[HN Gopher] Nonprofit boards are weird
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Nonprofit boards are weird
Author : apsec112
Score : 115 points
Date : 2022-06-23 17:57 UTC (1 days ago)
(HTM) web link (www.cold-takes.com)
(TXT) w3m dump (www.cold-takes.com)
| basseq wrote:
| Most of this article could apply to for-profit boards as well.
| Some of the key points here (e.g., lack of clear
| responsibilities) come from immature governance, rather than any
| particular difference in org. type. It's _easier_ to join a
| nonprofit board than a for-profit board, so you get less-
| experienced people (and leadership!). And nonprofit boards often
| come with a) fundraising responsibility and b) networking
| opportunity, so it can be a different kind of gig.
| jseliger wrote:
| I do grant writing for nonprofits, public agencies, and some
| research-based businesses. Many if not most nonprofits only
| operate through the will of a single person (usually the
| executive director) or small number of people, and this can
| remain true even in nonprofits with eight-figure budgets. In HN
| terms, startups don't have strong boards either, because startups
| only have a small number of people working at or in them.
|
| In addition, the more people there are on a board, the less
| likely it is to do anything, thus leaving the executive director
| to run the show.
|
| The board is often for show. Yes, the same may be true of many
| for-profit businesses, but the degree is much higher at
| nonprofits. Often, the board is there for signaling purposes:
| https://seliger.com/2012/03/25/why-fund-organizations-throug....
| Nonprofits are more like businesses than most people realize:
| https://seliger.com/2012/09/02/why-nonprofits-are-more-like-....
|
| So, as in many things in human life, there is the nominal, stated
| function, and the actual function. Board members are often
| cultivated for their ability to donate, not govern (or,
| sometimes, their ability to provide political cover). Volunteers
| are similar: https://seliger.com/2014/04/20/volunteers-
| nonprofits-really-....
|
| I suspect the author of "Nonprofit Board Are Weird" knows or
| suspects much of this.
| Hellbanevil wrote:
| hinkley wrote:
| There have been any number of experiences in my life that I did
| not appreciate until decades later, sadly in some cases after
| the person who gave it has passed away.
|
| Being a member of an exceptionally well run club in which I was
| one of the youngest members was one of them. This club wasn't
| strictly a volunteer group but it put on fund raisers twice a
| year which turned it into one.
|
| Successful volunteer groups have a number of things. They have
| a leader with some sort of coherent idea of what we should be.
| They have a stream of new enthusiastic members that can muscle
| through plans and projects that are at risk for falling apart.
| And they have old members who are practically spectators, and
| whose primary contribution (besides perhaps being a reliable
| source of dues) is as story tellers. They know Chesterton's
| Fence. They can tell you why it's there. They remember who has
| helped the club out of scrapes, and whether they are likely to
| do so again or that charity has run out.
|
| The oscillation in clubs comes when the leadership gets too
| involved, too invested, and either burns themselves out or
| starts alienating people. There's something to be said about
| keeping things a little at arm's length.
|
| A group I used to work with went and turned themselves into a
| non-profit, and created a board. The board was half people who
| most of us had never heard of, that in theory could open doors,
| most of the rest were sort of honorary titles, bestowed on the
| more gregarious long term members but not necessarily the
| people I'd want in that position. I moved around then so I
| don't know how or if that board has strayed from the group
| culture before they formed.
| yial wrote:
| I would add as someone who works in this space, that they also
| are kind of describing a mature board...
|
| There's the lifecycle of the non profit board
|
| https://boardsource.org/three-stages-nonprofit-board-lifecyc...
|
| Which describes different levels of engagement.
|
| And also the life cycle of the organization.
|
| https://socialtrendspot.medium.com/where-is-your-organizatio...
|
| I do agree that many non profits function because of the will
| of the ED / CEO and a small group of staff.
|
| Volunteers are always interesting - and depends on the board.
|
| Some boards become obsessed with adding people to the board.
| Many boards have little to no on boarding process. It's kind of
| like being hired for a part time job, and then being told that
| you come into work once a month/quarter/ annually.
|
| (This is an exaggeration to make the point).
|
| Many times the most functional boards are those that embrace
| working on governance and fundraising.
|
| I agree 100% about adding board members for the ability to
| donate, or political cover. The right board members can add
| instant credibility to your organization.
|
| Unrelated -- grant writing can become very hard work! I am glad
| you are helping organizations navigate that process.
| danbmil99 wrote:
| In my experience there are two types of boards in the for-profit
| space. If the company bootstrapped itself to profitability
| without taking any or very much investment, and especially not
| taking investment from experienced investors, the board will be a
| bunch of friends of the CEO who rubber-stamp everything.
|
| For companies that either are already public or are in the
| pipeline of venture capital start up to acquisition or i p o, the
| board dynamics can be very interesting and well dynamic.
|
| The main difference is that in this case the people who sit on
| the board, the startup founder CEO usually, and representatives
| of the various investor groups, have usually done this before and
| have a play book. Their objective is to maximize the return on
| their investment, and that's what they do professionally.
|
| Unfortunately, in my experience, in spite of the fact that this
| should result in a much more functional and experienced Board of
| directors, somehow things still end up getting pretty weird in a
| lot of cases. It mostly comes down to Ego and head games various
| directors seam inclined to play, often having to do with previous
| interactions or rivalries between investor groups. Also, CEOs are
| often cut from a certain type of personality cloth that plays
| into this gamesmanship. I'm not talking about the founder CEO ,
| I'm talking about the CEO that was brought in to scale the
| company up and prepare it for acquisition or public markets. He (
| it's almost always a he) needs to think about his own career,
| especially if things aren't going as well as everybody would like
| to think they are. It often boils down to a game of prisoner's
| dilemma.
|
| When this sort of thing gets out of hand, it can begin to feel
| like some sort of five dimensional poker game where you don't
| even know the rules. A bit like the game Mao if anyone remembers
| that.
| alhirzel wrote:
| Policy Governance[1] can really help with a lot of the weirdness
| described in this article.
|
| [1] https://en.wikipedia.org/wiki/Policy_Governance
| AlbertCory wrote:
| I find this interesting because it was suggested (not urgently)
| that I could be on the board of a local food bank. This article
| did not even mention D&O insurance, but they said they would have
| it.
|
| What scares the sh&t out of me is being financially responsible
| for anything any volunteer ever does (and possibly that not being
| covered by the insurance). None of the comments so far mention
| that either. Is that fear overblown?
|
| >Board members who can't say much about where they expect to be
| highly engaged, vs. casually advisory ... don't seem like great
| bets to step up when they most need to (or stay out of the way
| when they should)
|
| Indeed, I have no idea what I would do, so probably I should stay
| off.
| bell-cot wrote:
| IANAL, but I was once advised on this by a friend who was. In
| short, the justice system is very biased in favor of non-
| profits such as food banks. Nobody needs to tell a jury "if you
| award $$$$$ to the guy who ate the bulging can of bad tuna,
| that'll mean a whole lot of needy people going hungry". A
| lawyer deciding to sue the Food Bank (or a Director of the Food
| Bank, or ...) knows that "Defend the Food Bank, for Free" is
| the sort of "+10 to your own Reputation" side quest that some
| real heavyweight law firm might find irresistible. Etc.
| AlbertCory wrote:
| Well, you have a point. I thought of it as "suing me" but
| maybe "suing the food bank" is the right formulation.
|
| I hang out with one of the "gleaners" (the people who pick up
| the unused food from the supermarket), a former engineer, and
| he seems to be the business sense of this operation. They've
| been inspected by the big, successful food banks, so it's not
| some fly-by-night operation.
| kevin_nisbet wrote:
| > What scares the sh&t out of me is being financially
| responsible for anything any volunteer ever does (and possibly
| that not being covered by the insurance). None of the comments
| so far mention that either. Is that fear overblown?
|
| I don't think it's overblown, and should be something to
| research and understand. I'm on the board of my condominium
| corporation (same idea as an HOA), and there are specific laws
| outlined in the Condominium Act here in Ontario around
| directors, as well as the corporation declaration and bylaws.
|
| To try and briefly summarize, there are two things that largely
| protect directors in my case. First, the corporations insurance
| policy, includes directors liability insurance. So the
| corporation is purchasing insurance that covers all directors.
| It's actually in the law that the condo corporation shall
| purchase this insurance if reasonably available.
|
| The second, is so that people actually volunteer for these
| boards, the laws for the most part will hold harmless a
| Director that is acting in good faith. And there is context,
| that the board is expected to be made up of individuals with
| various background and no specific expertise or qualifications.
|
| There are carve outs for certain specific breaches. But it's
| mostly in the realm of your not covered if you breach your duty
| to act in honesty and good faith.
|
| In other contexts I don't know the laws, as I operate on a
| board specifically governed by the condo act in Ontario. But if
| you are considering boards in other jurisdictions, I do believe
| it's prudent to do some due diligence and understand potential
| liabilities. But in most jurisdictions I'd expect fairly strong
| protections for board members.
| [deleted]
| compiler-guy wrote:
| The assumption that boards aren't engaged seems really strange to
| me.
|
| Of the two nonprofit boards I've been on (one very well
| functioning, one not so much), both have had highly engaged board
| members.
|
| He also seems to be assuming mid-sized or larger nonprofits. For
| nonprofits with very few employees, or low budgets, board members
| often are brought in for their expertise, and their willingness
| to get in and do the work that would be done by employees in a
| larger nonprofit. If you can't pay them as employees, and they
| are volunteering their time and expertise and are highly engaged,
| it makes sense to put them on the board. Why wouldn't you?
| AlbertCory wrote:
| My main contact there is talking to a lawyer experienced in
| non-profits, and she said that, actually, the board should NOT
| have all employees on it.
| notahacker wrote:
| > He also seems to be assuming mid-sized or larger nonprofits
|
| I think that's it in a nutshell. Or super ambitious nonprofits
| gunning for Effective Altruist funding by having the most
| Silicon Valley approach to operating and expanding possible.
|
| In the rest of the nonprofit world, the board member with the
| legal background is there for legal advice, the one with the
| media background to help promote its work; if both of them
| think performance metrics is one for the board member with the
| accountancy background to look into rather than for them to
| study and challenge, that's _fine_ And firing the CEO (an
| experienced middle manager who took a massive pay cut to get
| involved) for not hitting KPIs is wayyy down the list of useful
| things they could be doing
| quercusa wrote:
| I was involved with a non-profit with a low-eight-figure (USD)
| budget. The board members were chosen because they either had
| money or had influence over people with money. In other words,
| busy people. Over the years the CEO reduced the amount of
| information that got to the board, in part by replacing
| competent staff with lackeys, and the reality of the
| organization diverged ever further from the stated objectives
| and value.
| hmessing wrote:
| I think the weirdest thing about non-profit boards is that people
| in general pay (in the form of donations) to be on them, as
| opposed to for profit boards where the money flows the opposite
| way. Much of the interaction between the board and management is
| designed to keep the donations coming, which can create a real
| conflict between good governance and financial stability.
| AlbertCory wrote:
| Indeed, someone I know who was on an arts group board said that
| his main job was fundraising. Something I'm not even a little
| bit interested in doing.
| ilamont wrote:
| The author is making some broad generalizations ("Board members
| often know almost nothing about the organization they have
| complete power over") that don't match what I've seen as a
| nonprofit board member.
|
| There are certainly best practices out there, as nonprofit
| management is a very developed "industry" in the United States
| and I suspect other countries as well. I don't know why he had
| trouble locating this information. Identifying a capable and
| engaged executive committee and limiting tactical committees and
| projects in favor of strategic planning will go a long way to
| making for an effective board.
|
| Small nonprofits will seem chaotic as there are too many things
| to do, (usually) no full-time staff to manage it, board members
| who don't participate and/or make demands that are not practical,
| poor financial management, launching important tasks that are
| never completed, and badly written bylaws at foundation that
| cause problems for years after they are written.
| Sniffnoy wrote:
| > I don't know why he had trouble locating this information.
|
| If you're aware of good references to check out, it would be
| helpful to list them here.
| pge wrote:
| I have served on a lot of private company boards (VC-backed
| companies) as well as a mnumber of non-profit boards. I agree
| with the sentiment that non-profit boards are weird, and I have
| found them significantly less productive than for-profit boards.
| Comparing for-profit and non-profit boards, I see several key
| drivers of non-profit weirdness:
|
| * Definition of success: With for-profit boards, there is a clear
| shared view of what the long-term goal is: value creation for
| shareholders. While there are lots of healthy debates about how
| that is accomplished, they are all in the context of the same
| goal. With a non-profit, each board member may have their own
| view of what the org is ultimately trying to accomplish. Further,
| these differing views may never be surfaced in open conversation,
| leading to people talking past each other a lot.
|
| * Incentives: Related to a shared view of success is the issue of
| incentive. Many private company board members are shareholders
| and have a clear financial incentive to make the company
| successful. I won't go so far as to say this creates
| accountability, but it does serve as a clear motivator to be
| engaged. Non-profit directors have nothing at stake that creates
| an incentive for engagement. If anything the incentive may be a
| friendship with other directors or the ED, in which case, the
| incentive is to maintain the relationship with that person rather
| than do what is best for the org (a common cause of dysfunction).
| This is a particularly acute problem when it comes to the most
| important issue a board can face: when and whether to replace a
| CEO. Most non-profit board members have no incentive, or a
| negative incentive, to engage in such a difficult conversation.
|
| * Size: Non-profit boards are often very large (10+ people),
| while private company boards are usually 5-7 people. Size makes
| everything harder, and leads to fewer meetings, less discussion,
| and less engagement.
|
| * Skill sets: Non-profit directors are often recruited with the
| primary goal of fundraising. They often have little to no board
| experience and may not have any experience with governance of an
| organization of any size in either a director or executive
| capacity. In my experience, even the ability to read simple
| financial statements is rare, much less the ability to think
| strategically about where to take an organization or how to scale
| it.
| kayson wrote:
| More like "bad nonprofit boards are weird", though there's
| definitely some truth to - great power, low engagement, unclear
| responsibility, and zero accountability. But a good board and
| CEO/ED will address all of these.
|
| First and foremost, board members are volunteers. They need to be
| people who are invested in the organization and its mission, and
| would be available to help as needed. They're also consultants.
| The board I'm on has people with expertise in HR, finance,
| accounting, marketing, medicine (very useful since COVID),
| economics, education. All of their experience is incredibly
| valuable in different ways, especially since the non-profit
| ("medium"-sized at 1.5MM annual revenue) can't really afford
| those roles.
|
| Engagement and responsibility has been a challenge for us, but
| we've addressed it by keeping up on best practices, which
| includes self-evaluation of the board and its members. As a
| result of that, we've invested in our onboarding process so new
| board members know what expectations and responsibilities are. We
| have various committees that focus on certain areas (e.g.
| finance, governance, fundraising, strategy), where board members
| meet outside the formal bi-monthlies to engage with staff more
| directly and help guide and support the organization.
|
| Overall, I've had a great experience being a part of this org.
| Maybe the board I'm on is just a unicorn...
| mherdeg wrote:
| My town has an elected position called the "board of library
| trustees" which has just a few powers, including notably the
| ability to hire a new library director.
|
| There are usually vacancies and poorly-contested elections for
| the position, even this year when the director resigned and the
| town had to search for then hire a new one. The job has a fair
| amount of influence on a critically important part of civic
| infrastructure, but people don't seem to be stepping up to do it.
|
| Every time there's a vacancy I took at the state handbook that
| describes what your job _should_ be if you 're one of these
| trustees and I decide I am not confident I could do those tasks
| as well as the job deserves:
| https://mblc.state.ma.us/for/2012-Handbook.pdf . It's a LOT!
| autarch wrote:
| I've served on two nonprofit boards with a combined time of about
| 22 years or so on them. Both were/are much more engaged than the
| boards described in this piece, but I think they are an
| exception.
|
| The other thing I'd add as a nonprofit board responsibility is to
| be the final owner of the organization's mission and values, and
| to make sure the organization sticks with them. To a large
| degree, this is deeply entwined with evaluating the CEO, since
| one way a CEO can fail is to let the org drift off mission or
| fail to live up to its core values.
|
| Another thing I'd add, at least for smaller orgs with few
| employees, is that the board can be part of regular long-term
| strategic planning (1+ year plans) and budgeting discussions. But
| of course this requires a more-than-normally engaged board to be
| useful.
| dougmwne wrote:
| Oh boy, can I relate to this! I have spent about a decade working
| for nonprofits and I think they are extremely weird organizations
| with no good accountability or feedback loops built in unless the
| CEO and Board choose to implement them. The quality of the
| organization almost completely flows from a few highly engaged
| board members, one or two donors that may give the majority of
| funding, and the CEO. If they are spectacular, you get a
| spectacular org, if they suck, you get a sucky org (and maybe
| some crimes as well).
|
| Because the thing is, the customers of the nonprofit are the
| donors which purchase the marketing story of nonprofit and
| nothing else. It is sort of like bitcoin, there are no
| fundamentals, just the hype and hope and that is the only fuel
| needed. The actual programmatic activities of the nonprofit do
| not need to bear any resemblance to the marketing story the
| donors purchase. If you are very good at telling that story, you
| do not need to answer to the donors at all on the real
| performance metrics of your org. A very large donor may demand to
| see these fundamentals, but you don't need them if you have
| smaller donors. Grant making foundations also often demand
| fundamentals and measures of effective philanthropy, but you can
| avoid taking any grants that expose you to too much governance.
|
| And finally the board tends to be the society of friends of the
| CEO, so they very rarely do anything but use their connections to
| boost the money and influence of the org.
|
| In the end; the CEO does not need to answer to the board, the
| donors, the beneficiaries, the shareholders, the IRS, the Gates
| foundation or the employees. They answer to their own conscience.
| DwnVoteHoneyPot wrote:
| Reminds me of Twitter's board where they have a small ownership
| stake (in % and $ terms).
|
| I've seen a few non-profit boards in action and they're filled
| with a couple people who really care about the cause, and the
| rest really care about their egos and like the title of board
| member.
|
| While this is likely the case for for-profit boards, but having
| skin in the game really matters for engagement and motivation.
| Try watching a sports game with money on the line and another
| without. The difference is huge.
| yardie wrote:
| I'm on a few non-profit boards and one of the things I don't see
| the author mention at all or specifically is the primary
| directive of the board is the financials. The CEO/Director is in
| charge of the day to day operations. The board has very little
| interest in that. A non-profit will have some or most of it's
| money from donors and those donors want to make sure that
| donation is being spent effectively. And that is where a good or
| bad board becomes responsible.
|
| If the money is being spent to drive the mission of the non-
| profit successfully no one cares. We show up for the board
| meeting, order sandwiches, and ask questions. And plan the next
| meeting.
|
| If the money is not being spent effectively or the mission isn't
| being met well we ask questions, sometimes offer advice, or raise
| more money. Maybe staff need to be changed or a new director
| hired. The board does not need to know the technicalities of the
| non-profit it just wants it to be governed with good care.
|
| You can't operate a non-profit the same technique as a for-
| profit. They are orthogonal in duties. A true non-profit has to
| spend almost every dollar it takes in. The board is all voluntary
| and there is nothing in it for them, except those sandwiches!
| ghaff wrote:
| I'm on the board of a very small non-profit--actually a student
| organization (that all of the board belonged to at some point
| in time, often quite a few years ago).
|
| We actually pay quite a bit of attention to financials and
| discussing them takes up a decent chunk of a board meeting
| including whether fundraising letters are going out (and
| reviewing them), overall financial situation, lease renewals,
| larger purchases, etc.
|
| As for responsibilities, I'd say it's a bit of a mix. There's
| an executive board--which I'm on--where specific
| responsibilities are pretty clear. The rest of the board
| probably much less so other than showing up for meetings.
|
| >A true non-profit has to spend almost every dollar it takes
| in.
|
| We certainly try to have a reasonable reserve. And, fortunately
| in recent years, we've been able to fulfill the basic mission
| while staying in the black.
| nickff wrote:
| I think you're missing the trees for the forest, in the same
| way the OP describes. If you don't take interest in, and pay
| attention to the significant details, there's no way you can
| understand whether "... the money is being spent to drive the
| mission of the non-profit successfully...". I have served on a
| non-profit board and observed this problem.
| clairity wrote:
| much like a startup, the key thing to understand about non-
| profit boards is that the board members' primary job is to
| fundraise (directly or indirectly) and secondarily to make
| productive introductions (donors, partners, 'customers',
| funding organizations, etc.).
|
| a distant (but not insignificant) third is strategic direction,
| which is often what we imagine board members do, but that's a
| relatively minor part of the role. some board members might
| have some operational input, but that's usually not expected
| for any but the smallest non-profits.
| compiler-guy wrote:
| "that the board members' primary job is to fundraise ... and
| secondarily to make productive introductions...."
|
| Although this is a common structure and plan, there are
| plenty of nonprofits structured differently than this--
| especially if the nonprofit is small and has only one or two
| employees, or maybe none at all.
|
| In which case the board does work on the ground.
| clairity wrote:
| right, that's the "operational input", in case that wasn't
| clear.
| TigeriusKirk wrote:
| This matches my experience on a small arts non-profit. People
| were added to the board rather explicitly for their
| fundraising contacts. I was there partially for my arts
| contacts, but mostly because I was shameless about hitting up
| local politicians for grants and such.
|
| The executive director was in charge strategy-wise, the rest
| of us were along for the ride. Because of my particular role,
| I had considerable say over which artists were involved, but
| almost no input on overall direction.
|
| Because of the fundraising focus, it could be stressful at
| times (there's never, ever enough money), but working the
| government systems was very educational and I'm very happy
| about the time I spent doing it.
| rvba wrote:
| If someone is a board member for few non-profits, is it hard to
| make the jump into for profit companies?
|
| If a for profit compaby goes belly up, do the board members
| suffer any real consequences, apart from perhaps not being
| invited into other boards?
| kekeblom wrote:
| I would add that the probability of a task getting done, is
| inversely proportional to the distance between the people
| deciding about the task and the people who will actually do it.
|
| Since the board members are almost never the people implementing
| the decisions, the plan is much less likely to get executed. The
| decision needs buy-in from the CEO and then the employees. Since
| the board members don't spend much time with the CEO and
| employees and they have a very different view of things, that
| buy-in is likely to be weak, so the plan gets watered down every
| step of the way.
|
| Really makes you realize why things are so inefficient in public
| organizations and politics.
|
| In a two person startup, if the founders decide to do something
| and they are the people executing on that decision, the task is
| very likely to get done fast and in full. If a non-profit board
| decides to do something, not so much.
| zachlatta wrote:
| Usually the Executive Director is making decisions for the
| organization, not the board. They are getting approval on their
| high-level strategy and budget from the board, but all of the
| day-to-day decisions lie with them.
| lkgbgjjugfffffg wrote:
| I served on the non profit board of my local arts centre. Worst
| decision of my life. 7 years troubleshooting impossible HR
| problems. At one point I had to take a two weeks off work to
| carry out disciplinary proceedings against someone who had been a
| family friend. Constant childish complaints from employees who
| refused to communicate with each other and expected the unpaid
| board members to resolve thier stupid problems. The whole thing
| was a basic income program for dysfunctional people, it didn't
| produce much in the way of art. I strongly urge anyone
| considering joining something like this to make sure they
| understand how badly it can go wrong.
| BiteCode_dev wrote:
| Worked for nonprofits in Africa, including the Gate foundation.
|
| Now if I want to help people, I give to a hobo in the street, or
| take time for someone I know.
|
| I don't trust NGO to handle money with care, or honesty, nor do I
| think most programs bring more benefits than problems.
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