As you rise through the ranks in your private sector career, you may be invited to join the board of a not-for-profit organization. These groups continually look to recruit successful people, especially those who can contribute financially. Whether you join an NFP in the arts, nature conservation, or good works, it’s a good way to give back to your community and to meet fine people. But I want to dispel the opinions of those who think running an NFP it is easy. In many ways, it’s tougher than running a company that sells a product or service.
First, I want to offer some comparisons of the ways these two types of organizations should be managed. Then I will describe a few techniques to help NFP boards operate in an effective, businesslike manner.
Board of Directors
A corporation’s aim is simple: make maximum revenue and profit ethically. The board, usually numbering no more than 15, shares this view, and may debate how to get the result, but agrees on the goal.
A not-for–profit board may number 25 and often more. Each member gives money, so membership has its reward but also its cost. After making this investment, each board member believes his or her voice should be heard, and they may have many different objectives in mind. Consider the board of an Audubon Center, for example: What’s the goal? Protect native birds? Protect all birds? Provide education? Provide a sanctuary for wildlife? Merge with a nearby nature preserve? These are all legitimate goals, but the board must prioritize. Establishing a coherent strategy is akin to herding cats.
Corporate vs. Not-for-Profit Staff
Corporate directors are supported by the best staff a company has to offer. Sometimes stubborn and opinionated, these staff mandarins are well paid, smart, and knowledgeable about their business. Not-for-profit staff are generally passionate about their cause, but they are often poorly paid and can be clueless about business processes. Sad to say, but except for at the senior levels, pay at NFPs does not attract top-rung people.
Selling a Product or Service vs. Seeking Donations
At Apple, a professional sales force sells products and services through various distribution channels all aimed at meeting customer needs. At an NFP, board members are continually asked for donations. Along with program fees, these donations are where NFPs get the money to operate. Additionally, the board and the organization’s development staff comb the community for corporate and individual donors. At Apple, new products and excitement about technology fuel growth and increase income and profit. At an NFP, there is only so much a board can do to put a new spin on protecting birds or presenting classical music. It’s commerce vs. culture. In a tight economy, culture does not win.
So for those of you who have joined or might consider joining NFP boards, here are techniques to make them more businesslike and apt to survive in these troubled economic times:
Stay close to the large donors by keeping them well informed.
This is no different than corporations giving major shareholders continuing information about results, trends, and strategies. A major donor who is not afforded the courtesy of information by the board leadership will turn away and support other worthy activities.
Evaluate board committees and special purpose task teams.
Every organization has standing committees — finance, governance, and development are among the usual. Do they meet often enough to address important issues? Do members become committee chairs and focus on their position to the detriment to getting things done? If you’re the board president and find committees slow or ineffective, establish special-purpose task teams. Load them with the best board members, give them a charter, and let them run with it. You will be pleasantly surprised by their results. Board members want the organization to excel.
Be clear on who does what.
The key paid staff member is the executive who is responsible for the staff and for running the operation. The chairman of the board traditionally is a well-known person who reaches out to the community and can rally major donors. The president of the board runs the board committees and is the person who has most contact with the paid executive. Some NFPs combine the chairman and president positions. The differences in the roles should be clear. Make sure they don’t get fuzzy, else the staff and the board won’t know who’s on first. Board members should not interfere with staff unless asked to help by the paid chief executive.
For additional reading, I recommend two books: Managing the Non-Profit Organization by Peter Drucker, and Strategic Planning for Nonprofit Organizations by Michael Allison and Jude Kaye. Kenneth N. Dayton also wrote an excellent article, Governance is Governance, published by Independent Sector.
Note: Auerbach is currently president of the Board of Trustees of the Austin Lyric Opera and was previously president of the Board of the National Audubon Society of Greenwich, Conn.