Friday, March 30, 2007

Financial Accountability: Some Questions to Ask

What kinds of questions should board members ask as part of their ongoing financial accountability responsibilities? Here are some essential discussion focus points to start the process.

How is this action consistent with our mission? Are you using your resources wisely, advancing the mission in the process? As organizational stewards, your primary responsibility is ensuring that all resources are being used toward your purpose.

Are our finances in line with our budget? Overspending is a major accountability red flag. If you see evidence of that in your budget, find out why that is the case. Is it a matter of a budget that needs revision to meet shifting needs, or is there a broader issue of spending controls and priorities?

Are our expenses appropriate in light of donations? If possible, develop a benchmark against similar organizations to gain sense of whether your balance is appropriate.

Do we have the right checks and balances in place? Do our fiscal processes have the right types and levels of controls built in?

Source: 9/02 Board Member special issue

Wednesday, March 28, 2007

Bottom Line Board Accountability Actions

What are some of the specific steps that boards can take to assure accountability? Some of the more workable and appropriate recommendations I have found in answer to that question appeared in a 2002 special edition of Board Member magazine.

Among the more critical recommendations offered by various authors in that volume are:

Comply with the requirements of Internal Revenue Service Form 990. Make sure that you are doing everything possible to ensure compliance with these federal regulations.

Draft clear policies on critical areas, such as conflict of interest, fund-raising, and client protection.

Monitor executive compensation, to ensure that there is an appropriate balance between fair recognition of individual work and stewardship of organizational resources.

Adopt a code of ethics. Such a code should articulate broad ethical principles and the values underlying them. It should be the foundation for everything the organization does. Independent Sector offers a Model Code that you may find useful.

Commit to diverse board membership. Bringing to the leadership table multiple perspectives and backgrounds helps to ensure that decisions are made taking into consideration a range of considerations.

Next time, I’ll share some key finance questions that boards should ask.

Monday, March 26, 2007

The Board's Accountability Responsibility

Pressure for accountability is especially strong in the nonprofit sector, which cannot exist without public trust and donor/funder confidence.

Accountability is an organization-wide responsibility, beginning with the board of directors. The board sets the tone, the board defines policies, and the board ultimately assumes responsibility for making sure that all of this happens.

To be honest, it was probably five or six years into my own board service that I even began to grasp the true gravity of the job. Understanding the depth of that responsibility has come over time, and sometimes “the hard way.” Board service is not to be taken lightly. Unfortunately, I believe many enter into the commitment without a clear understanding of exactly what it requires. I also believe well meaning people simply don't know the questions to ask before accepting a board position.

Certain aspects have received attention over the years, but a holistic approach to defining accountability is somewhat new. Fortunately, IF they know they need to be concerned about these issues, today's boards have a growing pool of resources available.

Financial accountability is a significant concern (or should be) for a nonprofit board. It's also one of the most terrifying for many members. Thinking over my own board experiences, the one piece of advice I'd take to heart - and share with others - is this: ask questions. Do everything you can to understand the organization's budget and to understand, and demand, regular reports of its financial status. If those reports do not meet your information needs, or if they are confusing, request a different system. As a board member, you not only have the right to fully understand the program's financial health. You have the responsibility to do so.

Friday, March 23, 2007

Conflict of Interest: More than Policy

As I was preparing to launch a brief series on board accountability, Nonprofit Quarterly released a teaser for its next issue, featuring an article on a topic related to those future posts: conflict of interest.

Written by Mel Gill, this article offered a thought provoking way of framing conflict of interest that should prove valuable to any nonprofit board. Today, I’d like to share that article with you, and invite your comments on it. Access “Now You See It, Now You Don’t: Conflict of Interest Demands More than Just a Policy” here.

Wednesday, March 21, 2007

Joining a Board – Some Questions to Ask

Suppose the telephone rings one day, with an invitation to join a nonprofit board. Your friend on the other end of the line is persuasive, and the offer sounds enticing. Do you leap at the chance and say yes?

As tempting as that may be, it’s a good idea to stop long enough to ask the recruiter – and yourself – some questions to determine whether the assignment and your interests are a good fit for everyone.

Some questions I would ask in that situation:

Do I support the organization’s mission? That’s question one. If the answer is no, there is no need to proceed. Hopefully, you are already quite familiar with the organization and its mission. Better yet, you’re downright enthusiastic about its work. But enthusiasm can grow. At minimum, you should be able to say you generally support what the nonprofit is working to accomplish.

What is expected of board members? Every board has certain essential governance responsibilities. How they go about accomplishing them, and what is expected above and beyond that bottom line will vary from group to group. How often do they meet, and when? What are the roles and focus areas of board committees? Are board members expected to be involved in fund-raising? What are the expectations of board members’ own giving? How do they describe the working environment? The leadership style? Be frank in asking yourself: am I able to meet those responsibilities, and can I thrive in this environment?

In what specific ways can I contribute? Is there a place for your skills and interests in service to the organization? Are there opportunities to develop new skills through governance work? How will the organization be stronger at the end of your term?

What kinds of support exist for board members? Ask about orientation for new members and opportunities for continuing education. Is there staff support for board work, or is the governing body expected to be fairly self sufficient? Is there a foundation for board success?

You may have other questions about the specific invitation to serve before you are ready to offer an answer. These questions, however, will give you a basic sense of whether or not that offer is one in which you can be effective and truly make a contribution.

What questions would you add to that list? Please add a comment and share your thoughts.

Monday, March 19, 2007

Community Board Development – A Discussion

Today, I present the Laramie Board Learning Project (LBLP) concept to the United Way of Albany County board and agencies. My goal in making this group presentation extends beyond sharing the idea: I hope to gauge their interest in community-level board development and initiate a conversation about the idea.

What I propose emerged from a board learning needs assessment conducted last fall (see the blog archives, Feb. 10-21 entries, for details on the results). Members of eight participating boards described using a range of sources – human, print and electronic – in their personal learning. They described a willingness to incorporate similar breadth in their board learning. The Laramie Board Learning Project, beginning with this blog, is an attempt to begin providing that community capacity building.

I welcome their feedback in any form they care to share it. But I also will suggest that they visit this blog and share their thoughts in the comments section. If you’re a member of the United Way board or its agencies (or are otherwise interested in what might develop in our community), please click on the “X comments” link at the end of this entry and share your thoughts. Then visit again, to read and respond to what others are thinking.

Friday, March 16, 2007

Board Member Motivations – Emerging Research

My interest in volunteer motivation is expanding, in part, because understanding individual reasons for board service is one part of the question driving my dissertation research.

In the last two entries, we considered frameworks for describing volunteer service generally. Today, I describe on a research-driven scale developed by Canadian scholars Sue Inglis and Shirley Cleave. They reported their findings in a fall 2006 article, published in the journal, Nonprofit Management & Leadership.

The issue arrived in my mailbox as I was starting to think about the ways in which individual board member motivations might shape their participation in governance work and how they might influence their motivation to learn within the context of their responsibilities. I’m also considering how this might be useful in developing any community-level board development initiatives. (For more information on that effort, please visit the blog archives and read the Feb. 10-21 entries.)

Inglis and Cleave’s research yielded six categories of volunteer board motivations:

Enhancement of Self-Worth: “attitudes and behaviors that benefit the individuals” (p. 93).

Learning through Community: “the individual’s growth through learning new skills, learning about the community, developing strengths, and making contacts” (p. 94).

Helping the Community: “(W)orking to help make a difference in the community” (p. 95). This was the strongest of the six components.

Developing Individual Relationships: social relationships, emphasizing “the personal and individual level and on the relations one builds with others” (p. 95).

Unique Contributions to the Board: “skills, expertise, and different perspectives that are brought to the board…what individuals perceive they bring to the board and how they might be able to see things differently and make a personal difference to the challenges faced by the organization...Worthy of consideration is how these types of attitudes and motivations can be emphasized in various aspects of the board’s work” (p. 95).

Self-Healing: “(H)ow individuals may be interested in volunteering as a way of dealing positively and proactively with deeply felt personal needs and problems of everyday life” (p. 96). This one was the weakest of the six components.

It would be interesting to do our own version of this survey, to see what motivates Laramie’s nonprofit leaders. This could be useful in both recruitment efforts and in developing board learning initiatives. As always, I am interested in your thoughts about how we might use this information in ways that benefit our community.

Wednesday, March 14, 2007

Motivating Volunteers – Board and Otherwise

(Blogger’s note: Readers of my last entry experienced my first blog ‘oops:’ I posted part two of a brief series on volunteer motivations prematurely. Today’s entry is part one. I trust that my first little blogger’s break won’t be my last – and hope that you’ll keep reading. I promise interesting ideas and resources, whether or not they’re shared in the order I intended!)

What motivators drive volunteers to nonprofit service? Through there are different approaches to answering this question, two frameworks in particular always make sense to me. I introduced one of those frameworks in my last post. Today, I’d like to share another way of thinking about the factors driving volunteer service.

This model features four primary motivations:

Altruistic: Volunteering provides the opportunity to serve others, make a difference

Experiential:
Volunteering offers the chance to either learn new skills or practice existing skills

Social:
Volunteering provides opportunities to interact with (and have fun with) others who share common interests or values

Survival:
Some volunteer roles offer the satisfaction of helping to perpetuate the organization (e.g., fund-raising, policy making)

I’ve been drawn to different volunteer experiences for one of more of each of these motivators. The altruistic motivation probably represents my strongest drive to serve; I volunteer, first, to act on my values. When I think about the occasional bad fits, virtually all involve experiences that were the bigger stretches from my core interests and values. Volunteer experiences have both given me opportunities to develop skills I never knew I needed (e.g., crisis intervention and victim advocacy) and give specifically of my existing talents (e.g., public relations). I thrive as a volunteer when I can interact with people who share my interests and values, particularly when they know how to have fun acting on them. And, I must be honest, one of the reasons I gravitate toward board work for the chance to exercise leadership skills and help perpetuate a strong and vital organization.

While this framework was presented as applicable to volunteers generally, it certainly offers a useful way to think about what drives individuals to board service specifically. Actually, I’ve personally experienced all of these motivators as a board member. Did you recognize yourself anywhere on the list? How does board service fill those needs?

Monday, March 12, 2007

Volunteer Motivations – Another View

Today, I’ll introduce another way to think about motivations for volunteerism. Overlaps with the framework I presented in my last entry will be clear; the terminology used may suggest a slightly different emphasis. As you read each description, please think about the potential fit to board service specifically.

Achievement: Performance counts; accomplishing goals is a driving force
Affiliation: Volunteer service has value in the relationships it creates and nurtures
Power: Volunteerism provides a chance to make an impact/shape the future.

Given that altruism on the previous list is a particularly strong personal motivator, I find myself focusing first on the power motivation here. One thing I find amazing: the tendency for so many who encounter this framework to equate “power” in this setting with common definitions that focus on “power-over” or “power-to-control” or even “power-to-abuse.” Even when I share no more than the description I provided here, “power” tends to take on meanings bordering on menacing.

While the tendency among audiences I’ve encountered has been to dismiss this framing in favor of the previous model, I believe they both have value as ways to describe the reasons people come to volunteer work generally and board work specifically. I always ask those audiences to remain open about the potential for each to describe and anticipate those factors that drive us to serve.

I’m wondering: what are your thoughts about the common resistance to this way of thinking about volunteer motivations, particularly as it might apply to board service? How might it be used effectively to help us think about motivations and the ways in which we draw upon them? Please comment, by clicking on the “comments” link at the end of this entry.

Friday, March 9, 2007

Governance - The Expressive Dimension

As I mentioned in my last entry, I’m on the board of a new nonprofit in Laramie. Over the past several months, we’ve been immersed in critical work. We’re laying the foundation for what we trust will be a healthy, sustainable organization that will serve the community in many important ways. It’s an exciting time and a rare opportunity to participate in building an agency from the ground up.

So why am I feeling so fatigued?

Recently, I ran across a January/February 2005 Nonprofit World article from a long-admired author, titled Putting the Expressive Dimension to Work. Years ago, I encountered a book by David Mason on the topic. His message resonated with me, because it acknowledged the value of my strongest personal motivations for volunteer service: the expressive element of nonprofit life.

Mason describes two dimensions of all organizations, including nonprofits:

The instrumental: “behavior that leads to a concrete, measurable goal”
The expressive: “action for direct, intangible gratification rather than for a defined goal” (p. 23)

Humans require that expressive element in their lives, Mason says, and nonprofits are particularly well suited to meet those needs. In my case, expression has come via immersion in the work of human service nonprofits, where there are many opportunities to make a difference in the lives of others.

Mason’s thesis is that the current nonprofit sector environment appropriately focuses on the instrumental, ensuring transparency and accountability. While this is essential work, he says, the sector risks ignoring the expressive component.

“The swing of the pendulum has helped the sector by bringing some positive business practices, but it’s now time for the pendulum to move toward the center again, before it ceases to be a pendulum and becomes a wrecking ball,” Mason says (p. 24). “We need to recognize nonprofit organizations’ relationship to people’s expressive needs.”

I love this description of the way in which nonprofits fill that role:

“As organizations that emphasize human values above profit, nonprofits elicit great commitment and loyalty. They are communities where individuals can function without economic pressures and reach goals consistent with their personal agendas. Nonprofits are incubators for innovation without utilitarian constraints. They’re where individuals are appreciated for who they are. In short, they are our primary expressive arenas.” (p. 25)

How does this relate to that fatigue I’m feeling? As a member of our organization’s board, I must attend to the essential instrumental aspects of ensuring its success. But I also long for the chance to really immerse myself in the expressive elements, realizing the vision that drew me to the commitment a year ago. While I’m not sure we’ve articulated it this way, I believe that our board is feeling the need to balance time spent developing personnel policies and financial reporting processes with the larger purpose to which we all gravitated. That balance begins later this month, at a next-steps retreat.

Wednesday, March 7, 2007

Assessing Board Performance

How well is our board meeting its governance and performance goals?

That question has been on my mind a lot lately. I’m part of a relatively new board, in the midst of assessing our efforts to advance the organizational mission. Are we focused on our essential responsibilities? Are we good stewards of organizational resources? Is our board structure conducive to effective work? Can we articulate our organizational mission to others? Do we feel comfortable in our jobs?

Taking time to evaluate your board’s performance is important, to have a sense of your strengths as a leadership group as well as the areas where growth is needed. Regular, formal self-assessment – and the board and individual levels – is one critical step. Our board chose to adapt a self-assessment tool from Jean Block Consulting (go to http://www.jblockinc.com, select the November 2002 newsletter issue). One of the reasons I like this format: it asks board members to reflect on not only the group’s efforts but our individual progress as well.

Some of us on the board feel like we’re playing dress-up in grandma's closet – like grandma's dresses, the assessment feels way too big for us right now, but we know we’ll eventually grow into the leadership role described. We’ll have more items in the “needs improvement” column than we would like this first time around, but that is okay. This group is committed to growing and expanding our service to the organization and the community.

Self-assessment need not be formal, though. Take some time periodically to stop and reflect as a group. Close your next meeting with a quick check-in: what did we accomplish this time? Did we use our time together effectively? What information did we need to make more informed choices?

Don’t forget to spend time frankly evaluating your own participation and identifying ways to improve your effectiveness. Effective boards lead effective nonprofits.

Monday, March 5, 2007

Board Roles & Responsibilities – Round 5

We wrap up our look at the 10 basic board responsibilities, with an examination of accountability concerns and recruitment and orientation of new members.

Responsibility 9: Ensure legal and ethical integrity and maintain accountability. Certainly, one could make a convincing argument for the notion that ALL organizations should strive for the highest ethical standards in daily business. But that need probably is heightened in the nonprofit sector, where credibility and public good will are essential. For the most part, we feel we can trust our nonprofits to act in the public interest. As a result, nonprofits enjoy relative freedom in their quest to serve the public good. But that freedom has limits. If your organization loses that public trust, if it loses credibility with volunteers, donors, policymakers and other key stakeholders, you have truly have nothing. That fact is the bottom line answer to the “who cares” question of ethics.

A great starting point for understanding accountability issues is the Independent Sector (http://www.independentsector.org/issues/accountability.html). On that site, you will find a link to a 2002 publication, Obedience to the Unenforceable, which emerged from a broad discussion facilitated by IS’s Committee on Values and Ethics. One of the more important ideas that emerged for me as I read that report is the list of “essential values and ethical behaviors” that all nonprofits should share:

• “Commitment beyond self
• “Obedience of the laws
• “Commitment beyond the law
• “Commitment to the public good
• “Respect for the wroth and dignity of individuals
• “Tolerance, diversity, and social justice
• “Accountability to the public
• “Openness and honesty and
• “Responsible stewardship of resources” (p. 9).

The committee recommended a series of five foundational steps for all nonprofit organizations:

• “Adopt an organizational creed of ethical practices
• “Conduct an ethics audit or self-evaluation every year
• “Subscribe to and abide by a set of codes or standards
• “Involve all of their constituencies in the process and
• “Infuse the process and the documents into the culture of the total organization” (p. 9).

Responsibility 10: Recruit and orient new board members and assess board performance. When you identify a good match between board need and individual qualities, it’s time to invite a prospect to join your board. An invitation should include a description of expectations. Don’t minimize your requirements – it’s better to provide an accurate picture and be turned down than to bring on board someone who is unable to fulfill responsibilities later on.

All new members must receive a thorough orientation to both the organization and to the board. Some of this information can be shared in a fairly straightforward way (e.g., handbooks, articles, web resources) that the new member can peruse at his/her leisure. Other aspects should include one-on-one contact with board and organizational leadership.

Critical to the orientation process is early immersion in your organizational culture. Immediately assign new board members to active committees that use their interests and talents. Consider assigning new members to a mentor or “board buddy,” for the first six months to one year.

Friday, March 2, 2007

Board Roles & Responsibilities – Round 4

Today, we ponder the board’s responsibility for programming decisions and members’ role as organizational ambassadors.

Responsibility 7: Determine, monitor, and strengthen the organization’s programs and services. This is my favorite part of board service, because this is the heart of governance. The process begins with mission-driven decisions about which programs and services to offer. Note the “mission-driven” reference. The board should be diligent in ensuring that everything the organization does advances its mission in some way. Once those decisions are made, the board should work together with the executive director to ensure that processes are in place to monitor and evaluate programs.

Some potential exists for confusion about board vs. staff roles in program management. The specific mix of who-does-what may differ from one organization to the next. It is important to clearly identify the individuals or groups responsible for each program or program component. This should take place in planning – goals should include both clear assignment of responsibility along with a target time frame. It also plays a role in evaluation processes. Whatever the right fit might be for your organization, it is important that defining and providing highest-quality programming that advances your mission become the bottom line.

Responsibility 8: Enhance the organization’s public standing. Board members act as the organization’s ambassadors to its key stakeholder groups: the community, current and potential donors, opinion leaders, policy makers. As community leaders themselves, they have access to, and high credibility with, personal and professional peer groups. Board members should be willing to regularly communicate and advocate for the organization with those groups, raising awareness and building support for its mission.

I recently facilitated a planning session for a local nonprofit where this role was spotlighted. It was interesting – and heartening – to see this group take a proactive approach to speaking out on behalf of the organization and nurturing stakeholder relationships. They came up with an interesting balance of goals related to specific issues of today while looking to the future. They identified both formal ways for board members to promote their organization and informal opportunities to raise awareness in their daily activities as civic leaders.

How refreshing that was to witness! If board members succeed at meeting those goals, the community will have a stronger perspective of the evolution of the organization, its place in the life of our town and the importance of ensuring that it remain a viable resource.

Thursday, March 1, 2007

Board Roles & Responsibilities – Round 3

Resources – obtaining them and managing them effectively -- are the focus of our next two board roles.

Responsibility 5: Ensure adequate resources. Whatever its direct contribution to this process, the board bears ultimate responsibility for making sure that the organization has the resources it needs to operate. Most boards will delegate all or part of its fund-raising responsibilities to staff and/or volunteers. Management of that process probably falls on the shoulders of the executive director. But setting fund-raising goals – and ensuring that they are achieved – is the board’s responsibility.

In most cases, a board should play a more active role in the process. At minimum, all board members should make a financial contribution to the organization. Many funders now expect 100 percent board participation as an award criterion. In other situations, the board may play a more active role in achieving the fund-raising goals that it sets. Board members can play a pivotal role in identifying donor prospects, introduce those entities to the organization and event make the ask themselves.

Responsibility 6: Manage resources effectively. Obtaining funds is one part of the process. Ensuring that those resources are used wisely, toward fulfillment of the receiving organization’s mission, is a second, equally important step. The board’s financial management responsibilities include developing and monitoring an annual budget, establishing and upholding cash management controls, ordering an annual audit, purchasing liability insurance, and overseeing investments and reserves.