But even those who have not been exposed to board service may have wondered just what goes on behind those closed doors when the fate of an organization can be decided.
Within Moore County alone, there are 273 registered nonprofit boards. Some members will be extremely effective; others join without full knowledge of how time-consuming the responsibilities will be and end up asking, “Why am I doing this?”
Often they serve to give back to a community that offers so much. But what do they really know about board service? There has been a fair amount written about how to create an effective board, but it’s probably safe to say that many organizations go about the project haphazardly, without proper guidance.
Joyce Franke has run the gamut of board service. She started the Pinehurst Historic Foundation in the fall of 1992 for the express purpose of renovating the Fair Barn. Her board consisted of three people, and they met informally to formulate plans. They hired a lawyer to incorporate into a 501C3, but other than that, she says, they used no guidelines other than their own plans to raise funds for their project.
Today the fully restored Fair Barn is in full swing, and the board has expanded to 10.
“I welcome a bit of dissension on the board,” Franke says. “If we all agreed, we wouldn’t be effective. The best way to settle a problem is just to sit down and talk it out. That’s what we did—and it worked.”
Franke now sits on the board of FirstHealth of the Carolinas.
“And that, of course, is entirely different,” she says. “We have formal monthly meetings, committees and rafts of material to read and digest.
“FirstHealth puts out a publication called Trustee, specifically for board members. It has in-depth articles dealing with many of the problems and solutions a board of this size encounters. The treasurer prepares a financial statement every month, so the president is aware of every penny that goes in and out.”
On such large boards, major disagreements on policy are usually handled at the Executive Committee level, with the board ratifying the committee’s recommendation
On the other side of the coin is Patricia Mabe, president of the Alumni Association of Sandhills Community College.
“For almost three years we tried to get an organization going,” she says, “but the outside interest wasn’t there. We met and elected officers, who were all graduates. We were organized and chartered, but after inviting the last three graduating classes, consisting of 350 people, to attend a meeting, only 27 came. We hope to get started again, but right now are inactive.”
Most of the board service in the Sandhills is on a small scale.
Betty Hurst served on the steering committee that formed Friends of the Library and has been president for two years. She was part of the group that laid out the organization, right down to the bylaws.
“Never was anyone asked to serve because of what they could give monetarily,” she says . “Time and talent was what was required. New board members were asked to sit in on a presentation of how the organization works before they took office and were assured that it was an honor to be asked to serve.”
When she went on the board of the Given Library in Pinehurst, she recalls, the librarian gave a presentation which at the time appeared overwhelming.
“You learn by doing,” she says.
As for differences of opinion, she feels that is something every group should expect.
“It’s both healthy and a necessary evil,” she says. “Talk it out, think it out, take a vote and the majority rules, like it or not. That’s the American way!”
Sorting Out Tasks
Ron Sutton is one of the most prolific board members in Moore County.
When he joined the Arts Council six years ago, he was shown a film at a special session and given printed material.
“There was a specific evaluation done of the board every year as well as the staff — very professional operation — one of the best I have ever served on,” Sutton says.
Sutton now serves on the board of the Weymouth Center for the Arts and Humanities in Southern Pines. The Weymouth board, he says, is just beginning the task of figuring out how to orient directors.
But at this point they are a bit at sea on their tasks. Sutton led members on a one-day retreat to discuss where they wanted to be five years from now, and they were able to develop a mission statement, but he says there is still much to be done.
Sutton also serves on the Sunrise Preservation Group (SPG). He notes that that organization still has some developmental problems to be solved. Beyond running and saving the Sunrise, there is some concern about how board members can be most effective.
Tightening the Ship
There are ways that even a small board can conduct business in a professional manner.
Many directors admit that it takes a good plan of action to be successful. They suggest that a board should try to identify the skills of its members. Ideally, each should have a different skill. If there are too many marketing experts but no one who knows how to read a financial report, problems arise immediately.
It’s essential that as wide a range of skills as possible be represented. Harvard Business School suggests a practical plan called activity/competency mapping.
If a board can “map” the organization’s goals and strategies, then its members can enable themselves to visualize why and how performing certain activities may help achieve the objectives and goals.
They might ask the question, “How do we create value for the community?” Then the board members look to themselves and their talents to see who would be best to perform the activities that generate this value.
In performing this lesson, an organization may find that certain of its work is not generating enough interest to warrant continuing. Conversely, now may be a good time to initiate a new cause.
Keeping It Honest
Most local nonprofits don’t have an audit committee, as corporations do. Some probably don’t even know what that means.
But if you’ve read the news in the past year, you might remember a couple of scandals, as when American Red Cross was accused of diverting funds designated for 9/11 victims. Or when United Way of the National Capital Area replaced its entire board of directors when it was alleged that they inflated fund-raising figures. Or when San Diego’s Red Cross dismissed its CEO and the entire board after money disappeared.
While these refer to millions, local Moore County nonprofits are only looking at thousands. But money is money.
According to John R. Owen II, a director of the Pennsylvania Association of Nonprofit Organizations, several factors make nonprofits vulnerable: an atmosphere of trust, a steady stream of cash donations, reliance on volunteers to perform important tasks, limited supervisory resources, and an unpaid board of directors with little or no financial expertise.
It is the job of the outside auditor to detect mismanagement or fraud, but the board of directors remains responsible for what happens on its watch. An audit committee could be the main tool for carrying out this financial oversight, experts say.
Questions to Ask
When invited to be on a board, experienced directors recommend that you ask a few questions before you say “yes.”
Of course, you are flattered, but will you be required to make a substantial contribution to the cause? If you don’t have the wherewithal to do that, are you willing to go out and raise money? If one of the primary functions of the board is financial support, you probably should not join if you can’t give a substantial amount personally or go out and raise it.
“Some boards,” Ron Sutton says, “inform potential members up front what their financial obligations will be. Others have expectations that you will be forthcoming with annual donations according to your ability to give and/or service offered in lieu of big money.”
One local board has just raised the bar concerning actual dollar amounts to be given. The board has $500 and $1,000 annual membership contribution requirements. Some members have been willing to accept that, and others apparently resent it, as they feel giving is a personal decision.
An important function of the board that is interested in maximizing the contributions of its members is having in place a process for evaluating the performances of the manager, president and board members.
It need not be complicated to evaluate board effectiveness. Indeed, it can be done as simply as placing it on the agenda of a regular meeting, perhaps concluding the meeting by asking members to rate the meeting on an index card.
Sources of Help
The Minnesota Council of Nonprofits suggests asking the following questions: Were the issues covered today significant? Did the materials you received prior to the meeting adequately prepare you to participate in the discussion? Did the board conduct matters of management or policy? Overall, was the meeting worth your time?
A steady stream of feedback created by these responses and used by the board chair can greatly improve the value of board meetings.
This is often followed up with an annual board assessment, probably best completed by board members in their own time. They may be asked to evaluate, on a scale of one to five, some of the following areas: knowledge of financial, legal and public responsibilities; how the public sees the board; communication of the mission; oversight of financial structure, i.e., fund raising, audits, insurance, bank relations; meeting attendance and discussion participation; board succession and nomination process, and new board member orientation.
Many boards have Governance Committees, with duties to assess current composition and identify missing qualities, draft recruitment plans and cultivate new prospects, devise job descriptions for members and orient new members.
This committee may set up a “SWOT team,” devoted to analyzing internal and external Strengths, Weaknesses, Opportunities and Threats.
Resources: There is a wealth of material out there to help boards become more effective, whether they are just starting up or have been in existence for years.
The North Carolina Center for Nonprofits can be reached at 1110 Navaho Drive, Suite 200 Raleigh NC 27609.
The American Bar Association publishes a “Guidebook for Directors of Nonprofit Organizations,” available for $19.95 from PO Box 10892, Chicago, IL 60610-0892.
A company called BoardSource (boardsource.com), with a staff of 40 and membership near 16,000, offers workshops, training, books, tapes and a biennial conference.
