At some point in your career, you likely will be asked to serve on the board of directors of a local nonprofit organization that provides needed services to some population in your community. You may already serve this way. It might be your local Boys or Girls Club, an organization that trains developmentally-disabled adults, a free clinic, an arts organization that exposes poor children to fine art and symphonic music, or even a Chamber of Commerce. Let’s assume that you believe that the mission is important and that this organization is one that can probably make a difference. What other criteria should drive your decision on whether to accept the invitation to serve?
A 1990 Gallup survey conducted for the Independent Sector estimated that there are 98.4 million volunteers in America. Well-known management author Peter Drucker noted that the nonprofit sector is the nation’s largest employer. However most workers don’t get paid. Why do these people volunteer? Unquestionably the major reason is that they believe in the mission of the organization. Research suggests that other motivations exist as well. Volunteer work may provide opportunities to “stretch” and learn valuable new work skills. Volunteer work may also provide a sense of achievement not received from one’s regular employment. Some people may become involved for personal or professional networking opportunities.
There are significant differences between being asked to sit on the national board of a well-known organization and being asked to join the board of the local chapter of that same organization or being asked to join the board of local nonprofit. The national board may provide prestige, visibility, and great networking opportunities as well as allow you to be of service. Most local boards don’t offer that level of prestige and visibility, and the networking may be of limited professional help. While both levels are important to society, the comments in this paper apply primarily to the smaller, local boards.
Millions of volunteers serve in thousands of organizations, whatever their reasons. Many of these organizations need board members. Where better to look for that talent than in the business sector? You as a business person are a prime target, especially if you are, or have been, a volunteer yourself.
What Should You Ask?
Let’s say you are inclined to accept the appointment to this board. You believe in giving back to the community. You believe in the organization’s mission. However, you may have some questions about what to expect, especially if this would be your first board appointment. First are the pragmatic questions. How much time and money will you be expected to give? Does the organization have directors and officers liability coverage? (The person recruiting you probably will underestimate significantly the time and money involved. That’s expected. But be sure that they actually do have directors and officers liability coverage! You do have potential liability as a board member.)
You should also ask why you were nominated for this position. Many effective nonprofit organizations recruit board members for specific expertise. They want one member who can read and monitor financial statements, another who can evaluate programs, another who understands legal issues, etc. They deliberately try to create a balanced board. Other organizations may simply look for someone who cares about the mission and who is willing to serve. You will want to know their specific expectations for you.
You should also ask some managerial questions. Does the organization have a clear mission? Defined objectives? Training for board members? Evaluation of program impact? What is their level of financial stability? What is the relationship between the board and the organization’s Chief Professional Officer (CPO)? Who evaluates the CPO? You may still choose to serve, even if these answers are more negative than you like. However, you will have an idea of where work needs to be done.
Board – CPO Relationship
A business corporate board has a clear responsibility to maximize shareholder value. Academic theorists who study corporate boards are concerned about “agency” issues, that is, do management incentives encourage actions in line with board priorities and shareholder interests, and not just the manager’s own interests?
What are comparable concerns in nonprofit organizations? Nonprofit organizations have no shareholders. However they do have clients and donors that the board must serve. Traditional agency concerns may be less of an issue, since CPOs have few ways to personally benefit financially by focusing on one strategic goal or program at the expense of another.
Yet, the potential for board/CPO conflict does exist. The CPO has better access to information than the board by virtue of working in the organization full-time. He or she serves as a gatekeeper and can control much of the information flow. The CPO may unduly influence board decisions if the board is not alert. Bowen argues that nonprofit boards need to be less supine than many have been, and that a healthy, friendly tension is appropriate between the CPO and the board.
Drucker notes that traditionally nonprofit boards ran their organization in a hands-on fashion, or at least tried to. More nonprofit organizations have a paid professional director today. However, the board may still try to do the organization’s staff’s job. Boards tend to do this because directors care deeply about the organization’s mission. Also, they have a financial interest. Corporate board members earn supplemental income for serving. Nonprofit board members generally are expected to contribute money and bring other donors in through their contacts. Thus, they are spending money and social capital earned elsewhere. People who care and who give can be expected to have an opinion about how the organization is run.
Drucker goes on to writes that “precisely because the nonprofit board is so committed and active, its relationship with the CPO tends to be highly contentious and full of potential for friction. Nonprofit CPOs complain that their board ‘meddles.’ The directors complain in turn that management ‘usurps’ the board’s function.” Are you prepared to deal with this?
Two Nonprofit Boards and Their Chief Professional Officers
We undertook in two recent studies to explore the nature of this relationship. The first organization studied was Reading for the Blind & Dyslexic, an organization that recruits volunteer readers to record material for the visually handicapped. The second organization, CONTACT, provides a crisis-intervention telephone hotline staffed by trained volunteer caregivers who are available twenty-four hours a day, seven days a week. Their legal structures differ. However, both organizations have local chapters throughout the nation, each with its own board and chief professional officer. The same questionnaire was sent to the board members and CPOs of the majority of chapter units from both organizations.
Fifty-six statements about potential board or CPO activities constitute the central part of the questionnaire. Many activities are shared by both the board and the CPO. Therefore respondents were asked to indicate on a five-point scale the degree to which board members and CPOs actually performed each activity. Respondents were then asked to indicate on the same type of scale the degree to which each should be responsible for the activity. The statements presented the actions in terms of the board involvement first, and then the CPO.
These answers enabled us to ascertain the degree to which both board members and CPOs agreed on whether both were doing what that they should be doing. We could also determine the issues on which boards and CPOs agreed and disagreed with regard to which party had the primary responsibility. A measure of consensus between a board and its CPO based on the percentage of time they agreed on the specific statements was then developed. The data also were analyzed to test for relationships between the consensus measure and the chapter’s accreditation score or ranking by the national office.
We offer here some summary generalizations that may be useful to executives in local nonprofit organizations, to board members, or to others considering opportunities to become involved. These conclusions blend the findings from both studies. Not all analyses refer to both data sets. Some conclusions are drawn from one study or the other and some from both. The findings are remarkably similar when similar analyses were done on both data sets.
What Might these Findings Suggest?
These findings will not determine whether you should join the board of some nonprofit group. However, they might give you something helpful to think about.
First, don’t expect a lot of formal training on how to be a good board member if you decide to join a nonprofit board. Most respondents felt their boards did not do as well as they should in this area. Research or reading on your own ahead of time may be helpful.
Second, board members generally believe they perform most tasks at the appropriate level. However, they fall short of their own expectations in several important areas, including the recruitment, training, and evaluation of board members, involvement in — and communication with — other constituencies, the review of management information and financial controls, providing direction for long-term financial planning; and evaluation of the organization’s overall performance. This is a fairly substantial list. It is not that respondents thought their boards were doing nothing in these areas. They just felt they should be doing more. The only statements where the respondents indicated the board members should do less than they were currently doing involved relying too much on the CPO to do what they should be doing!
Given the above, there likely will be several areas where the application of good management skills would be helpful if your board is like most. Expectations may be too high in some areas, but clearly a board needs to be able to monitor financial controls and management information. Just realize that you may find yourself with a regular twinge of guilt about how much more there is to do than you are able to accomplish.
Third, expect some tension with the CPO about the distribution of responsibility and credit, especially if you are fortunate enough to have an active CPO and an involved board. The data consistently showed that that board members and CPOs each believe that they do more than the other side does –and more than the other side believes they do — in many key areas. These areas include strategic planning, financial management, fund raising, communication with outside groups, and board development. Many psychological studies show most of us give ourselves more credit for positive actions than we give others involved, or than they give us. It can, however, create some tension.
Our data also show a tendency for each group to believe that it has primary responsibility for more areas than the other is willing to cede. Areas of disagreement include questions of who should take the lead on short-term and long-term planning, initiating new services, recruiting new board members, and creating opportunities for visibility in and involvement with the community.
Overall, tensions result from a lack of clear understanding about the relative roles and responsibilities of the board and the CPO. The areas of probable tension appear to primarily focus on what might be considered operating issues rather than policy issues. The data support Drucker’s observations about conflict between boards and CPOs occurring when board members feel an obligation for “hands-on” involvement while the chief professional officer feels this is an intrusion on his or her domain. Conversely, board members apparently believe that CPOs often overstep their roles and take on board responsibilities, although CPOs may feel that they are only doing what is necessary to keep the organization moving.
Finally, we checked the impact of this tension on the performance of the organization. Using the consensus variable we developed, we ranked the organizations as to whether they had Consensus, Marginal Consensus or No Consensus. We then calculated the average accreditation score for each consensus category. The highest accreditation scores by a substantial margin belonged to the Marginal Consensus group, leading us to agree with Bowen that some tension and disagreement may be beneficial rather than negative. On the other hand, complete disagreement is not helpful. Those units with no consensus had the worst average scores, while the Consensus category was in-between. [See Figure 1.]
What Might this Mean for You?
What does all of this matter to you as you ponder your decision? Perhaps not much. It may help to realize that active organizations are likely to have some tension and disagreement – but it is because everyone is trying hard to achieve the goal, not because they are shirking. Before making your decision, ask some questions about these matters. If everyone agrees about everything, the organization may not be doing what it should. Are you prepared to resurrect it? If there is absolutely no consensus between the board and the CPO, run in the other direction. Unless you are a miracle worker, you are likely to be wasting your time, no matter how worthy the cause. You are likely to have a miserable time as well.
If the organization fits in the Marginal Consensus group, if you believe in its mission, and if you are prepared to spend your time, money, and effort to make a difference in the world, this could be a good place for you. You could learn some new skills that might transfer to the workplace, meet some interesting people, and stretch yourself in several ways. Perhaps more importantly, you might be able to make a real difference in the lives of people who need that help.