Should We Be Considering Professional Board Chairs?

I recently returned from Australia where I facilitated a series of master classes in governance. While the US and Australian systems are similar, there are some distinct differences. One, to which I was introduced this trip, is a trend toward hiring professional board chairs. Though not wide-spread, it is prevalent enough that there are actually companies there that provide such individuals to organizations as required.

Clearly, there are advantages to such a concept. You ostensibly get a board chair that is unbiased, skilled and willing to give the time to the job since he or she is getting paid to do it. One would expect that such a person keeps up with the latest governance trends and has a broad perspective from working with different groups – both conditions that can lead to increased board effectiveness.

Some of the drawbacks are obvious, but not necessarily insurmountable. One board member complained to me that the professional board chair working in his organization was working with twenty other boards and often came to meetings unsure of which organization’s meeting she was actually at! I would think that far fewer than twenty boards may still be too many for a board chair to handle well. Of course, this is a relatively easy problem to circumvent. The board has an obligation to do its due diligence. A single question would have determined that this woman was over-committed. Still, in an emerging field where there may not be that many qualified individuals available for hire, organizations desperate for leadership may opt to move forward anyway and take their chances.

I would be concerned that any board chair for hire actually has the facilitation skills necessary to do the job effectively and is familiar with today’s proven governance practices. I meet a lot of people who tell me that they have chaired many boards over the years and know what they are doing. Unfortunately, I have observed that far too many of these individuals are mired in how things were done back in the days when they began their board service and are totally unaware of practices common throughout the sector now.

I also see the potential for conflict of interest. A professional board chair might work for several organizations with similar missions. While it could be advantageous to hire someone who has a depth of experience in your organization’s mission area, how can you be sure that your ideas, deliberations and decisions will remain in-house until they are ready to be shared with the community? Of course, this could prove an issue with anyone in the boardroom and if you deal with a true professional, this should not be a problem. More critically, the board chair is privy to discussions that can personally impact him or her, for instance whether the contract should be renewed and at what rate. If the organization has policies for dealing with such situations, this also can be handled in a transparent and judicious manner. Australia has the same duty of loyalty requirement we do in the US and conflict of interest has not been a sticking point for the nonprofits in that country.

The culture in the US may be the biggest barrier to such an idea taking hold here. I can foresee donors reacting negatively to the idea of having their money go to pay a professional board chair. So many already resent money being spent on even the most critical administrative fees. Link this to the expectation that has taken hold here – but not in Australia – that all board members must make a personal contribution and we have yet another potential obstacle. This expectation would imply the professional must “pay to play,” something that is unethical if not illegal. Yet, if the organization excludes the chair from the requirement, resentment is sure to build in the other board members who are held to the giving standard. They may already be upset, wondering why they shouldn’t get paid for their time.

Then, who wants to be the first to test the IRS response? Surely, as paying for a professional board chair is not accepted practice in the US, the board and organization may be liable for a hefty excise tax on that fee if it is deemed excess benefit.

Yet, I can’t help thinking about the potential benefit – boards running more efficiently and effectively. Acceptance of such a practice might even stimulate new jobs as individuals with the appropriate skills move into this arena and programs crop up to certify these professional board chairs!

Is this a bad idea if no organization is required to move in this direction or consider itself locked into a paid chair if it has used such a service in the past but now has the appropriate leadership in-house? What do you think?

Instead of Low Overhead…Show How You Make A Difference

Earlier this year, Don Pallotta, author of Uncharitable, spoke locally. His key thesis, backed up with a lot of data, is that rating nonprofits based on their overhead asks the wrong question. Instead, he suggests that potential donors should ask: “Does the nonprofit make a difference? Do I trust them?”

For years, many nonprofits have completed extreme aerobics to keep their overheads low. Others simply report bogus numbers. Read a handful of 990’s. You’ll see some examples of creative accounting. What’s more, the whole sector has scars from decisions that were made to keep overhead rate low. Scars that were gained seeking low costs rather than improved results.

Let’s endeavor to use Pallotta’s work to reduce the frequency of the overhead question and increase the “does your nonprofit make a difference” question. How might you demonstrate your effectiveness? Pallotta shared several ideas. He suggested video clips that share your goals and progress. He also mentioned sharing the results of your customer satisfaction surveys. Add these and other proofs to your website and Guidestar information. Show how you make a difference.

If you are interested in making more of your outcomes first class, see How First Class are Your Operations? at www.kedconsult.com. Or, email me karen@kedconsult.com , I will send you a copy of the April Added Value article on this topic.

Planned Giving- Keep Your Income Flowing

At a recent planned giving event, Tom Waters, Vice President of Charitable Planning at the Community Foundation of Sarasota shared that planned giving efforts often ebbed and flowed in nonprofits organizations.

As someone who helps nonprofits to make dramatic improvements in their effectiveness, I asked Waters for his suggestions on how we can institutionalize planned giving to avoid these ups and downs. In a busy nonprofit, it is too easy to get busy, drop planned giving efforts and in the hiatus miss a $250,000 gift.

To institutionalize planned giving, Waters suggested:
1. Designing your planned giving work to create future and current gifts.
2. Involving the Executive Director. Waters recommended that this be a significant part of their job descriptions and measured in their evaluation. While planned giving efforts need Board support, Waters believes the key leader is the executive director.
3. Adopting a long-term vision about planned giving.


Are you serious about planned giving? Are you serious about creating a planned giving program that lasts? Build your program around these elements.

If you seek additional information about obtaining income for your nonprofit, red this article: How Will We Pay for This? 14 Ways to Obtain Income.

Do Nonprofits Partner Enough?

Last Thursday while leading a Manatee Human Services Network training session on the Power of Partnerships, I conducted an index card survey of the 60 participants. The goal was to compute the number of their current partnerships. The total? 1,076.

Do you often hear that your nonprofit needs to cooperate more? If so, to respond with strength, tally the number of your partnerships and share it often. For instance, “Did you know that we are already involved in 47 partnerships of various sorts? We’re always interested to learn more about potential partners –who do you have in mind?”

We need to educate the community about the highly cooperative nature of nonprofits. What’s your number?

Your Non Profit's Playing Field

Have you examined who is on your non profit's playing field lately?

It's logical to consider your board on your playing field. They are the people ensuring the mission and vision of the organization are carried out. But you must also consider who else should be there and either enlarge the field or ask them to step onto the field from the sidelines.

Staff and volunteers are part of the field, although some may feel that they are relegated to the sidelines if they are not invited to be part of the action and decision-making. Ensure that the field has room for everyone's intellectual and creative contributions as well as their community connections. Enlarge your field to ensure your players are helping you achieve your goals.

Laura Mikuska

Mikuska Group

www.mikuska.com

Creating Clairvoyant Board Members

Do you wish your board members could read your mind? If so, you may wish to read and share an article that appears on Charity Channel’s website this month. It lists a dozen thoughts nonprofit leaders often think during board meetings that they wish their board members knew. It also suggests board members actions.

Here’s one more additional “thought.”
“Listen to the community for us.” Sometimes, as a board member, you learn things no one else knows. Action: Share this information and your insights to help our nonprofit understand the community’s response to our work and take actions to use this knowledge to our advantage.