About Governance as Community-Centered Stewardship
Originally published in the Nonprofit Collaborative of Southern California (NPC) ebook, “What Every Board Member Needs to Know about Leading a Nonprofit”
By Jeffrey R. Wilcox, CFRE
When a community member is asked to serve on the board of a community impact organization, a number of images about the work that lies ahead come to mind. It can range from an assumption of acting as a boss or participating in a policy-making process to asking lots of friends for money and a significant number of meetings.
Over the years, even the title of people who serve on boards has evolved from one of a trustee to one of a director. Some organizations believe that a board’s primary role is fundraising while others view the work as a community check and balance system for use of charitable and taxpayer funds. Every board has its own culture, and it takes time for any board member to realize what they have signed up for in the name of adding to the quality of life in a community.
No matter what the positions are called, we know that the most successful nonprofits and their boards have a few attributes in common:
1. The board understands it is governing a community cause not a proprietary corporation.
While there’s no argument about a nonprofit being a business, where there is disagreement is the business model that’s at work. Nonprofits, by decree, are nonproprietary and must achieve a social profit in addition to a financial profit in order to survive and ultimately thrive. Community causes, unlike private-sector corporations, have some subtle differences that influence their operations, policies and business models:
- Volunteers, rather than employees, comprise a significant portion of the human resource portfolio.
- Consumers of services are generally least likely to be the largest investors in the service.
- The concept of “stakeholder” replaces the notion of “stockholders” as a broad range of influencers impact the ultimate success of the nonprofit business model in carrying out its purpose.
- Government regulation and use of taxpayer funds for operations is significantly higher in nonprofit organizations that may or may not be influenced by board action.
- Community input and involvement in creating business strategy directly affects community reputation, endorsement and support.
Virtually every nonprofit started as a cause before it became a corporation. Every board is well served to create an orientation process that makes it very clear what the business model of the organization is in order for the board to provide the optimal governance to a cause that is in business to impact quality of life in a community.
2. The value of governance is measured in its outcomes not its activities.
Every organization is at a different place in its history and has a unique role in community life. Large or small, new or old, governance assures that an organization is serving its purpose in an accountable way. At Third Sector Company and in our Board Chairs Academy program, we emphasize the following five outcomes of any type of governance that should be regularly measured:
- Outcome #1: An effective and efficient infrastructure of paid and unpaid people working together to achieve a community goal.
- Outcome #2: The organization is having a measured impact on the quality of life in a community.
- Outcome #3: The organization guarantees a reasonable level of resiliency and sustainability.
- Outcome #4: The mission of the organization is advanced through advocacy efforts that result in charitable giving, policy-making, and persuasive campaigns that call for actions of people, organizations and government to enhance quality of life.
- Outcome #5: A next generation of leaders is being cultivated for the future of the organization
3. The intent of governance is citizen-led stewardship on behalf of the community.
A nonprofit board is comprised of community people who share a common motivation to achieve a quality of life outcome for the community. In order for that to occur, successful boards understand that their board, therefore, should be reflective of the community that it serves. The diverse voices of people who want to help and those who are being helped come to a common table to create policy and understanding that offers community benefits far beyond simple service delivery.
As community stewards, board members recognize that their primary responsibility is to be the voices of the community and to form relationships with the community, acting as liaisons, and assuring all contributors and participants in the mission advancement process that the organization is moving forward in a participatory, transparent and accountable fashion.
4. Governing an organization isn’t about managing it.
One of the most significant challenges boards and nonprofits face is the dilemma of understanding the differences between governing the organization and trying to manage it. The hiring and support of paid professionals is one of the most important roles of a board. Boards assure employees, beneficiaries, and the community that excellent and accountable management structures are in place and respected by all. When boards take on the job of management, the responsibilities of governance are weakened. Governance has an obligation to stand behind the leaders they have employed and a responsibility to help them be successful.
Generally speaking, once policies have been approved, management is in the lead role when it comes to four specific functions of the organization:
- Lead Role #1: The carrying out of policy with constant monitoring and recommendations for modifications based on situations and changes in law and society.
- Lead Role #2: Resourcing the functions and strategies of the organization including the hiring, valuing and evaluating of staff and directing the roles and support functions of volunteer structures.
- Lead Role #3: Planning, evaluation and direct oversight of the program, service and administrative functions of the corporation.
- Lead Role #4: Identifying and overseeing processes that resolve conflict, facilitate long- and short-term planning, assure consistent messaging in the marketplace and introduce best practices in nonprofit management and governance to the corporation.
5. Community-centered leadership focuses on success over strategy.
Given the changes that have occurred in society over the past three years, nonprofit leaders have come to realize that traditional strategic planning has been significantly impacted by COVID-19, a widening political gap in society, the remote workplace, and generational transference from Baby Boomer to Millennial and Generation Z-led organizations.
To quote Stephen Covey, “Success Planning” is an approach where diverse people begin their planning with the end in mind. People agree on the end game first before concentrating on a series of tactical action steps. “What should our organization look like to the community a year from now?” becomes the driving force behind Success Planning. Success Plans are simple single-page documents that outline the aspirations of an organization over a stated period of time, the driving forces that have the greatest impact on its success and a published set of benchmarks to achieve the stated success goals. Many boards approve an ambitious community goal as the basis of their Success Plan and then view the operations work as a community campaign to achieve that goal.
6. The demonstration of philanthropy rests with the Board of Directors.
Philanthropy is rooted in the sharing of monetary resources, the giving of time, the free imparting of knowledge and the offering up of community relationships to advance the cause. Boards approve and evaluate plans that cultivate human and financial capital and encourage and applaud generosity. Governance understands the multitude of traditions that exist in giving and assures that human generosity of all kinds is cultivated in and for the community.
In our opinion, a culture of community philanthropy emerges when board members understand they must lead by example of what giving can look like in a diverse community. Boards set the standards for recognition. They also give voice to those who are helped by thanking givers personally on their behalf.
7. The boardroom is an incubator for the next generation of community leaders.
Readying a new generation of community leaders for the stewardship of important causes isn’t something that happens in school. Today’s boardrooms must welcome all the generations that are present in a community to share life experiences, opinions and resources to achieve something extraordinary together. The mission of a nonprofit is often an important link that brings generations together which are often kept separate in work and society.
It is the obligation of governance to open pathways for the next generation of leadership to be a part of a deliberate succession planning process that assures a continuity of leadership for their organization and all community entities.
8. Governance is ultimately responsible for ending institutional racism in an organization.
It is a board obligation to assure that every statement and activity of the organization reflects a demonstrated commitment to operating a diverse, inclusive, equitable and accessible nonprofit organization which includes a governing manifesto of intolerance towards racism and oppression. The founding cause of the organization was rooted in assuring a social justice and the board is obligated to uphold and advance that deliberate action aimed at ending institutional racism.
Today, nonprofit boards are taking significant pride in establishing DEI (Diversity, Equity and Inclusion) work groups and training, and creating policy statements that respect the experiences and offerings of all people to make the nonprofit successful.
THE BOTTOM LINE:
One of the greatest joys in life is helping others. Board service is one impactful way in which community people can form meaningful relationships with diverse individuals and organizations and feel as though their efforts have made a difference in the quality of life for all.
Having come through very difficult years in the third decade of the twenty-first century, we now know
that nonprofits can thrive when:
- The “cause” comes before the “corporation”
- The focus is on “outcomes” versus “activities”
- The driver of governance is “stewarding” versus “directing”
- The goal is “governing” and not “managing”
- The future is driven by “success planning” over “strategic planning”
- The meaning of philanthropy is “demonstrated” versus “dictated”
- The board room is viewed as a “leadership incubator” as opposed to a “leadership clique”
- The board takes a stand to end conditions that have inhibited belongingness and full participation by all.
Jeffrey Wilcox, CFRE is a nationally-recognized pioneer in the field of nonprofit executive development, retention and transition. Founder of Third Sector Company and its Interim Executives Academy and Board Chairs Academy, Jeffrey is an author, columnist and popular speaker on succession planning, board and staff talent development and retention, and strategic interim leadership solutions for nonprofit charitable organizations, trade and professional associations, and congregations. He is the former Senior Vice President of Community Development for the United Ways in Los Angeles and Phoenix, the former Nonprofit Columnist for the Long Beach Business Journal, past president of the Orange County Chapter of the Association of Fundraising Professionals, and was named Alumnus of the Year by the School of Business, Economics and Government at Seattle Pacific University where he chaired the Executive Advisory Board for four years. In 2022, Jeffrey was presented the Innovation Award by the Washington Society of Association Executives. Connect with Jeffrey on LinkedIn.