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The Context for Innovative Board Leadership. Dr. Elizabeth Scott Brighter Strategies www.brighterstrategies.com 703-224-8100 liz@brighterstrategies.com. The process of providing strategic leadership to a nonprofit organization.
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The Context for Innovative Board Leadership Dr. Elizabeth Scott Brighter Strategies www.brighterstrategies.com 703-224-8100 liz@brighterstrategies.com
The process of providing strategic leadershipto a nonprofit organization. • It entails the functions of setting direction, making policyand strategydecisions, overseeing and monitoring organizational performance, and ensuring overall accountability. • The regulatory bar on board performance is going up. • Oversight is necessary but not sufficient to define the work of an effective board. 2
Duty of Care “The duty of care requires that first, a director be informed; and second, a director discharge his [or her] duties in good faith, with the care that an ordinarily prudent person in a like position would reasonably believe appropriate under similar circumstances.” ABA Guidebook for Directors of Nonprofit Corporations Among other things, board members must: • attend meetings regularly (and review materials before meetings!) • stay adequately informed about the organization • exercise independent judgment when voting – ABA Guidebook
Duty of Loyalty “[B]oard members must give undivided allegiance to the organization when making decisions affecting the organization.” The Legal Obligations of Nonprofit Boards “The duty of loyalty primarily relates to: conflicts of interests; corporate opportunity; and confidentiality.” Also, “the director’s duty of loyalty lies with the interests of the corporation, not to any constituency group.” ABA Guidebook
Duty of Obedience The duty of obedience “mandates that directors carry out the purposes of the organization as spelled out in its articles of incorporation and other legal documents.” Ilchman & Burlingame • Internal -- Board members have a duty to ensure “the organization remains obedient to its central purposes” as shown in its articles of incorporation, mission statement, bylaws, and other internal documents. The Legal Obligations of Nonprofit Boards • External -- Board members have a duty to ensure the organization complies with public laws, such as federal and state laws concerning transparency (e.g., making tax returns and other nonprofit filings available for inspection), solicitations (e.g., making required disclosures), and normal employment laws (such as tax withholdings).
Top Board Responsibilities • Shape the mission and strategic direction • Engage in strategic planning and policy decisions • Select, evaluate, and develop the Executive Director • Ensure adequate financial resources • Provide expertise and access for organizational needs • Build reputation • Oversee financial performance and risk management • Monitor performance and ensure accountability • Improve Board performance
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“It’s not the rules and regulations. It’s the way people work together.” - Jeffery Sonnenfeld (American academic @Yale School of Management)
The board "decides what to decide"; discerns challenges and opportunities; and probes assumptions, logic and the values behind strategies.
Type I: Operational Model of Governance • Staff and Board define problems and opportunities; develops, approves and monitors formal plans. • Board structure parallels administrative functions. Premium on permanency. • Board meetings are process driven. Function follows form. Protocol rarely varies. • Staff transmits to Board large quantities of technical data from few sources.
Type II: Strategic Model of Governance • Board and management think together to discover strategic priorities and drivers. • Board structure mirrors strategic priorities. Premium on flexibility. • Board meetings are content driven. Form follows function. Protocol varies often. • Board and staff discuss strategic data from multiple sources.
Type III: Generative Model of Governance • Generative boards institutionalize a culture of inquiry, mutual respect, and constructive debate that leads to sound and shared decision making. • They seek more information, question assumptions, and challenge conclusions so that they may advocate for solutions based on analysis. • They provide a less recognized but critical source of leadership for the organization. • They frame their discussion around big-picture questions, as opposed to current operational or strategic priorities.
What three adjectives or short phrases best characterize this organization? • What will be most strikingly different about this organization in five years? • On what list would you like this organization to rank at the top? • Five years from today, what will this organization’s key constituents consider the most important legacy? of the current board? • What will be most different about the board or how we govern in five years? • If we could successfully take over another organization, which one would we choose and why? • What has a competitor done successfully that we would not choose to do as a matter of principle? • What headline would we most/least like to see about this organization? • What is the biggest gap between what the organization claims it is and what it actually is? “Generative governance requires a fusion of thinking, not a division of labor.” - Richard Chait Author of Governance as Leadership: Reframing the Work of Nonprofit Boards
Summary • Use of Consent Agenda • Board Self-Assessment • Targeted Recruitment • Clear On-Boarding Process • Strong Committee Structure • Accountability through Commitment Agreements • Focus on Generative Governance (Big Questions)
About Us Brighter Strategies is an organizational development firm specializing in strategic planning, process improvement and leadership development for nonprofits and the public sector. Brighter Strategies www.brighterstrategies.com 703-224-8100 liz@brighterstrategies.com
Additional Resources Books • American Bar Association, Guidebook for Directors of Nonprofit Corporations (ABA 2d ed. 2002) • American Bar Association, Nonprofit Governance and Management (ABA 2002) • John Carver, Boards That Make a Difference (Jossey-Bass 1997) • Richard Chait, Governance As Leadership (Board Source 2005) • Charles Clorfelter & Thomas Ehrlich, eds., Philanthropy and the Nonprofit Sector(Indiana University Press 1999) • Fisher Howe, Welcome to the Board (Jossey-Bass 1995) • Sandra Hughes, Governance Committee(Board Source 2004) • Richard Ingram, Ten Basic Responsibilities of Nonprofit Boards (National Center for Nonprofit Boards 1999) • Daniel Kurtz, Managing Conflicts of Interest(Board Source 2d ed. 2006) • Jacqueline Leifer & Michael Glomb, The Legal Obligations of Nonprofit Boards(National Center for Nonprofit Boards 1997) • Katherine Tyler Scott, Creating Caring & Capable Boards – Reclaiming the Passion for Active Trusteeship (Jossey-Bass 2000) Periodicals • Chronicle of Philanthropy [great bi-weekly newspaper about philanthropy] www.philanthropy.com • The Nonprofit Times [biweekly newspaper that tracks nonprofit issues] www.nptimes.com • Nonprofit Quarterly [thought leadership quarterly magazine] www.npquarterly.org • Blue Avocado: www.blueavocado.org [free e-newsletter, great for boards] Websites • National Council of Nonprofits: www.councilofnonprofits.org [great site for information regarding nonprofits] • BoardSource: www.boardsource.org [resource for practical information] • CompassPoint: www.compasspoint.org/content/index.php?pid=216 [“Nonprofit Board Basics Online”] • Free Management Library: www.mapnp.org/library [incredible free resource about nonprofits] • Independent Sector: www.independentsector.org [strong site for accountability issues and national trends] • IRS: www.irs.gov/pub/irs-tege/governance_practices.pdf [good resource for understanding the expectations of the IRS relating to nonprofit]