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The Effective Board Formula A guide for people who want to improve their board, the organization and the community it serves by John A. Doxey

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Copyright Š 2010, John A. Doxey. All rights reserved. The Effective Board Formula http://sites.google.com/site/communityprofits/home November 2010. Version 1.0. I wrote this guide to help leaders in the nonprofit sector reclaim the authority and direction that is desperately needed in our organizations. My thoughts are offered as guides and not prescriptions. Consider all of your options and by all means, think before you act. If you have comments about the work, please send them to me: doxeyjohn@gmail.com.

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Finding Our Way Back Home Who is this paper for? This paper is for anyone who serves on a nonprofit board or is thinking about joining one. It is for all the nonprofit staffs that work with board members and the Executive Directors who are required to work closely with their boards. This paper is also for individual philanthropists, government, corporate and foundation funding agencies that work with nonprofit boards. They look to these boards to provide the first and last measure of accountability for their organizations.

What is this paper about? ! !! !! ! ! ! This paper serves as a companion piece to a slideshow that I use online and in workshops.1 This paper is about how to organize your board so it helps you achieve your mission. In describing this process, Iʼll discuss the many ways boards can go wrong while doing their work and why it happens. If your board has problems, Iʼll describe the hard decisions you must make in order to change your board for the better. Iʼll also show you what it takes to maintain an effective board. The kind of board that helps the organization achieve its mission. ! !! !!

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The Next Ten Years Sunrise or sunset? Over the next decade we are going to face some tough times in our country. Words like austere are going to be tossed around. What weʼve become use to is going to evaporate and conditions are going to dictate a new level of responsibility and commitment from those who work in our field. Many of the organizations currently operating will not survive. Low to moderate wages will return for those who choose to lead our organizations. Things like annual trips by key staff to conferences in scenic cities will vanish and no one will care if you are called CEO, COO, President or all three. Top staff leaders might start referring to themselves as Executive Directors again. Relevance and performance are going to be the key to survival for your organization and community. Today, boards donʼt work very well. In fact, most of them havenʼt worked well for a long time. What is the role of the board? What is the role of the staff? Who is in charge? Does the Executive Director serve at the pleasure of the board? What are board responsibilities? Do we even need a board?

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This paper is largely drawn from my 30 years of experience as a trainer, consultant and staff member working for and with nonprofit organizations.

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These and other fundamental questions have been the basis of many workshops and consulting services I have delivered over the years. What I often find when I meet with board and staff is widespread confusion and disagreement over these and other related questions. Because power and authority are centralized in the board and the key staff person (i.e. Executive Director), any disagreement or confusion over these key questions can cripple an organization. Why is this so? Why are sharp divisions that seemingly should be resolved with organizational charts and job descriptions, an ongoing source of problems for nonprofits? I believe the answer rests with understanding the way our society, nonprofit organizations and boards have evolved over time. Serving on a nonprofit board today is not what it once was. In the past there were far fewer nonprofit organizations.2 3 Those who served on a nonprofit board were drawn from a relatively small circle of community leaders.4 Odds were they knew each other or knew someone in common. They were familiar with power and how to wield it. Resources were very limited, so prudent action was necessary. In any given community, this relatively small group of people brought to their volunteer work a set of life experiences that prepared them for the demands of board work. We still have boards where all the members have the “right” skill set for board work. They are largely represented by our older established nonprofits and a smaller number of young, imaginative organizations. Yet today, these ʻtraditional styleʼ boards are a decided minority. The majority of our current boards regardless of age or size are composed of people unfamiliar with leadership, volunteer community service or how to wield power effectively. Many have never served on a board before, and many more have never received any formal board training. They are recruited from all levels and sectors of society by organizations who want them to do things they are often unqualified, unprepared, or (more typically), unwilling to do. As you shall see, board service can be challenging volunteer work even for those who are highly motivated and prepared. For those without the qualifications and experience, their service to the nonprofit can range from unsatisfying to an outright disaster for both parties.

Who is qualified to serve? All nonprofits are required by law to have a volunteer board, but there are some glaring gaps in this requirement. Amazingly, no one tells board members they are there to represent the publicʼs interests. There are no required oaths before a judge, swearing fidelity to principles of public service and there are no clear penalties if members fail to do so. Itʼs usually the case no one informs the new recruit they are joining the board to ensure the mission of the organization is pursued for the benefit of the community served by the organization. Thereʼs...nothing. Youʼre simply asked to join a board. Unless you already have a well developed sense of civic duty, responsibilities and ethics, in most cases you are left completely on your own as to your purpose for serving on a board. 2

Hall, Peter Dobkin. 2003. A History of Nonprofit Boards In The United States, p. 21. BoardSource E-Paper Series.

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latest figures, http://nccs.urban.org/statistics/quickfacts.cfm, http://nccsdataweb.urban.org/PubApps/profile1.php?state=US

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Hall, Peter Dobkin. 2003. A History of Nonprofit Boards In The United States. BoardSource E-Paper Series.

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The other huge gap is the lack of standards for board service in state incorporation rules.Typical state articles of incorporation provide limited or no direction in this area (when the original incorporation language was drafted decades ago, it was probably assumed that only experienced leaders-business, professional, political, religious-would serve on boards). So legally, other than the size of the founding board (usually at least three), there are no minimum qualifications for serving on a board. Each nonprofit when founded is able to establish requirements for selection and service on the board. They usually donʼt. Lacking standards, most nonprofits recruit a variety of board members representing everything from the talented to the talentless; people who want to serve themselves and those who want to serve the mission; those with passion for the cause and those who have only a vague idea why they were asked to serve. The organizations are usually unclear about what they want the board to do (other than raise or donate money), nor do they know how to prepare new members for the challenges they will face. I have talked to numerous new board members who have told me that even after a year or more they still donʼt know what they are doing when they go to a board meeting.

Can we get the board members we need? Today, recruiting board members with the right skills and experience is even more difficult than in the past. Over the last 30 years there has been a dramatic increase in the number of nonprofit organizations. This growth has created an environment where it is very difficult to find enough qualified board members to serve every organization. But this hasnʼt stopped organizations from recruiting board members. On the contrary, it seems every organization has the same notion of the “right” kind of person to recruit for the board. Consider this-every nonprofit is trying to recruit the same kind of board member: ✓ ✓ ✓ ✓ ✓ ✓ ✓

someone who is available ethical has money or access to it connections in the community has leadership and social skills has interest in your program(s), and has expertise in one or more of the following areas: finance, law, politics, technology, fundraising, human resources or management

✓ In other words, the ideal board member. In each community there are only so many of these ideal board members to go around. The most prestigious, imaginative, resourceful and relevant nonprofits get their pick of these model candidates. For the remaining nonprofits-which are most-they wind up recruiting people who fall well short of this profile.

Where Are We Now? As I stated earlier, our country is in serious trouble. The problems we face are vast and way beyond the scope of this paper. But we didnʼt get here overnight and we didnʼt get here by mostly making the right choices. Nonprofits are no exception. Much of our work embodies dealing with those things society doesnʼt want to deal with. In a tough economy, doing those things becomes harder, much harder. Our boards, usually drawn Page 5


“The board’s fundamental purpose is to provide accountability for the actions of their organization; not occasionally, not when provoked, but all the time”

from leadership roles elsewhere in society, have been profoundly effected by the dramatic socio-economic changes taking place in our country.

How are we doing? Well, with virtually no guidance from the state and with few people noticing it, over the last 30 years most nonprofits started to transform their boards from bodies of experienced, capable leaders, to just bodies. Somewhere along the line we lost sight of our civic history and responsibilities and decided that doing the right thing was just not that important.

What About Training? Every organization operates a little differently. Boards are no exception. Even if you get the right people, training and orientation is needed to establish work rules and levels of accountability for the board. Without this training and organization, the board will not be able to do its job. In fact, with the immense power given to it, the board will do far more harm than good. So board training is a good thing. Right? Yes. But over the last 15 years weʼve seen a dramatic decline in board training and training in general in the nonprofit sector.

Why Nonprofits Fail to Train Their Boards I believe there are three reasons why boards fail to perform as they should: First, most organizations simply provide little or no board training. There are many reasons for this but I think it comes down to: ! ! !

they lack the funds they donʼt see it as important, or they simply donʼt know that boards and staff need training.5

Today, training of some duration and at a high level of quality is needed because many board members lack enough “good” board experience to manage board work successfully. Most have not read anything about how a board and nonprofit should operate. Many donʼt understand the fundamental differences between for profit and nonprofit enterprises. Finally, many donʼt have enough experience making difficult decisions, leading groups or working as a productive member of a team. They donʼt realize how little time you have as a board member to work through complex matters. For board members who primarily lack good board experience, effective training can be an invaluable aid. For the others who represent the bulk of board members today-those who have little experience with and are uncomfortable leading people, have difficulty working with others, canʼt make decisions or make poor ones, and those who for various reasons are ethically challenged-I am convinced training does little good (Iʼll have much more to say about this group later). Nonprofits need to make every effort to ensure these candidates do-not-get-on-the-board!

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This is an inexcusable position for any board member.

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Second, as previously stated, there is a widespread lack of knowledge about governance among board members and staff. This means that most nonprofits donʼt implement effective governing practices. Hereʼs a good example of what I mean. Every nonprofit has articles of incorporation and a set of bylaws. While these documents may not fully describe the requirements to serve on a board, they do provide some guidance for how a board should act. Yet, these documents are almost universally ignored. Here is another example. Information demonstrating effective governance practices are widely and easily available today, yet many board members are reluctant to read it, take training, or ask other organizations for help when they have a problem. The board is often composed of the blind leading the blind. Finally, an alarming number of boards are demonstrating they donʼt practice or care to practice the concept of due diligence. This has become an increasingly prevalent condition across the nonprofit sector. Boards are like police or fire departments. It would stun all of us if we discovered that fire and police departments only responded to some calls for help, or, did not respond at all. . If it fails to do that consistently, there is no reason to have a board. Rest assured, left unchecked, this failure to apply ʻdue diligenceʼ will undermine organizations and the communities they intend to serve. Unfortunately, with so much misbehavior out here today, only the most egregious or negligent acts come under the scrutiny of the public, the press, law enforcement or regulatory bodies. For the most part, boardstrained and untrained-are accountable only to themselves. How do we recruit new board members when the people we need are scarce and we have to compete with so many organizations? How do we find and attract to our organization real leaders? How do we make sure the board does board work, and leaves staff work to staff and other volunteers? How do we ensure our organization remains relevant? How do we stay focused on real problems and donʼt get distracted or become complacent? How do we stay committed to doing the right thing? These are challenges we all face. The ultimate goal of this paper is to have boards, staff and other volunteers working together as a team to pursue a mission that improves society.

Complete the Effective Board Formula Worksheet to see where your board stands

What To Do First? If you are being recruited to serve on a board, or, you have found a board that you might want to serve on, ask for a board calendar that includes a schedule of meetings and agendas. As simple as it sounds, this very important information is not often developed. It seems logical that everyone would want to know what will be on the agenda at the next board meeting. But I have found this information often does not exist in advance. Boards that donʼt plan their meeting and agenda schedule in advance usually drift from one board meeting to the next. These groups open themselves to a host of problems that weʼll explore Page 7


in later sections. If no one can provide you meeting schedules for this or next year, with at least tentative items for each meeting agenda, youʼre most likely looking at a board that does not have a plan (or a clue). If you do plan to serve on a board like this, caution is the word. If youʼre already on a board that doesnʼt plan ahead, consider taking the following actions. The board chair, working with committee chairs, should schedule board meetings before the next fiscal year begins and draw up a list of issues committees will work on in the coming year (see the Three Primary Functions of a Board). This schedule can be given to board members and staff at the annual meeting or sometime before the new fiscal year begins. If the board chair cannot or will not lead this effort, then other members of the board should do it. If the board chair and other members of the board donʼt want to do this, again, you might want to rethink your service on this board. In other words, quit. Find another nonprofit to work with. Life is short.

The Effective Board Formula Before we get started, what exactly do I mean by an Effective Board Formula? I donʼt mean anything quite like a scientific formula. That would imply you need to measure and apply exact amounts of different ingredients in precise ways to achieve an effective board. That isnʼt possible. The formula is based on the following: observations of board members in a variety of settings, a critical examination of what they are typically asked to do along with a review of conditions that seem to contribute to improved board performance. Based on this premise, it assumes within a range of behavior there is a right way and a wrong way for a board to operate. With the ʻformulaʼ I argue that you can establish conditions based on guidelines that allow members to effectively do the work of the board. Letʼs begin. You can measure the effectiveness of your board by examining the following conditions: board interest (BMII) board time (Time on the Board) the three primary functions (planning, funding, evaluating) board organization (board committees, board charge, chairs) board skills (match skills with board charge) board dollars (annual dollar contribution, annual fundraising event, help obtain major grant every 3 years) 6

Board Interest Everything starts with the interest of a board member. Without interest you cannot attract and retain board members. Think about it. Of all the potential board members out there, how many have an interest in your cause? How many of that group have an interest in your organization? If you look at it this way, that pool of potential recruits narrows quite a bit. So, what is it that we need to know about board interest?

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Go to CommunityProfits and click on “What I Do”, then click on the second point under “My Work”. Also see Attachments section.

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Guideline: manage board interest to keep it in the high range (4). Guideline: accept board recruits with a 3 or higher BMII score. As measured by the Board Member Interest Indicator (BMII©1997-2010), on a scale of 1 to 5, with one indicating low interest and 5 high interest, most board members, at least initially, will show a moderate (3) level of interest in the board they serve on. Is that good or bad? Well, itʼs not necessarily bad, but it isnʼt good either. Let me explain. A potential board member needs to have at least a moderate level of interest in your organization in order to accept an invitation to serve on your board. Have you ever found yourself pleading with a person to serve on your board? If so, that person probably has less than moderate interest in your board. They may or may not accept. If their interest is very low, a one or two, they will simply refuse your offer. Recruiting people with less than moderate interest is not wise because once on the board, you have to make a huge investment in this person just to get them more interested in the organization. Usually, you donʼt have time to nurture a reluctant new member in this way. If they come on board and you leave them alone, chances are their interest will remain low. So new board members need at least a moderate level of interest. So, it is critical you measure the interest of each board member.7 For new board members, wait until they attend a couple of meetings. Youʼll get a more accurate gauge of their interest level. See Organized Board on how to develop the interest of board recruits. Guideline: board interest can rise or fall during the tenure of a board member. Keep it up in the 4 range, and donʼt let it decline. Get board members involved on committees. Since a moderate level of interest is required to get a recruit to serve on the board, what level of interest is needed to keep a member actively involved in board work? Rising interest is characterized by greater participation and falling interest by less participation. To increase new and current board member interest, get them involved with committees where they can share their expertise. Feeling valued for their contributions will raise the interest level of the board member. If on the other hand you donʼt involve board members, their interest will start to decline, gradually at first, and further as time passes. Guideline: once interest starts to decline, it is very difficult to reverse. When a board member starts to lose interest in serving on a board, they will continue to lose interest until they leave or you force them to leave. Their attitude has changed. Every board member in their own way evaluates how effectively their time is used. If your board member feels, for whatever reason, they are not making a contribution to the organization, or, their efforts are not appreciated, their interest will decline. You are now faced with the considerable challenge of trying to change this board memberʼs attitude toward service on this board . Attitudes are difficult to change (see organized board, board time). Here are some signs of declining interest: silence during meetings and discussions withdrawal from participation absence from meetings selfish behavior disruptive behavior

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Click here to go to the BMII.

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Selfish behavior, an all too frequent occurrence, is a particularly difficult attitude to understand and control because it can manifest itself in different ways and the causes vary. Selfish behavior can mean one no longer cares what the board does or says and therefore acting independently becomes the primary behavior. We see this type of behavior in board members who ʻknow whatʼs best for the organizationʼ and also in board members who have motives that are clearly at odds with the organization. Guideline: Prevent interest from rising to a very high level (5). Very high interest (4.5 to 5)-VHI, is often associated with problem board members. They are sometimes but not always the founders of the organization (see Organized Board). These members are easy to identify because they do everything, speak out on everything, and often want to control everything. When asked, VHI board members will say they have to do all of this because no one else will (or can). Others usually say they are shut out of the decision making process by the VHI board members. A VHI member operates as if the organization and their self are one. They personalize board work and relationships with other members. Often, VHI members are not viewed by others as objective. VHI members can be intimidating. The most aggressive ones turn the board into a one man or woman show. VHI members can damage a board and the organization. They are much more problematic than members who lose interest. Unlike that group, VHI members want to stay on the board and continue to act in the same way (see Organized Board for how to handle or get rid of problem board members). Guideline: Make sure each board member is involved and has the opportunity to contribute in ways that maintain their interest. It is the responsibility of the board chair to make sure a board structure is in place that encourages every member to contribute and provides the means to discuss and vote on business and issues that come to the board. Getting all board members involved is the key to maintaining high interest among all members (see Organized Board for ways to get board members involved).

Board Time Guideline: The board chair and Executive Director need to manage the work load of the board so that it focuses on board work and all members contribute. Focus on The Three Primary Functions. Get and keep the board organized. Guideline: Board meetings should last no longer than two hours. Committee meetings should last no longer than one hour. Board and committee meetings are for reporting and discussing. Do the work of these meetings away from them. Come ready to report and discuss. The board meeting is not just another meeting. This is a very common assumption and itʼs a mistake. You donʼt have a lot of board meetings each year so you have to make the most of each one. Ideally, the full board should meet 4 times during the year (see Organized Board). Thatʼs not a lot of meetings. When you do get together, meetings need to be highly organized with clearly stated objectives. Every person should know the group is going to discuss this problem or vote on these issues at the meeting. Without this kind of clear focus, board meetings become unfocused and time gets away from participants. Under these conditions, itʼs not unusual for board meetings to last three, four, five hours-or more. Thatʼs ridiculous, and a waste of valuable time.

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Every board meeting needs to be treated as a the scare resource it is. If everyone is aware of how few times you meet each year, more effort will be made to make the most of each meeting. One way to highlight this is to look at how much time the typical board member spends on board work each week.8 This is how time impacts the individual and collective work of the board: Too little time: If you put in too little time on board work, nothing gets done. Often, board members put in too little time because they donʼt understand the issues of the organization. In my experience this usually means the board chair and/or the executive director have not clarified these issues and allocated to the board those parts of the issues that are the boardʼs responsibility (see the Three Primary Responsibilities). Too much time: If you spend too much time on board work, you wind up with a very, very common problem; the board starts to do the work of the staff. This, by the way, is how I get a lot of work. The board is now in competition with the staff, telling the staff how to do their job. Another problem that emerges from spending too much time on board work is the loss of perspective. One reason you have a board is to give staff advice that is both knowledgeable and separate from the day-to-day work of the organization. You need a clear set of relatively objective eyes looking at the organization. Thatʼs what you want and need. You canʼt get that if your board has a vested interest in the smallest details of your organizationʼs activities. In summary, hours spent in full board meetings should remain low for all board members. The typical quarterly board meeting, properly organized, should run no longer than two hours. Time devoted to scheduled committee meetings should run longer. Since committee meeting meet on an as needed basis, those hours will vary. But again, time needs to be allocated so that all committee members are able to contribute. What you want to avoid are situations where a few people are spending large amounts of time on “board work” and the rest of the board is essentially inactive. This will lead to the formation of power cliques (see Board Interest). Power concentrated in the hands of one or two members is a key sign you have a weak or dysfunctional board.

The Three Primary Functions of A Board Guideline: These are the three areas a board should focus on: planning, funding and evaluating. Forget about the other stuff you do. It is a distraction and outside the scope of what a board is capable of doing in the time you have available. This is perhaps the most difficult condition to get started on. The first time you read it, it sounds so simple. But most boards donʼt want to do it. Why? Most new board members come on a board not knowing what they should do, and most boards provide little if any training on what they will do. Board members therefore make it up as they go along. They start to do a little of everything, or they do little if nothing. That covers the range of activity for most of our boards. What most of them learn is that they can do what they want to do-not what the organization needs them to do. And certainly not whatʼs best for the organization and the community. Thatʼs our modern board, and itʼs the key reason why so many are dysfunctional.

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Click here to go to the Board Time worksheet.

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The best time to introduce the three primary functions of the board is when you bring on new board members. They donʼt know how you work and they will be eager to find out what you want them to do (see Board Skills). Guideline: Plan to spend as little as two and up to six months to develop a strategic plan. Click here for strategic planning template. Planning The board is responsible for developing or approving a strategic plan that covers 3 to 5 years. A strategic plan provides broad direction. From this plan the staff develops a more specific tactical plan that covers 1 (fiscal) year. Plans prepared too quickly, under 2 months, usually donʼt allow enough time for communication, thoughtful fact finding and consensus building. Plans that take too much time, more than 6 months, run the risk of becoming “fake” planning because these extended planning processes are usually not completed. Funding & Finances The board is responsible for developing a fund development plan for the organization that meets current and future obligations. How you do this is described in your strategic plan. The board is also responsible for making an annual monetary contribution to the organization and for participating annually in some capacity in at least one fundraising activity. The board is also responsible for providing oversight of current spending. It does that by approving annual budgets, reviewing quarterly financial statements to make sure they align with the budget, and approving an annual financial audit of the organization. Evaluation Finally, the board is responsible for evaluating three areas: the Executive Director annually, the board annually and the organization every 3 to 5 years. Click here for Executive Director, board and organization evaluation templates. Planning, funding and evaluating. Thatʼs it. Now Iʼm not trying to make it sound like each of these are simple, easy things to do. Theyʼre not. But there is nothing, and I mean nothing overly difficult about implementing these functions. What these functions require are boards willing to work together as a team to get them done. Showcase: The Typical Contemporary Board If all of this sounds perfectly reasonable, why are so many organizations having board problems? In my experience, it comes down to this attitude, “What three primary functions?” Most boards simply want to “do their own thing”. They donʼt act in terms of what they should do. They do as little as possible, or in some cases, not much at all. What we typically find in organizations are boards driven by the instincts of a strong chief staff officer, a strong member of the board or an established way of doing things. In these individualistic, personality driven organizations, one or two people determine the direction of the organization. Everyone else takes their cues from these people. Formal planning doesnʼt happen, and if there is a written plan, it usually isnʼt followed. On funding, most of these boards follow a “donʼt ask, wonʼt tell” policy. Donʼt ask me to do it and I wonʼt tell you no. Securing funding is handled by staff, other volunteers or one or two board members who are very involved in managing the organization. Evaluation-forget it. The only consistent evaluation is where the Page 12


board evaluates the chief staff person始s performance. In practice, the methods for doing these evaluations and their quality vary widely. Other areas of focus for evaluation, such as programs or the organization as a whole, are rarely done. Sometimes organizations are required to conduct evaluations by outside grantmaking institutions. In these cases, the evaluation is usually limited to the scope of the grant. Occasionally organizations learn from this and expand their evaluation process to include other areas of the organization. However, this is rare. A general rule, if boards don始t plan, they don始t evaluate. Resources Masaoka, Jan. "All Hands On Board." Support Center For Nonprofit Management & National Center for Nonprofit Boards. Gislason, Michelle & Wilson, Judith. "Coaching Skills for Nonprofit Managers and Leaders: Developing People to Achieve Your Mission." Jossey-Bass. 2009. Self Assessment for the Board. CompassPoint. February 2005. "Principles for Good Governance and Ethical Practice." Panel on the Nonprofit Sector, Convened by Independent Sector. October 2007. "Regulating and Monitoring Nonprofits: Balancing Compliance and Best Practices." BoardSource. 2009. Financial Management Guide For Non-Profit Organizations. September 2008. Analyzing Outcome Information: Getting The Most From Data. Urban Institute. March 2004. Building a Common Outcome Framework To Measure Nonprofit Performance. December 2006. NGO Manager: Organisational Assessment Tool (OAT). July 2004.

Organized Board Guideline: Always provide a formal board orientation for new members. Your orientation should contain a complete review of how your board, staff and volunteers work together. Click here for a New Board Orientation Agenda template Guideline: Have an annual meeting each year. The annual meeting should be the first meeting of your fiscal year, whenever that starts. Take this opportunity to introduce (or reintroduce) the primary goals for the year and any major issues facing the organization. This is a good time to review progress on the strategic plan and it is a good place to set an optimistic but realistic tone for the year (see Annual Meeting Agenda template. Click here to get a calendar template you can use to organize your meeting schedule and agendas). Planning Exercise (If you don始t have a strategic plan): At your next meeting, have board members and key staff individually write down the top 3 accomplishments from last year, 3 unfinished items from last year and 3 goals for the organization next year. After the group is finished, allow 5 minutes or so for participants to share their list with each other. Next, on a flip chart, ask people to share what they wrote. List accomplishments, unfinished items and goals in separate lists. Tasks: (1)Decide if any of the unfinished Page 13


items need board action. (2)Determine when that will happen and add it to future meeting agenda schedules. (3)Determine what decisions and reporting the board, committees and staff need to make about the goals for next year, and when those activities should occur. Add those to next yearʼs meeting schedule and agendas. (4)Complete this exercise; also see sections on Planning and Board & Committee Meetings. Guideline: Have 4 standing committees. I recommend: Resource Development, Personnel, Business and Programs. Committees are where the work of the board takes place. Resource Development covers all future sources of funds. Personnel covers paid staff and all volunteers, including the Board. Business covers current income and expenditures and buildings and supplies. Program covers the programs and services of the organization. These 4 committees are capable of handling every facet of any nonprofit organization and they provide a clear distinction between various organizational duties. If you have too few committees, which is sometimes the case, your committees will be burdened with too much work and will lack focus. It you have too many committees, which is usually the case, your committees will be too narrowly focused. Some will be so narrow they wonʼt have issues to work on and therefore no reason to exist. I call boards with a large number of standing committees (usually 8 or more), B-52s, because when laid out on paper, the diagram, with the Executive Committee in the center, looks like a B-52 bomber airplane. For our purposes, the B-52 model is not only way too big for the needs of most nonprofits, it winds up putting many board members on nonfunctioning committees. Thatʼs a good way to get a board member to lose interest. Standing committees stay in business throughout the fiscal year. Occasionally youʼll need something called an Ad Hoc committee. These are organized when needed and go out of business when their charge is completed. Guideline: If you have an Executive Committee, it should meet no more than once a year. Executive Committees should address decisions that need to be made before the next regularly scheduled board or committee meeting. In other words, emergencies. Youʼll notice I didnʼt include it as a standing committee. Executive Committees are often composed of standing committee chairs, board officers and the Executive Director. This committee often meets once a month. If you have an Executive Committee like this, shut it down. Now! Executive committees that meet frequently will kill other committees. This happens because the committee makes decisions without the participation of other board members. Acting without the input of other committees, the executive committee over time becomes the only functioning committee on the board. It becomes the board. It doesnʼt take too long before other board members conclude their participation is no longer needed. Guideline: All committees should have a charge. Page 14


A committee charge is like a job description. It describes where the committee gets its authority, who serves on the committee, for how long, the committeeʼs purpose and its duties. All committees need a clearly written charge to function properly. In my experience, the vast majority of board committees donʼt have charges, or if they have them, donʼt use them to guide their work (see sample Committee charge). Guideline: The full board should meet 4 times each year. Standing committees should meet on a as needed basis determined by the board and committee chairs. The full board should meet on a quarterly basis. The purpose of the board meeting is to review staff work that was accomplished over the previous quarter to determine if that work is helping the organization reach its goals. The quarter provides enough time between meetings so the board can provide one of its essential functions-as an evaluator of the organizationʼs performance. Standing committees should meet on a as needed basis. The purpose of a committee is to gather relevant data to show how work in that area is helping the organization reach its goals and pursue the mission. You need sufficient time between board meetings so that enough operational activity takes place so as to suggest a pattern or trend. This is what board committees should focus on, patterns or trends. For example, how spending compares with the budget. Or, how will we fund this new program? When the full board meets too frequently, usually on a monthly basis, there is little or no time for reflection. Also, if your full board is meeting monthly, when do your committees meet? In most cases they donʼt. In this all too frequent scenario, the board meeting becomes a de facto committee meeting and neither is well served. If youʼve ever been to a four or five hour “board” meeting, then you know what Iʼm referring to. You shouldnʼt try to do committee work at a board meeting. In fact you really canʼt. The two have very different purposes. If you want to kill your committees, start having the full board meet every month. Guideline: Donʼt start managing the day-to-day operations of the organization. Another consequence of frequent full board meetings is the strong tendency of these boards to start managing staff. This behavior is usually something that starts slowly and then over time becomes a permanent part of the boardʼs culture. It is a dangerous path to take and results in producing many of the problems we find in our nonprofit organizations. You serve on a board to perform board work (see The Three Primary Functions of a Board). Iʼve often said to groups that if you want to manage staff, quit the board and apply for a management position with the organization. Guideline: All deliberations of board and committee meetings should be captured in meeting minutes and every decision by the full board or a committee represented by a recorded vote. This is a crucial part of board work that is overlooked all the time. When records of meetings are not kept and decisions are not made with votes, the way in which boards are suppose to work completely breaks down. People often ask do minutes of meetings have to capture everything that is said in a meeting? The answer is no. Page 15


Your meeting should have an agenda (see sample Meeting Agenda) that outlines the objective and the topics for discussion. The agenda should also indicate if a vote will be taken on specific topics at that meeting. Any discussion that leads to votes should accurately summarize the positions that lead to the vote. The summary should of course capture the actual vote totals-yea and nay. If, as sometimes happens, a board member wants to go on record with a specific statement for or against some action, that statement should be captured as accurately as possible. A tape recorder can help guarantee accuracy. But the point is you should focus on recording actual and summary statements that lead to votes. Every decision made by a committee or the full board should be as the result of a vote. Making this a cardinal rule for your board will keep all of your board members involved and prevent power from accumulating in the hands of a small group of board insiders. Too many boards have gotten in the habit of voting on very few things. Most of the major decision making is done by one or two (or a few) people who might listen to other board members, but not allow them to vote. If your board operates like this, you need to change it now. If the power brokers refuse, organize the other board members and demand a vote. If the others donʼt want to do this, thatʼs a good signal itʼs time for you to leave this board. Guideline: The ideal size of a board can range from 9 to 15 members. Many years ago, boards were large; 30 or 40 members. We still have boards of this size. Put simply, in todayʼs world they are impossible to manage. Imagine whatʼs it like trying to get 40 board members to meet at the same time, 4 times a year. Youʼll have more more success managing a smaller number of board members. Guideline: A board memberʼs term of service should run 2 or 3 years (I recommend 3). If renominated, members should be able to serve a second consecutive term. Members should be required to leave after the second term (for at least one term). Stagger the board terms so about one third of the board leaves at the end of a term of service. Long term board members can be an asset or a problem. In my experience its been about 50/50. My take on this is, if your service is so important you canʼt leave the board, then your board has a problem (and so do you). One of these days something will force you to leave the board. Then what will the organization do? Your organization will be in a better position if there is a regular infusion of new talent coming on the board. With staggered terms, you will always have seasoned members on the board who can move into senior leadership positions and provide the necessary guidance to new members. If a veteran board memberʼs term is up and they want to continue service with the organization, find a place for them as one of the operational volunteers. This goes for founders too. Founders need to establish good board practices by setting an example. If youʼve been on the board for two terms, leave for a term and then ask to come back on the board if you choose to do so and if the organization is open to that. Board service isnʼt the only key volunteer role. Founders can serve in advisory roles (no vote) or volunteer in a operational capacity. Page 16


I think itʼs crucial to make the point that as a board member, if you canʼt make a significant contribution to the organization in 3 or 6 years, then you have a problem. Either the board/organization is deeply dysfunctional or you havenʼt really tried to contribute. In either case, itʼs time to leave. Guideline: Evaluate the board yearly. This is the best way to make sure board members are providing adequate service. The difficult task of removing board members is made much easier when their performance is documented. By the same measure you can identify who needs help and provide appropriate training and support with the same evaluation process.

Board Skills Take inventory. Before you recruit, know what type of people you need. (Click here for a template you can use to inventory the type of people you currently have on your board. It will help you identify the skills you need to recruit). Guideline: Never recruit people to serve on the board. Always recruit people to serve on specific committees of the board. This way you are always thinking of matching the candidateʼs skills and interests with the work of that committee. Click here for a sample committee structure. Hereʼs a good technique. Allow a potential board recruit to serve on a board committee as a non voting member as a way to see if they are a good fit for your organization. Guideline:You need people who are committed to teamwork. Donʼt accept just anyone who is willing to serve. Some people naturally work well with others. They have good social skills. Some people have poor social skills. The board is not the place to learn how to work with other people. Look for people who have successfully worked in a group setting before. Pay keen attention to any work on group projects and the results.

Board Dollars This is a broad, complex area that can be reasonably easy or especially hard depending on the talent, experience and motivation of board members. Easy or hard, one or the other. But regardless of what you have to start with, the fact is every board has to at some point start fundraising. If the board accepts its responsibility to lead and participate in fund development, the process becomes much less of a challenge. In fact, once skills and contacts are acquired, the organization usually develops considerable confidence in its ability to deliver the mission of the organization. On the other hand, if the board neglects or refuses to lead in this area, the result is a severely weakened organization. Guideline: Every board member is expected to participate in fundraising for the organization. These are some of the questions you should ask every board recruit: • Can you give money? • Do you know people with money who will donate to our cause? Page 17


• • • •

Are you willing to raise money from other sources? Are you willing to help the organization build its capacity to raise money? Do you have financial management skills? Are you an ethical person?

Current members of your board will have different fundraising roles, but everyone will participate. Here are three fundraising activities that should involve every board member: 1. each year, give money to the board. This amount should vary according to financial ability and it should be kept private. 2. each year participate in one major fundraising event 3. work toward a goal of getting a major donation every three years Raising money is the one area where almost every board falls down. In some of our better boards, fundraising is given to a committee and they take on the task of raising funds. In our worst boards, no one raises money. That task is left to staff or maybe an outside consultant or fundraising firm. Both of these approaches neglect the important role that all board members should have in fundraising for the organization. It is a role that requires a careful balancing act. We need board members to have a somewhat dispassionate view of the organization. They need to be able to look clearly at what the organization is doing and make sound recommendations based on the mission of the organization and the community it serves. At the same time, the board needs to be sufficiently committed to the organizationʼs cause. One of the primary ways they can demonstrate that commitment is to raise or donate money or other key resources to the organization. This dual role of the board member in fundraising-give and forget (step away from the money youʼve given/ raised) so you can act responsibly, I think, is one of the more challenging behaviors board members must master if they hope to provide effective service. Resources Before A Campaign: Planning is Everything. Capital Campaigns. Tony Poderis: Your Non-Profit Fund-Raising Resource. 9-8-10. Suggested Funding Plan Outline. Tony Poderis: Your Non-Profit Fund-Raising Resource. 9-8-10. Suggested Capital Campaign Calendar and Plan of Action. Tony Poderis: Your Non-Profit Fund-Raising Resource. 9-8-10. Capital Campaign Plan. Tony Poderis: Your Non-Profit Fund-Raising Resource. 9-8-10. HERA SOCIETY: 2004 Strategic Plan for Fund Development. June 2004. Thatʼs it! Six conditions that make up the Effective Board Formula. Follow the guidelines and with some time and effort your board, organization and the community will start to share the benefits of a board doing the work it was created to do.

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Attachments Effective Board Formula Worksheet

EFFECTIVE BOARD FORMULA WORKSHEET Guidelines to help your board and organization pursue your mission for the benefit of the community 1 you serve. No.

Board Guideline

Your Priority 1 to 10 (1 high, 10 low)

Action Steps To Get It Done

Who Is Date Responsible Completed

1 (a) We actively manage board interest to keep it in the high range (4). 2 (b) We accept board recruits with a 3 or higher BMII2 score. 3 (c ) We get all board members involved on one or more committees. 4 (d) Once board interest starts to decline, it is very difficult to reverse. Is it falling? 5 (e) We make sure each board member is involved and has the opportunity to contribute in ways that maintain their interest. 6 (a) The board chair and Executive Director need to manage the work load of the board so that it focuses on board work and all members contribute. We do this. 7 (b) Board meetings should last no longer than two hours. Committee meetings 1 Taken from last The Effective Board Formula, by John A. DoxeyŠ2010 should no longer 2 Board Member Interest Indicator score. 1 to 5 with a 5 score the highest level of interest in serving on your board and 1 than one hour. Board the lowest level of interest in serving on your board. and committee meetings are for reporting and discussing. Do the work of these meetings away from

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than two hours. Committee meetings should last no longer than one hour. Board and committee meetings are for reporting and discussing. Do the work of these meetings away from them. Come ready to report and discuss. We do this. 8

(a) These are the three areas a board should focus on: planning, funding and evaluating. Forget about the other stuff you do. It is a distraction and outside the scope of what a board is capable of doing in the time you have available. This is what we focus on.

9

(b) Plan to spend as little as two and up to six months to develop a strategic plan. This is how we plan.

10

(a) We always provide a formal board orientation for new members.

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(b) We have an annual meeting each year.

12

( c) We have 4 standing committees. I recommend: Resource Development, Personnel, Business and Programs.

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and Programs. 13

(d) If you have an Executive Committee, it should meet no more than once a year.

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(e) All of our committees have a written charge.

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(f) The full board should meet 4 times each year. Standing committees should meet on a as needed basis determined by the board and committee chairs. We do this.

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(g) Don’t start managing the day-today operations of the organization. Do we do this?

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(h) All deliberations of board and committee meetings are captured in meeting minutes and every decision by the full board or a committee represented by a recorded vote.

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(I) The ideal size of a board can range from 9 to 15 members. Ours is in this range.

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(j) A board member’s term of service should run 2 or 3 years (I recommend 3). If renominated, members should be able to serve a second consecutive term. Members should be required to leave after the second term (for at least one term).

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able to serve a second consecutive term. Members should be required to leave after the second term (for at least one term). Stagger the board terms so about one third of the board leaves at the end of a term of service. We do this. 20 (k) We evaluate the board annually. 21 (l) Never recruit people to serve on the board. Always recruit people to serve on specific committees of the board. We do this. 22 (m) You need people who are committed to teamwork. We don’t accept just anyone who is willing to serve. 23 (a) Every board member participates in fundraising for the organization.

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The Effective Board Formula