Advice to Businesspeople Who are New
to Nonprofit Boards

PostGayleGifford


As advisors to nonprofit organizations ALSD often encourages them to strengthen their boards by adding qualified businesspeople.  But for the businesspeople themselves – what to expect? Author Gayle Gifford has been helping our clients for years.  For Gayle, “nonprofits are a commitment to our society to create a more just and peaceful world of hope, beauty, and equal opportunity for all.”


 

Congratulations! You’ve just joined the board of directors of a charitable nonprofit. If this is a new experience for you, you are in good company. More businesses today seem to encourage (even push) their staff to get involved with nonprofit service.

The people who serve on nonprofit boards come from all walks of life — from other nonprofits, from government, consumers, community members and the business world.
Most likely, you’ll learn this craft through “on-the-job” training. If you are one of the fortunate few, you joined a high-performing board with great role models. With luck, your board will bring in a trainer now and then to work with you on board governance. (And, you can visit another boards to see how it works or even read one of the many great books designed to help you be a better board member).
While you might feel a little unsure of yourself, remember that most nonprofits relish the thought of businesspeople on their boards. They are eager to benefit from the business savvy, strategic thinking, technical skills, connections, and from the many other resources that business may have that nonprofits find harder to afford.
To help get you started, I wanted to share a few insights about nonprofits and then a few tips to get you started.
First the insights.
The world of businesses and nonprofits are both different and the same.
How is that for stating the obvious! But it’s true.
As a businessperson serving on a nonprofit board, you may experience a little culture shock at first. Decisions seem to take longer to make. Lots of people need to be consulted. Change may occur more slowly than you anticipated.
Many of these cultural differences flow from the very nature of charitable nonprofits. Because a nonprofit is accountable to the community for doing good, building constituent support and goodwill is essential to continued success. Stakeholders expect to have some say in the outcomes.
The problems and needs that nonprofits address are multi-faceted, involving complex and constantly changing systems of clients, funders, supporters and opponents. The “product” is not always easy to define and measuring impact can be extremely difficult.
Small organizations take on these big issues. In the USA, over 85% of public charities have annual revenues less than $250,000, which makes them more comparable to a “micro-business.” In Canada, half report revenues under $50,000. For many of these small nonprofits, their staff may have limited experience in management and resource development — if they have any or many staff at all. Funds for training and professional development are often scare.
Decisions and actions both big and small often rely on volunteers. The biggest decisions of all are made by volunteers — you, the board. Volunteers have all levels of expertise, knowledge and experience. Volunteer priorities usually follow the needs of family and work. Managing volunteers requires all of the skills and tools you would use with your staff, lacking one small but highly motivating reward — money.
Despite the differences, there are many ways that nonprofits and businesses are similar. Both enterprises need to be responsive to their marketplace. They need business acumen and attention to the business to be successful. Both require good research and quality information for good decision-making. Both demand high commitment to ethical behavior. And both need the structures, systems, people, skills, strategy and accountability that make any enterprise successful.
So, in the nonprofit world, how can you best put your business experience to work?
Here are a few tips to get you started.
Focus on the bottom line — the mission.
In business, profit is the bottom line. In a nonprofit, it’s the mission. Think of the mission as a contract that you’ve entered into with your community — a contract designed to make the world a better place by filling an unmet need, solving an important problem, creating new knowledge, or by increasing the level of joy or beauty for the people who live here. Everything your nonprofit does should be measured against how well it is fulfilling that mission.
Don’t undercapitalize.
Successful nonprofits also have the financial and other resources to get the job done. So while you focus on the mission, don’t forget to ensure that your organization has a well-developed capacity to obtain the resources it needs to keep moving forward. The fewer staff you have, the more likely that you will play a critical role in obtaining those resources.
Do your market research.
You wouldn’t think of starting a new company or making a major business decision without quality research to inform your decision. Yet, many nonprofit board members are tempted to make decisions based on their personal feelings or individual experiences. Do your research. Don’t conjecture. Seek out best practices and benchmarks. Keep up-to-date on issues affecting both nonprofits and your charitable mission. Ask for time at board meetings for education as well as action.
Share what you know.
There is a lament in the nonprofit world that we seek out board members who have extraordinary talents, but when they serve on our boards they seem to have left those talents back at the office. Just like your business, your nonprofit needs your knowledge as an entrepreneur, a resource-getter, a strategic thinker, a people-motivator, or an organization builder. That’s what they recruited you for. Apply those talents to your work on the Board.
Ask board leadership for your job plan and annual performance measures.
Just as you provide your employees with job descriptions and clear expectations for performance, you should expect the same for your role on the board. What is it that you have committed to? What will you achieve during your term of office? What are your priorities? What resources do you have to work with? What relationships are critical? What are the limits of your position? How will you be evaluated?
Be serious about legal matters.
It’s tempting for volunteers, especially in small organizations, to think — “those rules don’t apply to our little local organization.” Whether you are a $100,000 or $100 million nonprofit, the same rules and regulations apply. Do you know what your legal responsibilities are as a board? As a board member? Be knowledgeable about federal, state and local regulations governing your nonprofit. Be vigilant to ensure that your staff and board comply with those regulations. You may be liable for personal penalties if your nonprofit violates those rules.
Hold core values of stewardship and ethical behavior.
The nonprofit sector depends on the trust and confidence of the public for its existence. When a nonprofit violates that trust, it places the whole sector in danger of losing the unique privileges afforded to tax-exempt organizations. Nonprofits survive because they have promised the public that they will use their resources wisely for the community good and not for personal gain — the essence of stewardship. It’s easier to be ethical when you’re committed to wise stewardship.
Combine an entrepreneurial attitude with patience.
In their study of high performing boards, the international consulting firm of McKinsey & Company report that nonprofit leaders tell us that “when boards… devote time to providing expertise, helping managers get access to people and resources, and building managerial capacity, their organizations benefit the most.”At the same time, McKinsey and Company stated in a report on nonprofit capacity building that “almost everything about building capacity in nonprofits (and in for-profit companies) takes longer and is more complicated that one would expect.” Entrepreneurship and patience are important virtues.
Last, but definitely not least, be courageous.
It is not easy to be a good board member. It’s hard to rock the boat or risk offending business colleagues by asking questions that everyone else seems to be dodging, or by insisting on right but difficult courses of action. Even setting goals takes tremendous courage. But nonprofits need, no, they require the courage of board members. As Dr. Martin Luther King Jr. said, “the time is always right to do what is right.” It’s just not always easy.
Good luck. Enjoy your board service. It’s a good thing to do.
If you’d like to share the lessons you’ve learned as a business person serving on a nonprofit board, I’d like to learn from you. Just drop me a line at the email address in my bio. I’d be pleased to share your experiences in a future newsletter.


 

Gayle L. Gifford is  President of Cause & Effect Inc, and one is one of just over a hundred individuals who have earned the ACFRE, the advanced fundraising credential from the Association of Fundraising Professionals. She is an author of two books and contributing author to four books on nonprofit boards, fundraising and management. Check her blog, www.ceffect.com/butterfly-effect, or e-mail her at gayle@ceffect.com

Any views, opinions, and statements are those of Gayle Gifford exclusively and may not represent the views, opinions, and/or statement of Aaronson Lavoie Streitfeld Diaz & Co, PC or its officers or owners. Nor has Aaronson Lavoie Streitfeld Diaz & Co reviewed or authorized the information Gayle Gifford has presented and it expresses no warranty on them.

 

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