The Board Reality

Alright, let's talk about your Board of Directors.

One of the things my post yesterday generated was a lot of emails from people who were unhappy with their Board of Directors.

The complaints ranged from "our Board doesn't raise enough money" to "our Board doesn't get the reality of my job."

I understand the hard feelings.  And I think many of those hard feelings are caused by a fundamental misunderstanding about the relationship between an organization and it's Board.

Let's think this through . . . (and as always, stay with me, I'm going somewhere with this)

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Let's pretend that you were asked to be on the Board of Directors for a for profit organization.  Let's say McDonalds.

Technically, this Board runs McDonald's.  Just like a nonprofit Board runs the nonprofit organization.

You were asked to be on the Board of McDonald's because of your expertise in a given field.  Maybe finance, maybe international law.

Now, here's the first question for you Ms. New McDonald's Board Member, whose interest do you represent?

The McDonald's shareholders.  Exactly. 

And what do those shareholders want?

Right, more value/money

And how do we measure value in this particular for profit organization?

The stock price. 

The great thing about that particular measure is that it is so easy to figure out.  All you need to do is check the stock price online and you have a pretty good idea of where the company is.

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Now being on this McDonald's Board is pretty cool, but you probably also have a full time job of your own.  So it's not like you can spend all your time thinking about Big Macs.

Plus, like I said above, you're probably a finance expert and you don't know THAT much about McDonald's internal operations.

So the Board needs an agent, somebody whose job it is to run McDonald's on a day to day basis.

They hire that person.  They call him the CEO.

And since you already know who you represent as a Board (the shareholders), what you want that CEO to do (increase shareholder value) and the measure of that success (the stock price), you can be pretty "hands off" with that CEO.

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Now let's go the nonprofit Board.

First question, whose interest does the nonprofit arts Board represent?

It's a tougher question then most realize.

Do they represent the community?  If so, how do you define community and figure out what that community wants?

Do they represent the artist?  Or the artistic field as a whole?

If it's difficult for your Board to figure out who they represent, it is even more difficult to define how success is measured.

Is it better art?  More money?  More donors?  A strong world wide reputation?

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So before you go ripping your nonprofit Board a new for their flaws, it helps to remember what a complex situation they are a part of.

As I have said before, running a nonprofit Board isn't easy.

The only way to make it a bit easier is by placing two things in the relationship between a nonprofit and it's Board:

1.  Clear goals.

2.  Trust.

You can probably see now why having some clarity on what your nonprofit is trying to accomplish is important.

What may be less obvious is why trust is such an important part of the relationship.

Go back to yesterday's post.  Why couldn't my client just tell the Board that what they wanted from him and his small staff was unrealistic?

Because the client and the Board don't trust each other.

My client doesn't believe that if he tells the Board that he's overwhelmed they will believe him and try to help.

The Board probably doesn't trust that whatever suggestions my clients give are in the best interest of the company.

So many nonprofits pick Board members based on what resources they can give to the company.

But I believe the number one criteria for picking a Board member is whether the nonprofit and the Board member trust each other.

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Here's the bottom line:

If you work at a nonprofit arts org, try like hell to set some clear goals for your company.  It's going to be hard.  But you got to try.

But even if you do that remember this:

If you and your Board don't trust eachother enough to tell the truth about a situation, no matter how ugly the truth may be, the odds of you thriving (not just surving) long term are very slim.

Comments

[RVCBard]

This, of course, begs the question: How do we build trust in the absence of, say, a lifelong relationship?

[Adam]

Bard,

I think (in this context at least) trust has to be automatic assumption.

For example, if you put someone on your Board, you've got to at least know them enough to have a basic level of trust.

And if someone hires you as the CEO of their nonprofit, that Board has to give you the presumption of competence and the trust that comes with it, or the relationship will not work.

[RVCBard]

My gut agrees. But actual practice is often the opposite. I find it kind of odd that, in a risky endeavor like the arts, people still want to have complete certainty when it comes to marketing. It's kind of . . . confusing.

[hithWinny]

I would like to ask of you: How do you feel financial crisis in your life ?