Why nonprofit boards underperform is the core question behind this blog. What is it that makes some boards do great stuff and others run into quicksand?
Over the last year or so I have talked to over fifty chairs of charities about their organisations, their challenges, and their boards. Some have been doing swimmingly, leading a great board, and others are struggling. Inevitably more of the people I talk to have problems than not – that is why I am talking to them.
From this sample of chairs and my own personal experience of boards and chairing, there are a variety of ways that nonprofit boards underperform. I’d love to know if any of these resonate with you, or if you think I have missed the mark. My email is at the end (just to make you read everything!)
Three categories of why nonprofit boards underperform
I see the reasons behind underperformance as divided into three main categories. Inevitably, there is crossover, but a board struggling in one area can be strong in another.
Events problems
The first set of problems is driven by events, either internal or external. These two types of underperforming boards are two sides of the same coin.
1 – The external event-hit board
The biggest external event in recent years was Covid. It placed enormous strain on non-profit boards. Challenges converged: funding, staffing, service delivery. Many chairs and boards faced enormous strains and had to tackle multiple problems all at once.
A more common set of external challenges are funding loss, competition, or recruitment difficulties. Risk registers are one of the ways that boards can try and predict what the external catastrophes might be and prepare for them.
2 – The unprepared board
The unprepared board is one on which internal events aren’t tackled properly. This is often because the right policies aren’t in place, meaning that the board under or overreacts to a situation.
For example, if somebody makes a complaint about the behaviour of the chair, the situation may be ignored or brushed under the carpet, or over-reacted to – the chair is suspended with no clear process in place. Either way, a board that is unprepared for the range of internal events that can derail things will be in trouble. These events could be accusations of bullying, sexual misconduct, resignations of the CEO or chair, and so on.
The benefit of clear policies is that they provide a pathway for resolution. The unprepared board just muddles through and judging by some of the chairs I have talked to in the last year, it can be a very destabilising time.
How do you know if your board might be undermined by events? Here are two questions to answer.
- Does the board have clear policies for some of the common crisis that impact on an organisation: bullying, sexual harassment, safeguarding, etc?
- Has the board thought through its reaction to various external events that might affect it?
People problems
If event problems are typically acute, inflammatory, and destructive, so then are people issues.
3 – The fractious board
An awful lot of people I talk to have people problems. The chair and CEO don’t get on. Trustees don’t get on. Personalities are clashing. Usually both sides think they are hard done by. Many think they have some mythical non-existent set of rules about what boards do, and what staff do, and they think these have been broken. Or about what chairs need to tell others, or how chairs make decisions.
The result of all this is that a massive amount of time and energy is taken up with personal disputes and grievances. And that means the board doesn’t focus on its real work.
4 – The founder’s board
This next problem is really a subset of the previous one – the founder’s board or the founder’s charity. What it comes down to is the founder (whether now a chair or CEO or whatever), thinks the charity is all theirs, perhaps by:
- Behaving how they like
- Packing the board with their mates
- Staying for far too long
- Thinking being founder gives them some magical insight into what is the best way forward
I talked to one new chair whose founder CEO had to be told in his appraisal to stop saying ‘my charity’ (which the founder ignored). I talked to another chair who had a vote of no confidence launched against them, when they started asking tough questions about the difference between the charity’s interests and the founders.
5 – The imbalanced board
The last of the people problems that boards face is a subtle one. It’s when either the staff or the trustees get out of kilter with the other in terms of their ambition. Typically this might be that the trustees appoint a new dynamic CEO, who they haven’t quite realised is going to stir things up. The CEO (and their new team) is steaming ahead to make changes, while the trustees are still in the old mode of business as usual – often typically in a ‘cautious board’ mode described below.
The opposite can also happen: new chair appoints new trustees, and the trustees are eager to make things happen, while the staff, or portions of the board, are not. This imbalance leads to problems in terms of how quickly and how widely change happens, and this creates friction and strain between board and staff, or within the board. Get ahead and work to prevent imbalances by taking a look at our free resource A Chair’s Compass.
How do you know if your board has people problems? Here are three questions to answer.
- Can you identify personal clashes between trustees and staff, or within trustees?
- Does the board and staff have a shared and agreed plan for moving the organisation forward?
- Does someone (founder long-time trustee, or member of staff) overly influence the way the board works?
Direction problems
My last cluster of problems centres around a lack of desire to make the organisation the very best it can be with the resources available.
6 – The cautious or complacent board
An old colleague emailed me recently to tell me about a board where the trustees were sitting on a pile of money, not doing much with it, and with no sign of change in sight. The board was dominated by a few long-standing trustees. New trustees found it difficult to affect much change.
For me this is the classic complacent board. I have been on a board where the risk register said the organisation might run out of money – while having 10 times its annual expenditure in reserves.
7 – The bureaucratic board
How many policies does your organisation have? How much of your board time is spent looking at, discussing, and approving policies?
I know one board of a non-profit organisation with no staff, which had twenty-four policies from GDPR to infectious disease to expenses to complaints and whistleblowing. No policy was bad, but the collective effect can be that a huge amount of time can be spent debating policy.
Policies don’t make anything happen. They are there to help when something goes wrong, typically. Boards should have policies (as is clear from the ‘unprepared board’ problem above), but no board should mistake approving policies for actually getting things done. And the ‘approving policy’ tail should never wag the ‘strategy and direction’ dog.
8 – The distractable board
I was in a board meeting recently (not of the Association of Chairs) which spent 20 minutes talking about tablecloths for events. It wasn’t on the agenda. It just came out of an idle comment that one trustee made.
Trivial boards find it easy to get distracted from the agenda. Alternatively, the length of time set out on the agenda bears no relation to the gravity of the item. A colleague told me that they had agreed a £50 million fundraising plan in 5 minutes and then spent 30 minutes talking about the state of the toilets in their properties.
9 – The rudderless board
My last direction problem is perhaps the most subtle in this section. The board appears dynamic: good discussions are held about a range of issues. The staff and trustees work well together. The problem is that there is no clear sense of direction, no strategy. Everything is responsive and tactical.
The rudderless board shows the sign of activity but in reality, there is little progress from one year to the next. Because to paraphrase that old adage: if you don’t know where you are going, any board meeting agenda item will get you there.
How do you know if you have a directionless board? Here are four questions to answer.
- Is the way in which your organisation is going to be different in a year, discussed in your board meetings, and clearly set out?
- Have the trustees exceeded the normal term limits of 8-10 years?
- Is much of the board meeting spent discussing policies, bureaucracy or distracted by trivial issues?
- Do board meetings follow a standardised agenda, changing little from meeting to meeting?
Do any of these issues resonate with you? Have I missed reasons you think your board underperforms? Is it time your board considered a governance review?
I’d love to hear what you think. I am on [email protected]. And if you’d like to have a chat about your board problems we can organise that as well.
