1. “The Governance Difference: How Boards Can Add Value in Challenging Times” Molly Polidoroff © 2009. Not to be distributed or reproduced without the permission of CEN. The Nonprofit Forum: Making an Impact in Today’s Realities March 11, 2009 Presented By:

2. © 2009. Not to be distributed or reproduced without the permission of CEN. Why is this important? > There are 1.6 million nonprofit organizations in the United States and they provide a vital role in improving the quality of life in our communities. > Nonprofit boards must understand and fulfill their governance responsibilities in order to ensure that these organizations have the resources, leadership and oversight necessary to fulfill their missions. > Highly effective organizations with the greatest mission impact require high-performance boards.

3. © 2009. Not to be distributed or reproduced without the permission of CEN. Why now more than ever … and what’s different? > The world around us has changed dramatically in recent months. > Business as usual is not an option. Boards need to be more flexible, agile, and strategic. and …… > These are really tough times for nonprofit leaders!

6. © 2009. Not to be distributed or reproduced without the permission of CEN. “The Governance Difference: How Boards Can Add Value in Challenging Times” Purpose of Today’s Session To gain an understanding of what it takes to have an effective board, and what characteristics are most critical to success in these challenging times To gain insights about specific practices that can benefit your organization To share experiences with colleagues and maintain perspective

7. © 2009. Not to be distributed or reproduced without the permission of CEN. EXERCISE: A Silent Start Take a moment to reflect upon what your Board is doing in response to the current economic challenges … i.e., what are they doing differently? Is it making a difference?

8. © 2009. Not to be distributed or reproduced without the permission of CEN. Dr. Richard Chait Harvard University “Effective governance by a board of trustees is a relatively rare and unnatural act.”

10. © 2009. Not to be distributed or reproduced without the permission of CEN. There are solutions … > “There is a growing acceptance of the notion that good governance makes a difference in organizational effectiveness.” (BoardSource*) > “In response to the public’s increased interest, the volume and quality of readily available information on good governance has grown enormously.” (BoardSource*) * established in 1988, this organization is recognized as the premiere resource on nonprofit governance

11. © 2009. Not to be distributed or reproduced without the permission of CEN. Some underlying assumptions … #1 – Every organization is unique and there is no “one- size fits all” model of governance. There are, however, certain fundamental responsibilities common to nearly all boards. #2 – Highly effective organizations with the greatest mission impact require high-performance boards. There are established practices that are known to foster high-performing boards and effective organizations. #3 – The chief executive/board partnership is critical to the success of the organization. It is important to understand the respective roles and responsibilities, and how leadership differs from management.

12. © 2009. Not to be distributed or reproduced without the permission of CEN. TEN BASIC RESPONSIBILITIES OF NONPROFIT BOARDS (BoardSource) #1 –Determine mission and purposes #2 – Select the chief executive #3 – Support and evaluate the chief executive #4 – Ensure effective planning #5 – Monitor and strengthen programs and services #6 – Ensure adequate financial resources #7 – Protect assets and provide financial oversight #8 – Build a competent board #9 – Ensure legal and ethical integrity #10 – Enhance the organization’s public standing

13. © 2009. Not to be distributed or reproduced without the permission of CEN. GOVERNANCE BEST PRACTICES Dr. Richard Chait, Harvard University Focus (Allocating Time & Attention)Best Practice #1 Structure (Organizing to Do the Work)Best Practice #2 Making Meetings MeaningfulBest Practice #3 Learning (Creating a Community of Practice)Best Practice #4 Deliberating (Promoting Robust Discussion)Best Practice #5 Cohesive (Building a Team)Best Practice #6 Accountability (Ensuring Diligence)Best Practice #7

14. © 2009. Not to be distributed or reproduced without the permission of CEN. TEN BASIC RESPONSIBILITIES OF NONPROFIT BOARDS (BoardSource) #1 –Determine mission and purposes #2 – Select the chief executive #3 – Support and evaluate the chief executive #4 – Ensure effective planning #5 – Monitor and strengthen programs and services #6 – Ensure adequate financial resources #7 – Protect assets and provide financial oversight #8 – Build a competent board #9 – Ensure legal and ethical integrity #10 – Enhance the organization’s public standing

15. © 2009. Not to be distributed or reproduced without the permission of CEN. TEN BASIC RESPONSIBILITIES OF NONPROFIT BOARDS (BoardSource) #1 –Determine mission and purposes The Board is responsible for determining the mission of the organization and for ensuring that it is periodically reviewed. There should be an understanding of whom the organization serves and how, and what distinguishes the organization in the eyes of it’s stakeholders and funders. A commitment to this mission is what drives the board’s and management’s priorities.

16. © 2009. Not to be distributed or reproduced without the permission of CEN. TEN BASIC RESPONSIBILITIES OF NONPROFIT BOARDS (BoardSource) #1 –Determine mission and purposes Board actions in challenging times: > Ask the question “how has the economy affected our ability to serve our mission and what should we do differently in light of this?” > Think strategically, revisit the mission (if necessary), and actively engage in dialogues with stakeholders to ensure your relevance and competitiveness in the changing market.

17. © 2009. Not to be distributed or reproduced without the permission of CEN. TEN BASIC RESPONSIBILITIES OF NONPROFIT BOARDS (BoardSource) #3 – Support and evaluate the chief executive The success of the chief executive is directly linked to the board’s commitment to do its part to sustain an effective relationship. The board should provide support (particularly in challenging times), candid and constructive feedback, acknowledgment of accomplishments, appropriate compensation and benefits, and the professional development resources necessary to enable success. The board chairman has a particular responsibility for frequent communication and for intervening with board members who abuse their positions.

19. © 2009. Not to be distributed or reproduced without the permission of CEN. TEN BASIC RESPONSIBILITIES OF NONPROFIT BOARDS (BoardSource) #3 – Support and evaluate the chief executive Board actions in challenging times: > Increase communication with, and support of, the chief executive. > Revisit operating goals and performance expectations in light of the current economic climate, and identify “mid-course” corrections if needed.

20. © 2009. Not to be distributed or reproduced without the permission of CEN. TEN BASIC RESPONSIBILITIES OF NONPROFIT BOARDS (BoardSource) #6 – Ensure adequate financial resources IT IS A FUNDAMENTAL STEWARDSHIP RESPONSIBILITY OF THE BOARD TO ENSURE THAT THE ORGANIZATION HAS THE RESOURCES NECESSARY TO FULFILL IT’S MISSION !!!!!! All boards need to be “fundraising boards”.

21. © 2009. Not to be distributed or reproduced without the permission of CEN. TEN BASIC RESPONSIBILITIES OF NONPROFIT BOARDS (BoardSource) #6 – Ensure adequate financial resources Board actions in challenging times: > Reforecast your budget in light of the recent economic downturn. Develop contingency plans to ensure that the organization has the resources necessary to fulfill the mission as the situation continues to change. > Engage all board members in all aspects of fund-raising … i.e., individual giving, stewardship with existing donors, and cultivating new funders.

22. © 2009. Not to be distributed or reproduced without the permission of CEN. TEN BASIC RESPONSIBILITIES OF NONPROFIT BOARDS (BoardSource) #8 – Build a competent board There should be a mechanism in place (ideally, a Governance Committee) that continuously assesses what is needed in terms of board composition, recruits and orients new board members, sets high standards and expectations, evaluates individual board member performance, provides opportunities for continuing board education, and ensures a periodic self-assessment of the board’s overall governance effectiveness.

23. © 2009. Not to be distributed or reproduced without the permission of CEN. TEN BASIC RESPONSIBILITIES OF NONPROFIT BOARDS (BoardSource) #8 – Build a competent board THREE KEY PRINCIPLES …. > Every organization’s governing board will only be as effective as its individual members. > Members of governing boards will respond only to the level of expectation persistently articulated to them by the organization and its leaders. > A well-balanced and functioning board depends on the sustained hard work of the governance committee. AN IMPORTANT CAVEAT …. > Avoid “dysfunctional politeness” … and ask the question “can you teach old dogs new tricks, or do you need new dogs?”

24. © 2009. Not to be distributed or reproduced without the permission of CEN. TEN BASIC RESPONSIBILITIES OF NONPROFIT BOARDS (BoardSource) #8 – Build a competent board Board actions in challenging times: > Reassess what you need in a board and revisit the expectations that you have set for board members. > Perform assessments of individual board members as well as the board as a whole. > Establish board goals and develop a board member engagement plan.

25. © 2009. Not to be distributed or reproduced without the permission of CEN. TEN BASIC RESPONSIBILITIES OF NONPROFIT BOARDS (BoardSource) #10 – Enhance the organization’s public standing Board members are the organization’s “ambassadors” and advocates. They should be highly knowledgeable about the organization and capable of positively promoting it in the community. They should also be willing to leverage their networks of influence on behalf of the organization.

26. © 2009. Not to be distributed or reproduced without the permission of CEN. TEN BASIC RESPONSIBILITIES OF NONPROFIT BOARDS (BoardSource) #10 – Enhance the organization’s public standing Board actions in challenging times: > Develop organizational “talking points” to be used to communicate the organization’s value and effectiveness in the community. > Have board members identify their own individual “spheres of influence” and how these networks can be leveraged for the benefit of the organization.

27. © 2009. Not to be distributed or reproduced without the permission of CEN. CHAIT’s BEST PRACTICES… FOCUS#1 STRUCTURE#2 Do we know what matters most and are we positioned to address it? MEANINGFUL MEETINGS #3 LEARNING #4 DELIBERATING #5 COHESIVE #6 Are we working as effectively as possible in doing our work? ACCOUNTABILITY #7 How do we know we are doing our best at making a difference?

28. © 2009. Not to be distributed or reproduced without the permission of CEN. PRACTICAL APPLICATIONS Do we know what matters most and are we positioned to address it? Are we being as effective as possible in doing our work?

29. © 2009. Not to be distributed or reproduced without the permission of CEN. What matters most … Examples of practices: #1 – Frame catalytic or generative questions to be asked at each Board meeting. #2 – Schedule a CEO (or Board) discussion on “what keeps you awake at night?” #3 – Create an organizational dashboard.

31. © 2009. Not to be distributed or reproduced without the permission of CEN. EXAMPLE PRACTICE: CEN DASHBOARD Sample Program Quality Indicators % Program Quality Needs ActionMonitor OK/ Exceeds Plan Improved Effectiveness Future Attendance Comments: Our goal is to have 85% of survey respondents indicate that they agree/strongly agree that the program attendance will improve their effectiveness as leaders and that they are likely to attend future CEN programs.

32. © 2009. Not to be distributed or reproduced without the permission of CEN. What matters most …AND are we positioned to address it? Examples of practices: #1 – Utilize strategy-driven task forces instead of standing committees to address organizational goals and priorities … i.e., more adhocracy and less bureaucracy. #2 – Establish and revisit Board goals to ensure that they are consistent with current organizational priorities. #3 – Develop a Board composition AND engagement plan.

33. © 2009. Not to be distributed or reproduced without the permission of CEN. EXERCISE: What Matters Most Take a moment to reflect upon what matters most to your organization, and develop an agenda item and/or frame a catalytic question that will focus your Board on this issue at their next meeting. What key structural changes to your Board need to happen in order to ensure that they are positioned to address this? What are the biggest hurdles to accomplishing this?

34. © 2009. Not to be distributed or reproduced without the permission of CEN. PRACTICAL APPLICATIONS Do we know what matters most and are we positioned to address it? Are we being as effective as possible in doing our work?

35. “They can’t find their hidden agenda.”

36. © 2009. Not to be distributed or reproduced without the permission of CEN. Working effectively … Examples of practices: #1 – Plan meetings with thematic agendas and structure them as mini-retreats rather than established “rituals”. #2 – Utilize consent agendas and written reports to expedite routine business matters and enable time and energy for catalytic questions and discussions. #3 – Schedule educational sessions focused on the operations of the organization, the industry, and what your stakeholders value. #4 – Incorporate a variety of meeting techniques such as silent starts, one-minute memos, etc.

37. © 2009. Not to be distributed or reproduced without the permission of CEN. EXERCISE: Working Effectively Identify 2-3 techniques or practices that you can immediately put in place to make your Board meetings more effective.

38. © 2009. Not to be distributed or reproduced without the permission of CEN. A Summary Checklist …. #1 – Assess the impact of the current economic downturn on your organization. #2 – Revisit the mission, with input from stakeholders. #3 – Reforecast the budget, and develop contingency plans. #4 - Revisit organizational, executive and board goals, making whatever mid-course corrections are necessary. #5 – Increase communication to and from the chief executive and the board.

39. © 2009. Not to be distributed or reproduced without the permission of CEN. A Summary Checklist (continued) #6 – Focus on what matters most, asking catalytic questions, scheduling a routine “CEO moment”, and creating a dashboard. #7 – Create and utilize strategy-driven task forces instead of standing committees to address organizational imperatives. #8 – Employ creative meeting techniques (such as silent starts, one-minute memos, consent agendas, mini-retreats) to foster a more robust engagement of board members and enhanced quality of discussion.

40. © 2009. Not to be distributed or reproduced without the permission of CEN. A Summary Checklist (continued) #9 – Engage all board members in fund-raising. #10 – Reassess board composition and expectations of individual members. #11 – Evaluate the engagement of individual members and the collective performance of the board as a whole. #12 – Develop organizational “talking points”. #13 – Leverage the board’s networks of influence. #14 – Maintain perspective and purpose.

41. © 2009. Not to be distributed or reproduced without the permission of CEN. Advice for the chief executive … #1 – Communicate openly and frequently with your Board. #2 – Aggressively assess the changes in the environment. Don’t be too internally focused. #3 – Be agile and respond to the changing environment, but be thoughtful and deliberative in your actions. #4 – Take a leadership role with your Board. #5 – Stay attuned to your own level of personal resiliency and sustainability.

43. © 2009. Not to be distributed or reproduced without the permission of CEN. Advice for boards … #1 – Communicate openly and frequently with your chief executive. #2 – Work in partnership with your chief executive and staff. #3 – Rekindle your passion for the mission of the organization and determine where you, individually and collectively as board members, can add value in furthering this mission.

44. © 2009. Not to be distributed or reproduced without the permission of CEN. Advice for boards (continued) … #4 – Devote the time and energy required to fully understand the organization, the industry, the external environment, the impact of the current economic climate, the options and alternative responses available to the organization, and what’s needed to successfully fulfill the mission. #5 – Be willing to conduct board business differently … be flexible, stay focused on what matters most, be more strategic and creative, become more engaged and contribute in positive ways.

46. © 2009. Not to be distributed or reproduced without the permission of CEN. CLOSING Final comments and questions Thank you! For further information: Molly Polidoroff Executive Director, CEN 408.945.4501 molly@cen.org