Board Member WorkshopFebruary 6, 2014

Haas School of BusinessUC Berkeley

Welcome

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Agenda

• 3:00 – 3:45 Welcome

• Dynamic Board Lessons

• 3:45 – 4:00 LinkedIn For Good

• Nonprofit Resources

• 4:00 – 5:00 Topic-Specific Group Coaching• Governance, Strategy, Marketing, Fundraising,

Board Recruitment

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Boards and Directors have Legal Duties of Care, Loyalty and Obedience

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Duty of care

Duty of loyalty

• An obligation to act in good faith – with best interests of nonprofit in mind – with such care of a reasonably prudent person

• Be informed e.g.– Attend meetings regularly – Seek and review necessary information

• Exercise independent judgment– Ask questions – avoid simply going along

with other directors– Rely only on judgment of dependable

sources• An obligation to keep confidences of nonprofit and avoid actions that benefit self at expense of nonprofit

• Avoid self-dealing transactions• Where directors’ firm provides services

or products to nonprofit, make conflict known to board, recuse self from discussions/votes

Duty of obedience

• Required directors to comply with applicable laws, adhere to bylaws and remain guardians of the mission

• Understand mission and bylaws• Ensure regulatory filings completed• Require operation audit and policy review

Hold public benefit corporation “in trust” for the community

Types of Boards

Organizing Board– small, homogeneous, informal – committed to purpose– Very hands on to support start up

Governing Board– larger and more diverse board– committees become important– shared authority between board and staff: board chair and

executive director are principal leaders– transition to governing board takes at least 3 years and a lot of

staff time

Institutional Board– very large (35-60 or more)– prestigious -- includes large donors or those with access to

funders– accepts significant responsibility for fundraising– often delegates some governance to executive committee

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Creating a Dynamic Board

• Monitor external and internal environment to prioritize areas for Board attention

• Ensure quality performance across 3 primary Board roles

• Develop a set of enabling practices around Board composition, size structure, processes, and staff relationships

Sha

pe m

issi

on a

nd

stra

tegi

c di

rect

ion

Monitor and improve performance

Environment

Ensure leadership and resources

Enablers

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9 Responsibilities of Nonprofit Boards

Sha

pe m

issi

on a

nd

stra

tegi

c di

rect

ion

Monitor and improve performance

Ensure leadership and resources

• Select, evaluate and develop CEO

• Ensure adequate financial resources

• Lend expertise; provide access to people

• Protect/enhance reputation of organization

• Oversee financial management, ensure appropriate risk management

• Monitor performance, ensure accountability

• Improve board performance

• Shape, clarify mission and vision

• Engage actively in strategic decision making and policy decisions

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Importance Ratings Vary Greatly by OrganizationQ: Over the next one to two years, how important is it for your Board to focus on:

1 2 3

1 2 3

1 2 3

1 2 3

1 2 3

1 2 3

1 2 3

1 2 3

1 2 3Low HighMedium

Rated Importance

Group Average Group Response Range

1. Clarifying the organization’s mission or vision

2. Resolving key strategic or policy issues

3. Developing CEO capabilities

4. Developing financial resources to support strategy

5. Providing expertise or access to support organizational priorities

6. Building the reputation of the organization with key stakeholders

8. Assessing performance against mission and key program priorities

7. Overseeing financies and ensuring adequate risk management

9. Improving Board performance

Ensure Leadership

and Resources

Monitor and Improve

Performance

Shape Mission and

Strategic Direction

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The Governance Gap

• 97% said that a high-performing board was important to a high-performing nonprofit...— However, only 19% said they were tapping their boards’ full potential

• 94% felt that their boards provide the appropriate level of strategic guidance…— However, only 46% thought that their directors would be able to summarize both

the mission and the vision of their organizations

• 77% of respondents indicated a desire to improve board fundraising, but…— Just 21% set individual board member fundraising goals— Just 38% provided fundraising training— Moreover, a mere 16% reported having individual board members receive formal

feedback on their performance at a regular interval

• Source: McKinsey survey of social services organizations9

Board Performance GPA

Fundraising

Increasing diversity

Community relations

Strategic planning

Monitoring performance

Knowledge of programs

Supporting CEO

Legal/ethical oversight

Financial oversight

Understanding mission

0 0.5 1 1.5 2 2.5 3 3.5 4

Director viewCEO view

Source: Boardsource Nonprofit Governance Index 2010

Survey response to “give your board a letter grade” on each dimension

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5 Enablers are Key to Closing Execution Gap

• Effective board leadership must drive for a true partnership at board and committee level

• A trust-based relationship with CEO as an underlying foundation

• Sweating the details on process is critical to board function and engagement

• Composition requires needs-based management and a graceful transition mindset

• Size and structure are a balancing act but must ensure coverage of 9 responsibilities

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Self Assessment Is Critical

Select, evaluate and develop CEO

1 Poor

2 Average

3 Good

4 Distinctive

Comments

Succession planning

Board has no clear succession plan

Board has informal discussion with CEO on succession and on identifying candidates before need for a CEO transition arises

Board has explicit view on succession and works with CEO to identify internal candidates with leadership potential

Board has explicit view on succession and actively works with the CEO to identify internal candidates and provide development opportunities for the top 3-5 candidates to “round out” their skills

Evaluation and development process

Evaluations are subjective and occur on ad-hoc basis; most board members are unaware of process or feedback messages

Evaluations performed annually against preagreed criteria; board members have opportunity to provide input to process

Evaluations performed formally and annually against pre-negotiated goals; written feedback messages are reinforced through CEO compensation

Evaluations performed at annually against predefined gooals; evaluation includes 360-degree feedback and includes a self-assessment by the CEO. Written feedback includes skill development plan. CEO compensation decision reinforces view of performance

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0.8 0.9 1.0 1.1 1.20.6

0.7

0.8

0.9

1.0

1.1

1.2

1.3

1.4

Dynamic Boards Set Priorities Based on Need and Performance

Relative Performance (ratio vs average response)

Rel

ativ

e P

riorit

y (r

atio

vs

aver

age)

Change Maintain

Quick fix only Reduce effort

Ensure Resources

Improve Board Performance

Shape M/V

Enhance reputationMonitor org performance

Provide expertise and accessShape strategy

Develop CEO Oversee financial performance

• Roles Matter: There are 9 clearly defined responsibilities of a nonprofit board, with a gold standard of performance for each. Increasing emphasis on:

• Multi-year planning

• Performance measurement and accountability

• Risk management

• Sweat the Enablers: Good governance is execution

• Pay attention to the enablers of execution, including the small stuff

• Board Chair as CGO

• Understand and address the “human” aspects of director interests and styles

• Pick Your Battles: There are lots of ways boards, as entities and directors as individuals, can help. Pick your spots carefully to allot valuable time where needed most

• Look in the Mirror: Invest significant time in board evaluation and continuous improvement

Summary Take-Aways

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A Good Board is a

Victory, Not a GiftCyril Houle

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Breakout Group Coaching

• Governance/Board Development• Marketing: Telling Your Story/Branding• Strategy• Fundraising• Board Recruitment: LinkedIn For Good

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