Friday, October 31, 2014

Top 10 Governance Survey Highlights

There are a few surprises among the Top 10 Highlights from the hot-off-the-press executive summary of the ECFA 3rd Annual Nonprofit Governance Survey. It’s available as a download to ECFA-accredited organizations and subscribers. (Click here.)  

Highlights include board giving, CEO succession, the gap between knowing and doing, operating reserves and measurable goals. Here are the 10:

1. Boards affirm distinctiveness of Christ-centered governance. There has been a dramatic and encouraging change in board member thinking, over 3 years, about the distinctives between “secular” board governance and “Christ-centered” board governance.

2. Strengths and spiritual gifts: more knowing than doing. While more than 95% of CEOs, board chairs and board members say it is important to leverage the God-given strengths of every board member, only about 17-21% of boards have completed a strengths assessment.  Somewhat more encouraging, 33-44% of board members say they know the spiritual gifts of their board colleagues.

3. Healthy governance: not there yet.  On the governance continuum of “Micromanagement (1) to Healthy (10),” about 35-40% of CEOs and board members rated their boards at 7 or less—but about 90% would like to be at “Healthy Governance” (8, 9 or 10) within 12-18 months.

4. In rating the three aspects of governance, fiduciary governance rated high, but generative governance rated the lowest. Board members agree that they are very effective in their “Fiduciary Governance” roles, but much less effective in their “Generative Governance” roles—the re-imagining of the organization, in light of trends and opportunities.

5. CEOs and board members agree that all board members should be givers and encourage others to give, but… while a healthy 87% to 91% agree that board members should be annual givers—less than 42% of their organizations provide training to equip and inspire board members on the “how to” of inviting others to give.

6. About one-third have operating reserves of 6 months or more, while up to 84% want at least 3 months of reserves within the next 24 months.  Based on their last fiscal year, 57% or more of survey participants said they had three or more months in operating reserves—and 30% to 33% reported reserves of six months or more.

7. Over one-third of board members recognize they dip into tactical versus strategic issues always or frequently. Yet overall, CEOs and board members said several unhealthy boardroom habits are usually avoided in their board meetings and/or addressed by the board chair.

8. Majority of board members not prepared for CEO succession.  In response to key questions “every board member must ask,” only 30-35% of board chairs and board members (the lowest response of the 13 questions) said they were prepared to name their next CEO.

9. Fundraising continues to be top area needing improvement. For the third year, CEOs, board chairs and board members were asked to select the Top 5 areas needing the greatest improvement in their ministries. Four areas have remained the same for all three years of the survey.

10. Almost 60% of CEOs and senior staff have annual measurable goals. Over 85% of CEOs say that donors are interested in mission impact—yet more than one-third of CEOs do not have board-approved CEO annual measurable goals. But good news: 84% of CEOs say their boards understand their role and God’s role in goal-setting and kingdom outcomes.

QUESTION: Download the executive summary and photocopy the 20 “Board Member Self-Assessment” questions (page 60) for your next board meeting. Then ask, “What are the Top 3 areas that need improvement in our board work?”

Note: A brief article on the Top 10 highlights is featured on page one of ECFA’s Focus on Nonprofit Accountability (Third Quarter 2014). View it here.

Friday, October 24, 2014

ECFA Survey: “Healthy Governance: Not There Yet”

On the 10-point scale between “Micromanagement (1) to Healthy Governance (10),” almost 40% of CEOs, in the latest ECFA survey, rated their boards at 7 or less. The good news: 87% of CEOs hope to move their boards to an 8, 9, or 10 within the next 12-18 months. Board chairs and board members were slightly more optimistic.

The findings are from “Highlight #3” in the hot-off-the-press executive summary of the ECFA 3rd Annual Nonprofit Governance Survey. It’s available as a download to ECFA-accredited organizations and subscribers. (Click here.)  This 62-page treasure chest of insights and trends includes 10 highlights, 130 open-ended comments from CEOs, board chairs and board members, and 9 strategic observations.

The report also includes color commentary, suggested resources, and next steps for boards. For example, the report notes six insights on “How Do We Stop from Micromanaging?” from chapter 13 in Ram Charan’s book, Owning Up: The 14 Questions Every Board Member Needs to Ask.

“Directors must take responsibility for managing the board’s time. As much as management complains about the problem of micromanaging, they may be contributing to it by providing too many slides and unnecessary details.”

• “Asking questions of an operating nature is not in itself micromanaging, as long as the questions lead to insights about issues like strategy, performance, major investment decisions, key personnel, the choice of goals, or risk assessment.”

• “The board is there to make sure management has a plan and that it is executing that plan.”

• “CEOs don’t realize that they bring some of the micromanaging on themselves with their presentations to the board.”

• “Addressing strategic topics first puts directors at the right altitude for the entire meeting.”

• “Another best practice is for the CEO and other presenters to give the bad news on the first page in unmistakable terms then describe the whys and the context.”

In my experience, micromanagers on ministry boards rarely think about the spiritual implications of operating in the weeds. Here’s an eye-opener from Bruce Bugbee, author of What You Do Best in the Body of Christ: Discover Your Spiritual Gifts, Personal Style and God-Given Passion. A friend asked him this spiritually probing question:
“Why are you doing what others can do,
when you are leaving undone what only you can do?”

QUESTIONS: What are the agenda items and tasks that only the board can do? What are board members doing that others (staff and volunteers) can do? (Note: Nail this one—and you’ll likely see calling enhanced and micromanagement decline.) 

Monday, October 20, 2014

The Twin Tensions of Honesty and Inspiration

Following Team USA’s loss to the European team in golf’s biennial Ryder Cup competition last month, U.S. Captain Tom Watson took the blame. According to a statement issued through the PGA of America and carried in the Los Angeles Times, Watson confessed:

“I regret that my words may have made the players feel that I didn’t appreciate their commitment and dedication to winning the Ryder Cup." 
"My intentions throughout my term as captain
were both to inspire and to be honest.”

Even board members who are not golfers will understand that twin tension: inspire and be honest! Just look at the short list of board agendas: the CEO’s annual performance review, quarterly financial reports, strategic plans, leading indicators—all opportunities for accountability, affirmation…or awkward silence.

Watson’s statement reminded me of the hot-off-the-press executive summary of the ECFA 3rd Annual Nonprofit Governance Survey. It’s available as a download to ECFA-accredited organizations and subscribers. (Click here.)  This 62-page treasure chest of insights, trends, and strategic observations includes 70 open-ended responses to this question:
“As the board chair, what is the most challenging issue
you face when working with your CEO?” 

Note these two board chair responses:

   • “Personality style: I am direct; he prefers indirect, especially with criticism.”
   • “I am very blessed to have a great personal relationship with the CEO. It is never ‘enjoyable’ to deliver tough feedback, but I know it must be done. Fortunately, he is very receptive and allows me the freedom to speak what we, as a board, see as important feedback.”

Balancing the twin tensions of Inspiration and Honesty prompted this homemade quadrant for your next board meeting:

   • The best board chairs are Symphony Conductors. Inspirational—absolutely, but highly demanding to bring out the best in the orchestra (boards and CEOs); always honest (“speaking the truth in love”), but with the right pitch—if you’ll excuse the pun. 
   • TV Hucksters make lousy board chairs. Their “inspirational” flim flam is inauthentic and dishonest. CEOs can spot huckster rhetoric a mile away.
   • No better—an Incompetent Counselor. Honesty is expected of therapists, but so is empathy. No inspiration nor motivation—no change. Board chairs take note! It’s a delicate dance to confront the brutal facts, yet still be inspirational.
   • Finally, there is nothing worse than a board chair who leads as an Inept Steward. That’s “steward” in name only because the ineptness cancels out any semblance of stewardship. Board members who are led by inept board chairs must address the elephant in the room—today.

For the Christ-follower, being inspirational and honest should come with the territory. It’s often difficult, but 1 Thessalonians 5:24 (NIV) reminds us that “the one who calls you is faithful and he will do it.”

QUESTION: As the board chair, or a board member, what is the most difficult issue you face when working with your CEO? (See what 70 others said in the ECFA 3rd Annual Nonprofit Governance Survey.)

Thursday, October 9, 2014

Should Your Board Launch an Advisory Council?

Over lunch this week, three of us talked about the upside of launching an advisory council for a nonprofit ministry. A younger leader was seeking advice, the invited expert was an experienced advisory council member, and in between bites of a chicken sandwich, I facilitated the conversation.

There is helpful counsel on councils, and numerous cautions, in The Nonprofit Board Answer Book: A Practical Guide for Board Members and Chief Executives (Third Edition), published by BoardSource. (Note: The first edition was co-authored by Ted Engstrom and Bob Andringa.) In the chapter, “Should Our Board Have Advisory Councils?” the jam-packed wisdom includes eight helpful bullet points in just three pages:
  • Set guidelines for creating advisory councils.
  • Choose an appropriate name. (“Avoid names that use the word ‘board.’”)
  • Describe the group’s role.
  • Establish terms of service.
  • Provide for formal leadership. (“Volunteers often respond better when one of their own chairs an advisory council.”)
  • Plan for staff assistance.
  • Budget for any expenses.
  • Provide appropriate publicity. (“Guard against providing more publicity than is warranted.”)

Our expert at the table described both positive and negative experiences while serving on advisory boards. (He preferred the positive ones!) While not opposed to serving on advisory councils where fundraising (giving and getting) is expected, he stressed the importance of the ministry leader communicating that expectation at the get-go. 

Alignment with the organization’s mission—we all agreed—was critical. I prejudiced the conversation with a few more opinions:
  • Invite people to serve who already have a passion for your organization. (Use the principles on board recruitment from the ECFA Governance Toolbox Series No. 1:Recruiting Board Members.)
  • Ensure that each advisory council member has a “personal win” by leveraging his or her “3 Powerful S’s: Strengths, Spiritual Gifts and Social Styles.”
  • Inspire each advisory council member to establish an annual personal BHAG (a Big Holy Audacious Goal). Each member should dream big and bold: an introduction to a foundation, a creative real estate deal, a strategic plan wish list project, or something else that God has uniquely prepared this person to do or be for your organization.
  • Communicate quarterly with a simple one-page update (mail or email). And treat them as "insiders," so they are among the first to hear both good and bad news.
  • If possible, meet annually for a half-day, or even better, for an overnight retreat with spouses.
  • Highlight the work of the Advisory Council on your website along with photos and brief bios. (Assumption: your board of directors' bios are already featured there.)

As you steward the amazing work of the people God is calling to serve your organization (staff, board, advisory councils, task forces, volunteers, givers, etc.), continue to inspire these teams of Christ-followers with their holy calling! (2 Thessalonians 5:24, NIV, "The one who calls you is faithful and he will do it.")

How? BoardSource suggests you interview the CEOs of five organizations that already have advisory councils. Learn from their successes (and mistakes). James Belasco shared this wisdom in the Leadership Tip of the Day on June 29, 2010 (these daily email leadership tips are now available through the Hesselbein Institute).

“You can never do enough looking over the wall
to learn how to do things.
Seeing excellence in action helps individuals
visualize how they can do it for themselves."

QUESTIONS: Has your board invested 15 minutes or more in conversation over the value of launching an advisory board? Does your CEO have margin in his or her life to appropriately leverage the expertise of advisory council members? Who is responsible for spiritually discerning who might be invited onto the council?

Note: BoardSource also publishes a 36-page resource, Advisory Councils, by Nancy R. Axelrod.