of board takeovers—when the non-profit leadership is “overthrown” by its board of directors.
We welcome back Roger Phare as our guest blogger who is an accomplished Global Executive Director, equipped with a commanding track record over the past 38 years of bringing sound judgement and a strong commercial perspective to IT businesses, from ‘Mainframe to Mobile’.
Roger has been fortunate to have been part of the commercial computing lifespan. With a market driven approach, which he has strategically supported, a number of organisations, both at significant Board, Executive and Regional Directorship and responsibilities. An expert in corporate governance and compliance and risk management; enjoying challenging the status quo and providing independent advice to Boards whilst maintaining sound judgment, impartiality and with integrity.
Roger is going to talk to us about ‘Not-for-Profit Directorships – It’s not a charity!’
Thank you Geoff, the blog heading might seem like an oxymoron (or perhaps even a paradox for those of the literary-minded fraternity). After all, surely Not-for- Profit (NFP) organisations are charities; a fact that very few would dispute. At board level, however, the leadership, governance and compliance responsibilities are on at least an equal footing with commercial businesses of equivalent size and complexity.
I mentioned in a previous blog that that the term “Not-for-Profit” is a misnomer; in reality the correct term would be more likely “Not-for-Dividend”. In other words there is nothing at all wrong with, in fact commendable that, a charitable organisation makes an operational monetary surplus. The major difference is that the surplus is not distributed to external shareholders but channelled back into the organisation for ongoing initiatives. The governance and risk at board level is substantial and yet directors are often voluntary – pro-bono if you like.
The issue is not just one of payment but the value and importance placed upon such roles. At a recent business event I overheard a young professional discussing board opportunities. The individual was alluding to a recent application they had made to become a voluntary director on a NFP board. They went on to say that they hoped it would give them experience to apply for “proper” board positions in the future and – wait for it – if they made mistakes along it didn’t really matter because it was only voluntary! The concept of “free” having little or no “value” is the problem.
Now I am not proposing that Not-for-Profit Directors are necessarily paid at the highest commercial rates; there does need to be a good amount of desire and passion to be involved with the sector which means there is in-effect, a subsidised participation. I have long held the view that the NFP sector should consider the concept of “paid volunteers” (there’s that oxymoron thing again) for all roles within the organisation. What does this mean? Well – currently NFP’s have two types of staffing – paid and voluntary. Voluntary means no payment (other than direct expenses) and this leads to issues such as talent pool availability plus difficulties in selection of one candidate over another.
If, union rules permitting, all staff were paid volunteers i.e all paid but at say, 50% of market rates then this overcome a good number of the issues currently faced. At board level an experienced director could value the 50% subsidy as their pro-bono contribution, yet still be able to justify the time, effort and corporate responsibility required within their portfolio.
With this approach, charity could well begin at home….
We hope you enjoyed this blog!
You can contact Roger Phare via LinkedIn: Roger Phare on LinkedIn
or by email: roger phare @ gmail .com (remove all spaces)