Monday, February 20, 2012

Accountability without (paralyzing) fear

How do we bring home the awesomeness of the nonprofit board's accountability charge without panicking members into paralysis?

If there is one takeaway that I hope that students in my "Nonprofit Management and Leadership" class will remember from last week's too-short unit on accountability, it would be understanding the breadth and depth of that function, and reinforcing the importance of creating a board culture where transparency and the highest of ethical standards embed everything it does.

Experience tells me that the typical board knows it has essential responsibilities when it comes to ensuring that the organization is financially sound. Members at least know a balanced budget is the optimal goal. They probably know that they need to be careful to use restricted funds as the donor has designated. They'd better know that the IRS has some pretty specific requirements that they must fulfill, via the organization's 990.

But beyond that, I suspect that the accountability challenge is largely a mystery. So, how to introduce a board to that larger role? That was the question I posed to my students.

I had to chuckle at the theme of some of the early responses: Scare them. Tell them stories about other boards who were asleep at the wheel and got caught. That'll bring it home to them. I must admit (and I did) that there is merit in illustrating the consequences of failure in this area. I also know that stories carry great power in learning. But because part of my job is to stretch our collective thinking in different ways, and because I have experienced the kind of paralysis that can set in with too many of those stories (thanks to a fellow board member, years ago, who had a "how we can be sued..." tale for every action we took), I suggested a different approach. What if, instead of relying primarily on fear, we framed accountability as the noble legal and moral responsibility that it is and we linked that to the higher aspirations that drew them to service?

Obviously, this isn't an either/or proposition. Board members benefit from a solid understanding of both the higher leadership roles and the cautionary tales. The role of the latter should be fairly straightforward. What would happen if we spent at least as much energy educating and challenging our boards to rise to the highest level of, well, accountability for owning this governance function? I have more questions than evidence on this one. But I think there is value in posing those questions, especially since I hope you will help me think them through:

  • What if we held boards accountable for living up to their higher-level stewardship roles, helping them to see the moral and legal obligations they assumed when they  joined?
  • What if we helped them focus appropriately on governance-level accountability - avoiding micromanagment while remaining diligent in their oversight, focusing on governance-level questions with an eye toward the vision and mission horizon?
  • What if we conveyed the seriousness of this work without paralyzing them with fear?
  • What if we educate boards, and support them, in all aspects of this work - including the parts that scare them? (Stating the obvious: we fear what we don't understand - especially those financial statements.). What kind of learning needs to take place for this to happen? 

There's the bottom line in accountability - the necessary reporting to people and organizations that expect it - and there is an environment, consciously created, where all deliberations, decisions and actions are guided by organizational values of almost sacred accountability to stakeholders.

How would you convey the scope and the seriousness of a board's accountability responsibilities without paralyzing them? How would/do you create a culture of accountability in your boards? What counsel would you offer my students on this critical topic?

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