Haas alumni dynamic nonprofit boards apr30 2011


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This presentation was given to MBA Alumni of the Berkeley-Haas School of Business on April 30, 2011. The presenters were Dr. Nora Silver, Director and Adjunct Professor of the Center for Nonprofit and Public Leadership, and Paul Jansen, Director Emeritus of the Social Sector Practice of McKinsey and Co. For more information: http://nonprofit.haas.berkeley.edu

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Haas alumni dynamic nonprofit boards apr30 2011

  1. 1. Dynamic Directors, Dynamic Nonprofit Boards<br />Haas Alumni Weekend<br />Discussion Outline<br />April, 30, 2011<br />
  2. 2. BOARD EFFECTIVENESS OFTEN ARISES AS A NONPROFIT CONCERN<br />“The motion has been made and seconded that we stick our head in the sand”<br />2<br />
  3. 3. OUR DYNAMIC AGENDA<br /><ul><li>Dynamic boards
  4. 4. What are they?
  5. 5. What do they do differently?
  6. 6. How do you create one?
  7. 7. Dynamic board members
  8. 8. Where do they come from?
  9. 9. What do they do?</li></ul>3<br />
  10. 10. BOARD SERVICE SURVEY (discussion, not presentation)<br />How many have:<br /><ul><li>Served on a nonprofit board?
  11. 11. Interested in serving?
  12. 12. Have questions about being a better board or board member</li></ul>4<br />
  13. 13. McKINSEY RESEARCH FOCUSED ON 3 MAJOR QUESTIONS<br /><ul><li>Howimportant is a high-performing board?
  14. 14. What are the characteristics of a high-performing board?
  15. 15. What are the best practices in building a high-performing board?</li></ul>5<br />
  16. 16. THE GOVERNANCE GAP<br />97% said that a high-performing board was important to a high-performing nonprofit.<br />However, only 19% said they were tapping their boards’ full potential<br />94% felt that their boards provide the appropriate level of strategic guidance, however…<br />However, only 46% thought that their directors would be able to summarize both the mission and the vision of their organizations<br />77% of respondents indicated a desire to improve board fundraising, but …<br />Just 21% set individual board member fundraising goals<br />Just 38% provided fundraising training<br />Moreover, a mere 16% reported having individual board members receive formal feedback on their performance at a regular interval<br />Source: McKinsey survey of social services organizations<br />6<br />
  17. 17. THE DYNAMIC NONPROFIT BOARD FRAMEWORK<br /> Monitor external and internal environment to highlight areas for board attention<br />Environment<br />Shape mission and strategic direction<br /> Ensure quality performance across 3 key board roles<br /> Ensure leadership and resources<br /> Develop set of enabling practices around board composition, size, structure, and processes<br />Monitor and improve performance<br />Enablers<br />7<br />
  18. 18. SHAPING THE MISSION AND STRATEGY<br />Scenario 1<br /><ul><li>Board has common understanding of the mission
  19. 19. All agree on where organization wants to be in five years
  20. 20. Staff develops strategic plan for board review
  21. 21. Plan describes specific targets and actions to achieve goals
  22. 22. Management and board agree on distinction between board-level and management-level decisions</li></ul>Shape mission and strategic direction<br /> Ensure leadership and resources<br />What’s strong or missing in this approach to the shaping role?<br />Monitor and improve performance<br />8<br />
  23. 23. ENSURING LEADERSHIP AND RESOURCES<br />Scenario 2<br /><ul><li>Board has shared belief that CEO is doing a good job despite a weak “bench” of functional managers
  24. 24. Board has some understanding of funding needs from discussions of annual budget
  25. 25. All board members support the organization financially and work with staff to introduce prospective donors
  26. 26. Directors participate in community outreach
  27. 27. Board members actively bring expertise to board discussions.</li></ul>Shape mission and strategic direction<br /> Ensure leadership and resources<br />Monitor and improve performance<br />What’s strong or missing in this approach to the leadership and resources role?<br />9<br />
  28. 28. MONITOR AND IMPROVE PERFORMANCE<br />Scenario 3<br /><ul><li>Board approves annual financial plan and monitors results quarterly
  29. 29. Board funds independent audit of financials annually and oversees regulatory compliance efforts as needed
  30. 30. Board evaluates members performance as part of bi-annual renomination process
  31. 31. Board annually assesses its own performance and uses results to inform multi-year plan to address deficiencies</li></ul>Shape mission and strategic direction<br /> Ensure leadership and resources<br />What’s strong or missing in this approach to the monitoring and improving performance role?<br /><ul><li>Monitor and improve performance</li></ul>10<br />
  32. 32. 9 RESPONSIBILITIES OF NONPROFIT BOARDS<br /><ul><li>Shape, clarify mission and vision
  33. 33. Engage actively in strategic decision making and policy decisions
  34. 34. Select, evaluate and develop CEO
  35. 35. Ensure adequate financial resources
  36. 36. Lend expertise; provide access to people
  37. 37. Enhance reputation of organization</li></ul>Shape mission and strategic direction<br />Ensure leadership and resources<br />Monitor and improve performance<br /><ul><li>Oversee financial management, ensure appropriate risk management
  38. 38. Monitor performance, ensure accountability
  39. 39. Improve board performance</li></ul>11<br />
  40. 40. ACTIVE PRIORITIZATION IS KEY TO BEING A DYNAMIC BOARD<br />Finance and risk<br />Ensure financial resources<br />Measure performance<br />Build reputation<br />High <br />Provide expertise<br />Perceived importance <br />for next 2 years<br /><ul><li> External changes
  41. 41. Internal factors</li></ul>Strategic decisions<br />Board composition<br />Low <br />Select and evaluate CEO<br />Shape mission<br />Distinctive<br />Poor<br />Performance<br /><ul><li> Self assessed
  42. 42. Capability</li></ul> Source: Board surveys<br />12<br />
  43. 43. DYNAMIC LESSONS FROM OUR RESEARCH<br /><ul><li>There are 9 clearly defined roles of a nonprofit board, with a gold standard of performance for each
  44. 44. Lots of ways boards, as entities and individuals, can help. Pick your spots carefully to allot valuable time where needed most
  45. 45. Recognize performance management as one of the nonprofit board's core roles
  46. 46. Invest significant time in board evaluation andcontinuous improvement
  47. 47. Good governance is execution, so sweat the little things: good meeting agendas/materials, open communication, having fun. </li></ul>13<br />
  48. 48. WHAT MAKES A DYNAMIC BOARD MEMBER?<br /><ul><li>Join for the right reasons
  49. 49. Understand responsibilities
  50. 50. Define a valuable role
  51. 51. Avoid the pitfalls
  52. 52. Enjoy the people, the mission and representing the institution
  53. 53. Give (or get) lots of money and leave us alone!
  54. 54. Attend and rubber stamp
  55. 55. Work, wealth or wisdom</li></ul>14<br />
  56. 56. Board composition and working arrangements<br />4 AREAS TO CONSIDER BEFORE JOINING A BOARD<br /> Board’s expectations of you<br /> Your interests<br />Stage and quality of organization<br />
  57. 57. 10 THINGS YOU SHOULD KNOW ABOUT YOUR NONPROFIT<br />Core activities, who, what, where, for how long?<br />Mission, Theory of change<br />Organization chart/profile of key leaders<br />Revenue mix/trends<br />Key cost components<br />Board composition/committees<br />Key peers/competitors<br />Other stakeholders <br />Recent events/public profile<br />Results against mission<br />16<br />
  58. 58. ACTION REQUIRED TO FULFILL LEGAL DUTIES<br /><ul><li>Be informed e.g.
  59. 59. Attend meetings regularly
  60. 60. Seek and review necessary information
  61. 61. Exercise independent judgment
  62. 62. Ask questions, rely only on judgment of dependable sources</li></ul>Duty of Care<br /><ul><li>Avoid self-dealing transactions
  63. 63. Where directors’ firm provides services or products to nonprofit
  64. 64. Make conflict known to board
  65. 65. Recuse yourself from discussion and voting
  66. 66. Encourage board to get comparative perspective (by seeking other bids)</li></ul>Duty of Loyalty<br />Duty of Obedience<br /><ul><li>Ensure decisions consistent with charitable mission
  67. 67. Oversee use of funds entrusted by public</li></ul>17<br />
  68. 68. COMMON PITFALLS FOR NONPROFIT DIRECTORS<br /><ul><li>Failing to learn the 10 things you should know about your nonprofit
  69. 69. Checking business knowledge at the boardroom door – or - assuming business perspective is the only way to look at issues
  70. 70. Confusing the role of director with the role of volunteer
  71. 71. Failing to take into account the resource and capacity constraints that limit nonprofits ability to execute all your good ideas
  72. 72. Forgetting why they wanted you in the first place</li></ul>18<br />
  73. 73. DEFINING A VALUABLE ROLE AND HAVING FUN<br /> What “business types” bring to the board? <br /> - Business skills in finance, strategy, sales and marketing<br /> - Entrepreneurial experience<br /> - Performance management mindset<br /> - Personal and corporate networks<br />19<br />
  74. 74. HOW TO BUILD YOUR GOVERNANCE KNOWLEDGE<br />Nonprofit Boards: Governance and Leadership in Nonprofit Organizations<br />Two Saturdays 9-5: <br /> October 22, November 5, 2011<br />
  75. 75. Q & A<br />21<br />