If you have been a reader of my blog, you know that I believe that the traditional NFP organizational model (501(c)3) suffers from systemic malfunction, and that the board role is central to this condition. For me it’s time to look beyond, to some possible solutions, and hear others’ opinions.
Boards of directors have 3 essential functional roles: governance (fiduciary, professional staff oversight, and assessment of mission accomplishment), resource development, and offering expertise. Most boards are in fact constructed around this model, comprised of individuals who represent potential competence in each of these areas. When I have been asked to serve on a board, it has been, for better or worse, because of my expertise and experience in governance. It’s there that I will focus in this week’s blog.
As I have experienced it, problems occur when those who have been asked to serve on a board for their resource development capacity or expertise in a specific area become central to the governance functions. This is inevitable, given the centrality and importance of contributed revenue, or of program development in a specific area. I will spare you here the many outrageous anecdotes I immediately conjure up from my and my close collegues’ experience. What I ask myself instead is, “is there a better way?”
I offer that the “official,” or legal board be reduced to 3 persons, whose responsibility is that of governance, that these individuals be certified in not-for-profit govenance, that the certification process include study and examination, and that there be some reward mechanism for individuals choosing this volunteer service path. The certification process could be offered live, but also online by higher educaiton instituions. Local arts service organizations could be made responsible through their state arts agencies to insure local implementation of these certification processes. Arts organizations and these certified potential board members would choose each other, or would be matched by the local arts service organization.
There’s a lot to be said for this model. It addresses what so many have said to me, that board members need to know what their roles are, need expertise in NFP managment, need to educate themselves, and need to monitor each others’ performance. It does appear to create a small bureaucracy, but in my opinion not a bad one, as this one would focus the arts service community on good governance. It would also likely centrally involve higher education, which in my opinion would be positive, as higher education often lives inside its own benign bubble on this topic.
Are there profound negatives to this idea? As I was contemplating it, my “resource development self” posed whether it would be possible to garner resources from persons of wealth if they did not serve on boards of directors. I will address this in my next blog.
From the State’s point of view the primary role of the NFP board is to represent the public interest and ensure that the corporation’s operations are consistent with that interest. Can a three-member board fulfill that role?
I came to NFP boards through the governing board of a public charter school. The governing board of a public charter school differs from an NFP board because the school’s board operates under stringent regulation and because the school’s board generally does not have a resource development role. That places a greater emphasis on the board’s governance role. I’ve had hours and hours of training in organizational governance paid for with public money.
I can see on my current NFP board how much difference that training makes. How can NFP boards be expected to govern properly without training? Good governance is not an instinctive function.
I don’t know the law elsewhere, but here a legally constituted board can contain as few as three people. That makes your proposal at least feasible under the current law.
I vaguely recall an article in the Stanford Social Innovation Review some years ago (couldn’t find it online) arguing for a new model for boards. The author wanted corporation law to be changed so that the whole board is not legally liable for decisions made by committees of experts. This would enable directors to focus on their own areas of expertise.
This would enable recruitment of board members for specific skills or tasks, without requiring them to be accountable for decisions made in areas about which they know nothing. As a planner, I could focus on strategic planning; as a fund-raiser, I would have no part in evaluating the executive director (except on his or her fund-raising results and methods) Non-financial board members would have no responsibility for financial decisions.
The author claimed that this would make it easier to attract board members because they wouldn’t have to be accountable for board decisions on matters in which they have no knowledge or interest. They wouldn’t even have to attend meetings unless something in their area of expertise was on the agenda.