Exploring Emerging Forms of Nonprofit Governance

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The most recent edition of our print journal the Nonprofit Quarterly focused on the moving target of nonprofit governance. The target is moving not only because ideas and practices in governance are shifting more generally but also because many nonprofits have, frankly, been lazy thinkers where governance is concerned. This has led to an overdependence on prescriptive norms, a general lack of attention to research, and a dearth of real creativity aimed at a powerful endgame. In recognition of this intellectual logjam, for ten years NPQ has collaborated with the Midwest Center for Nonprofit Leadership to sponsor a conference that brings academics and practitioners together. The conference’s mission is to discuss the theoretical frameworks in relation to the realities of nonprofit governance and the questions we see as needing further exploration. This special edition of NPQ reflects for the most part a combination of papers delivered and ideas explored at the conference over the last decade. It is in no way definitive but rather a stop along the way to refining governance practices to make nonprofits even more powerful and effective than they are now.

Why Won’t My Board Fundraise? I’m Dizzy! Why Won’t the World Stop Turning?

Here is a thought: maybe for most nonprofits the board will not, after all, be your fundraisers— but your governance system will! And, just in case you don’t get the point, we are talking less about getting your board to fundraise than about entreating you to consider transforming your nonprofit governance system so that it actively honors, informs, supports, amplifies, vivifies, and expands the work of the organization. The work of governance includes—but is hardly limited to—fundraising. And, arguably, if you do not use the governance system writ large in ways that demonstrate that you value your community of stakeholders for things other than their cash, they may be less likely to fund you—or recommend you for funding by others.

The Definition of Insanity: Trying to Fire Up the Edsel

It has been the case for many decades now that when you ask people in the nonprofit sector about their major issues with their boards, the response is an embittered collective whine about the unwillingness of board members to take on fundraising for the organization. Some organizations, do, of course, have one of those boards—filled with billionaire hedge fund managers willing to make use of their financial and social capital on behalf of the organization. But this is generally not what most of our boards look and act like. In fact, Francie Ostrower’s groundbreaking study, based on a survey of board practices (see Adding a Few More Pieces to the Puzzle: Exploring the Practical Implications of Recent Research on Boards in this issue), found that only 29 percent of boards are active in fundraising. That doesn’t stop us from trying to re-create our board in the revered image of symphonies or the Harlem Children’s Zone. We keep expecting this old car to start, when it was an Edsel—at least for most of us—to begin with.

It is not entirely the fault of practitioners, who have been trying for years to tinker here and there in hopes that the vehicle will finally spark up and get on the highway, somehow becoming fully capable of negotiating the passing lane; they have been assured by salespeople that it will easily do at least a reasonable sixty-five miles per hour if they just keep at it. These salespeople include governance consultants, whose business model is based on a set of antiquated formulas, some of which flat-out do not work for many nonprofits.

Here is one of those formulas: People with connections to money on your board = a healthier budget. Of course, you are told, you have to work the whole system right—and that, it seems, is where it all falls apart . . . or is it?

In 2003, Bill Ryan, Richard Chait, and Barbara Taylor wrote an article for NPQ titled “Problem Boards or Board Problem?,” in which the authors suggested that if the current structures and concept of the board are not working for so very many, perhaps it is less about a mass generalized dysfunction than about the fact that the basic precepts underwriting the governance systems of nonprofits are not accurate with respect to what we want them do.

There are some real indicators that the latter may be the case. David Renz and Robert Herman surveyed sixty-four human service organizations in 1993, and then again in 1999. The nonprofits were sorted into two groups: those more dependent on earned income (“commercial organizations”) and those more dependent on contributed income (“donative organizations”). When the authors examined the relative levels of prestige of their boards, they found that the commercial organizations began with fewer influential members than did the donative organizations, but both groups increased the prestige of board members at approximately the same rates:

“Contrary to what we expected, those nonprofits with no or only small increases in board prestige had, on average, more gain in total revenue . . . For the total sample of forty-four community-based organizations, those with large increases in prestige averaged total revenue increases of a little more than $642,000; those with no or small increases averaged gains of a little more than $941,000. The same held when we sorted the organizations into ‘donative’ and ‘commercial’ nonprofit organizations. Among the donative organizations, the average gains for the no/small increase in board prestige were almost $912,000 and a little more than $780,000 for those with large increases in board prestige; the respective gains for the commercial nonprofits were $1,010,000 and $469,000. Clearly, increasing board prestige was not instrumental in improving an organization’s financial outcomes.”1

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So, the advice sounds rational, but following it simply does not work for some types of organizations, and, in fact, has an adverse effect even on just the budget. We printed the above a decade ago, but probably every twenty-two seconds or so a poor nonprofit somewhere is being given the advice about recruiting for prestige. As Ryan recently joked, the “nonprofit governance industrial complex” is no small force.

Beam Us Up, Scotty—We Need to Rethink the Vehicle

While many boards are still trying to get on the highway, others have engineered ships built for and fueled by close encounters with constituents. Okay, we know we are mixing our popular metaphors, but a growing number of organizations have realized that if they want to keep people attached to them—energy and treasure and all—they must ensure they are listening and responding to, and even providing common space for, those people who feel that they have an interest in the organization to talk with one another. This large pool of advice and energy and cash does not replace other governance or fundraising approaches, but it adds to and changes them. It increases our power and accountability all at once.

Again, as we said at the beginning of this article, boards and governance are not the same thing. Boards play a part in your system of governance, but they are not the be-all and end-all by far. Many are in charge of telling nonprofit leaders what to do: regulators, funders, your community of beneficiaries—even their friends and families. Thanks to the wonders of the Internet, we can see even the most distributed and uncoordinated parts of this governance system fire up publicly and pretty quickly now when an organization makes a decision that some group of stakeholders disapproves of (e.g., Susan G. Komen) or when an organization is perceived as needing protection or support (à la Planned Parenthood).

And, in fact, this more disparate and uncoordinated system may be able to move much more quickly in some cases than institutional partners can—partners whom you may see as being more powerful (for instance, major funders and policy-makers). These kinds of partners—especially the policy-makers—are traditionally influenced by the fourth estate (the press). But more and more, as the media industry changes and people have more capacity to publish themselves—whether it be in tweets or posts on an organization’s website— policy-makers are becoming more sensitive to the groundswells of public voice. And we are likely seeing just the tip of the iceberg.

In “Reframing Governance II” (also in this issue), Renz surfaces the undeniable reality that, at levels where decisions about funding and policy get made, much of the generative work of governance for government-funded nonprofits has been done outside of any one agency’s board room. He suggests that we should all be paying more attention to how these realms are influenced through networks. Robin Katcher takes up the issue of networks and the way they are governed in “Unstill Waters: The Fluid Role of Networks in Social Movements.”

Groups developed in a more modern image have structured in a broader system of governance that connects with participation in the work of the organization and supporting the organization financially. Will a larger network that directs with a smaller group (board), ensuring the integrity of systems, be the new standard form of organizations as we progress forward? It is anyone’s guess.

Thus, while we have been sitting in our insulated board rooms discussing what has made it onto the agenda, there may be much larger agenda items brewing for us elsewhere; prime among them would be the use of our natural resources (our constituency and stakeholder bases) when it comes to wielding power and influence.

In this issue, Chao Guo discusses the difference between a representational approach to governance and a participatory approach: “This is an exciting time for civil society in that there seems to be renewed interest in public deliberation and collective action. At the same time—perhaps driving this renewed interest—information and communication technology has begun to unleash new possibilities for democratic governance. Social media are equipping organizations with the opportunity to instantly communicate with a broader range and new generation of constituents and engage them in joint action. Nonprofit governance is no longer limited to the boardroom; it is reaching out to people, partners, and communities like never before.” Guo concludes: “In the dawn of a participatory revolution characterized by the power of the Internet and social media, an organization that fails to recognize and address the democratic deficit in its governance will be left behind.”

The following excerpt—from a chapter by Michael Saward called “Governance and the Transformation of Political Representation,” in Remaking Governance: Peoples, Politics and the Public Sphere—provides a sense of the larger context for our discussions:

“The shifts in styles of governance from state-centric and more formal modes to plural and often informal modes of engagement with citizens at local, national and supranational levels raise important new questions about the scope and legitimacy of traditional notions of political representation. In the spaces of public–private partnerships, stakeholder involvement and new, more direct forms of citizen engagement, is there a transformed notion of political representation emerging? Can more groups, people and styles of activity count as ‘representative’ and, if so, what does this mean for the way in which we understand the term and more broadly for the legitimating role that representation plays in democracy?” He goes on to note, “processes of governance seep into a wider array of contexts and embrace a wider array of actors. We are not dealing here with a simple transfer of ‘representative’ politics from one type or domain to another, but rather a significant shift in the primary political sense of representation as a practice and concept.”2

Over the years, the governance research conference has more strongly focused on ideas about networked governance— but the strength with which society is re-forming assumptions about governance is surging ahead of most nonprofit practice. We need to find more well-conceived and up-to-date constructs.


 

Notes

  1. Robert D. Herman and David O. Renz, “Do Big Names Really Draw Big Bucks?” The Nonprofit Quarterly 13, no. 2 (summer 2006): 18.
  2. Michael Saward, “Governance and the Transformation of Political Representation,” in Remaking Governance: Peoples, Politics and the Public Sphere, ed. Janet Newman (Bristol, UK: The Policy Press, 2005), 179–96.
Winter 2012 CoverThe art for this special edition on nonprofit governance was contributed by Skip Hunt. Skip picked up a 35mm camera in the mid-1970s; bitten hard by the wanderlust beast, he has been canvassing the globe ever since, sharing his unique vision via photographic images. Skip’s insatiable thirst for rich color and even richer cultural exploration keeps him on the road most of the time. Of his art, he has said, “I am beginning to believe that we are all born asleep and that the rest of our lives are spent trying to awaken. Image making reminds me to rise from that slumber and celebrate life’s rich pageantry.” When he’s recharging his batteries, Skip calls Austin, Texas home. More of Skip’s work can be viewed at kaleidoscopeofcolor.com .
  • Anita Lauricella

    This article is so right on. As a board member and consultant to nonprofits, nothing is harder to get right than board work. My experiences as a board member have been some of the most rewarding of my career. Unfortunately they have also been some of the most tedious and frustrating. And at this point after more than a decade, I am not sure that my predictive skills are that much improved. Whether it will be a satisfying experience still feels like a crap shoot.
    As a consultant I am amazed at the literature and educational resources that are available to guide board development, yet so much of it is pedantic and formulaic. It often reads as “do this or follow these steps” and you will succeed. I find myself searching for the article that honestly assesses the difficulty. Where are the articles that honestly talk about failure?
    I do wonder if part of the underlying difficulty is the crazy and unsustainable way that much of the nonprofit sector is funded. When every year you must reach out for money to maintain on-going programs it is hard to keep going. In this environment, board fundraising is like throwing out a lifeline or sending up a flare. You need help and you try and get it in anyway possible.
    .

  • William Mott

    Any focus on the issues of governance and board development for nonprofit organizations is helpful and adds to the conversation. Where I believe we need more focus is in the area of building the relationship between the NPO CEO and the Board, specifically the Board Chair. This is a significant key to organizational effectiveness and in its absence efforts to focus on mission and vision are minimized. I researched this issue for my book “The Board Game” and came to the conclusion that boards and staff leadership are, sadly, not working together as they should. Discussions of fundraising along with a variety of other issues is secondary to the more substantive challenge of leadership – the courage to encourage is vital to the health of these organizations. The stakes are enormous and we need to address fundamental principles of what it takes to build an environment where teamwork is the focus. When that happens other issues can and will be more easily discussed and addressed.

  • Don DeGagne

    Perhaps non-profits need a new, simple way to raise funds as per below;

    Daily Deals + Fundraising = Win3 (Please Like and Share)

    Watch for the launch of our revolutionary new online Daily Deals type of platform Deals 4 do Gooders (created in the Okanagan) that will provide huge discounts on goods and services but, it will also have a heavy focus on providing lucrative fundraising opportunities for local charities, non-profits and community groups. Consumers win with great deals, fundraisers win with a new way to raise money and businesses win with increased exposure for their business and taxation incentives. Hence Win3. Check us out at http://www.deals4dogooders.com/ and sign up to receive updates.

  • Simone Joyaux

    Yes. Sure. Good governance is hard. Fundraising is hard. Parenting hard. Snow plowing is hard. Lots of stuff is hard.

    But I’m so bored by: “wW have to rethink governance because it just isn’t working.” “We need new governance models because the model is the problem.” And so forth.

    I’ve been serving on boards since 1975. I often end up as chair of the board. I’ve chaired the board’s governance committee and fundraising committee. I’ve been writing about governance since the 80s. I’ve been a full-time consultant (specializing in governance/board development, fund development, and strategic planning) since January 1988. And, of course, I read tons of governance stuff. Books and articles and and …

    And what I mostly see is:
    — Board members (who are experienced in their own work) know next-to-nothing about governance as a body of knowledge. Years ago, a board member said to me, “Well, Missy. I’ve served on more boards than you are old.” And my response was, “Perhaps you have. But you’re wrong and I’m right.” And I smiled. Board service does NOT equate to governance knowledge.

    — Executive directors/CEOs who know next-to-nothing about governance as a body of knowledge. And these execs are too busy to learn; don’t feel it’s their responsibility to know. In my experience, the most effective boards are effective because their EDs/CEOs know the body of knowledge and keep learning more and more about governance. And these staff leaders know how to enable their board members and boards to do governance well.

    — EDs/CEOs and boards themselves are chicken. They refuse to fire lousy board members. (See my book, Firing Lousy Board Members and Helping the Others Succeed.) Boards allow themselves to be held hostage by big donor board members or powerful board members.

    And on and on. Just read my newsyletter and my blogs and my articles (e.g., Firing Lousy Board Members and Destroying Executive Committees — all written for NPQ).

    Let’s get it together people.

    So let’s get it together, people.

  • Faith Carrabis

    I tried to give Simone Joyaux’ comment a thumbs up but hit the thumbs down button instead and it won’t let me change it. It is definitely worthy of a thumb’s up.
    A colleague and I were just discussing boards, fundraising and nonprofit this morning. Simone’s name came up in the conversation as usual! I agree 100% that many board members, while experts in their own fields and experienced in board service, don’t necessarily understand governance. In my experience, staff didn’t always understand the role of governance either. The more I participate in this sector, the more I realize just how critical good leadership & governance are to the longterm impact of an organization. As I evaluate my burgeoning career in nonprofit, one of the goals I have set for myself is to become an expert in governance as it is the cornerstone to an effective and influential sector.