Monday, June 29, 2009

Small Boards Lead to Group Think

The Chronicle of Philanthropy recently shared the findings of a report by the National Committee for Responsive Philanthropy that laid a good deal of the blame for the significant foundation losses to Bernie Madoff’s Ponzi scheme on the size of the foundation boards. The watchdog group found that of those foundations that lost between 30 percent and all of their assets, the median board size was just three. In a number of those cases, the boards were made up totally of family members.

I am not surprised by the premise in this report. While most states require only three board members and there is no perfect size for a board, group dynamics’ research teaches us that small groups often lack the diversity of opinion necessary to avoid group think. In some cases it is due to the fact that people ask their friends, or others “like them” to join them on the board. In such cases, there is an increased likelihood of similar thinking – or, as in this case, that many of the members of the board know and rely on the same investment people. In other cases it is just due to the fact that with such few people on the board, it is easier to go along because everyone knows they will have to get along in the future.

If this scandal teaches us anything, it should remind us that one of the most important skills a board member brings to the table is that of critical thinking. This means that every option should be questioned. All the pros and cons should be considered and the ramifications projected. Potential benefits should be tested against potential costs. Underlying assumptions and motivations should be brought to the surface. And board members must remember before making a final decision that they are responsible to the community for leaving the organization stronger than when they came in. Their decision should be consistent with their organization’s values and move the organization closer to the accomplishment of its mission and vision. This charge is made easier with a larger, more diverse board that treasures a culture of challenge.

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