Currently, I am observing the performance (or lack thereof) of six or seven non-profit boards. I have my eyes on a couple of profit-making ventures as well. If you are serving on one of these kinds of boards, then I have some observations and some thoughts for you today.
Profit Oriented Enterprises
If you serve on this kind of board and it is a publicly traded company, then you have some fiduciary responsibilities that other boards and other board members may not have. I will not really address these types of boards at this time. But, suffice it to say, there are stakeholders, shareholders, customers, and clients and each of them has needs that must be addressed.
If you are serving on this kind of bard, then I want to speak to you today. You, too, have stakeholders, shareholders, customers, and clients. There is just no profit-making motive that drives you. These enterprises are driven by the customer or client experience. It is in these environments — churches, charities, clubs, educational institutes, and most hospitals, that there is significant work to be done for the boards that lead and guide them.
Types of Boards
There are several different types of boards. Usually, they are identified by what function they fulfill. Some of the typical types of boards are identified by Partners in Policy Governance and are summarized and shown below:
Collective — A collective is a group of people with a shared focus or purpose. They make decisions collectively and each individual represents themselves and their own interests.
Governing Boards — This board leads the organization using authority to direct and control provided by the owners and the legal act of formation. They set initial direction and have the full authority to act in the owners’ best interests. Governing boards function at arm’s length from the operational organization. They focus on the big picture, are future-oriented, and act as a single entity.
Working Boards — This board leads the organization but also does double duty as the staff. These are common in very small organizations and community-based organizations that do not have the resources to hire employees. Working boards often get caught up in project management and set aside the governing function. Some would say that they are too busy chopping down trees to stop and sharpen their ax.
Advisory Boards — This board serves to provide insight and perspective to any decision maker, including another board or boards. An advisory board typically does not have any authority of its own but works to educate some person or body.
Managing boards / Executive Boards — This board is a group of people who actually manage the operations as a collective group (instead of a single CEO). They are not the same as a governing board but may work under one. They make the day to day decisions about what gets done and the long-term decisions about how to organize operations to achieve the organization’s purpose.
Fund Raising Boards — This board is often only a “board” in name alone. Its real purpose is to use its members’ connections and influence to solicit financial resources for the organization.
Policy board — This board is actually more about how the board does its work than it is about a type of board. But since you often hear the name they (Partners in Policy Governance) chose to describe it. A policy board is any board, typically a governing board, that directs operations by developing policies which guide operational decisions rather than making the actual yes or no decision themselves. The CEO is then expected to carry out all policy.
Johanne Bouchard identifies four types of boards. She states that they each have their own unique characteristics and purposes. However, they each need strong leaders sitting at the table. If you are interested in more of her work, you can click here and check out her website. She identifies these four types:
Public Boards — Public Boards are by far the most regulated boards. Serving on these boards is time intensive. Since the Sarbanes-Oxley act, directors of Public/Corporate Boards’ roles are more serious than ever.
Private Boards — Private Boards are not limited to small businesses. There are many mid-size and large companies that are private, and many family businesses are private. Private Board directors have more latitude with regards to their involvement with the CEO and the management team while working to grow the business.
Non-Profit Boards — Non-Profit Boards serve a 501[c](3) organization, which is an organization that is not and cannot be organized or operated for the benefit of private interests. Essentially, directors on these boards make a commitment to a cause, are volunteering time and are frequently asked to give a philanthropic donation.
Advisory Boards / Councils — There are many who don’t believe that these are truly boards. Many would prefer to call them “councils” in light of the fact that they have no fiduciary responsibility. Instead, they focus on providing expertise to complement any of the other three boards, and/or to complement the management team and/or any of the functional areas, and/or to complement special “task force” teams, etc.
Focus on the Non-Profit Board
Based on my experience serving on various non-profit boards, I am suggesting that there are three ways that these non-profit boards tend to act and tend to function (or dysfunction from time to time.) Let’s look at them and let me make a case for one over the other two. The functions are to “advise, consent, or to lead.”
Advise — The Congress of the U.S. has this as one of its two basic functions. The Founding Fathers wanted the Congress to “advise and consent.” To advise means to offer suggestions about the best way to operate or the best course of action to take. The one being advised is under no obligation to accept the advice and the one providing it cannot mandate that it be accepted and implemented. But, at least you can document that sound advice was offered and the board can take action based on the advice being accepted or ignored.
Consent — This is Congress’s other function. To consent means to give permission for something to happen. In theory, nothing happens without that consent. And that is where some problems begin in the non-profit world. In order for the organization to move (not necessarily forward or in the right direction) consent is required so boards tend to provide that permission without much thought for the validity or viability of the action they are being asked to authorize. Many a strong or controlling leader has made a consenting board into a “rubber stamp” board by packing it with friendly and like-minded individuals.
Lead — I almost don’t know how to describe this type of non-profit board as it is so central to who I am and how I operate. It is self-evident to me and I wish it were so to everyone. But, a leadership board is exactly that. A board that leads. It leads the one who operates and executes the day to day operations of the organization. And it leads the organization itself through the insightful creation of strategies, plans, policies, and practices that increase the scope and span of the non-profit organization.
Individuals who are striving to make their board a leadership board are doing so because they are emotionally, and many times, financially invested in the mission and success of the organization. They are not interested in academic or impractical advice that cannot be executed. And they are not interested in mere rubber stamping what someone else has brought to them. They want to roll up their sleeves and get down and dirty in frontline organizational leadership.
What about you?
Do you long to serve on a leadership board? What is preventing you from doing it? Look around you. Many organizations are looking for individuals like you to come alongside them and help fulfill their mission or adopt a new mission that others can get excited about fulfilling.