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A recent article from the Philanthropy Journal lays out four critical functions that nonprofit boards must attend to in periods of financial crisis:
- Revisit the investment policy
- Update the budget
- Communicate with stakeholders
- Build the right board
Last semester, Melissa Stone blogged about the fourth point: building the "right" board. She argued for a more critical discussion of what makes a "good" board. Stone notes that some generally accepted best practices have no foundation in research, and, like the Philanthropy Journal article, warns against recruiting Board members along only one dimension--e.g. fundraising skill or name recognition.
Stone: "...questions of organizational, program, and managerial effectiveness (broader than simply "results") must be addressed in a nonprofit governance system. And, they are very difficult to answer. We are getting there in terms of research but we have a long way to go."
Organizations need the "right" board now more than ever. Under pressure to do more with less, measure and demonstrate effectiveness, remain centered on mission, organizations may be tempted to recruit their way out of a relatively short-term financial problem (though dissolution is decidedly more permanent...). The current crisis may also expose a structural obstacle that threatens an organization's long-term survival--in this case, a myopic recruitment strategy seems even more ill-advised.
Building a board for the long term requires wrestling with Stone's question:
Aside from meeting the legal requirement that nonprofits (and for-profit corporations) have a board -- what are they good for?
That's an open question, I think. A related question: what qualifications should a board member carry? Clearly, fervor for the mission is necessary but insufficient qualification for a board in sum. Likewise, deep pockets. How best can an organization take advantage of differentiated skills and interests without pigeonholing board members or devaluing the holistic fiduciary and strategic responsibilities of a board?
Again, via Philanthropy Journal:
Nonprofit boards historically have been made up of major donors or potential major donors, along with and cultural and social leaders, says [King] McGlaughon. "In today's world, boards need to be made up of experts," he says. "While there's room for all of these, it's important to have people with legal and technical expertise."
Clearly financial literacy is important, though one shouldn't assume it to be the exclusive domain of accountants and bankers. With regard to a board finance committee, Nonprofits Assistance Fund has quality resources re: recruiting and communicating for maximum effectiveness:
Please share your crisis-time board challenges, success stories, and advice in the comments.