Board Members as Donors & Investors: Understanding Impact & Conveying ROI
Part II of III
By Avrum Lapin
I am preaching to the converted, or am I?
What makes a Board work? What drives an organization to recruit one person over another? Why do some Boards with comparable missions and similar caliber people succeed more than others? How do they measure success? What do Boards today expect from their members? Do they achieve their goals? So many questions…
So let’s take a step back and start our conversation about the Board member as investor and creator of return on investment (ROI), hopefully with some feedback from readers. I am eager to hear what others think about the ideas discussed in this posting.
The American nonprofit Board model has developed and evolved over many centuries, and today it is fundamentally American. It is told that the Massachusetts Bay Company Charter written in 1629 specified that a Board of 13 “men of wisdom” would manage the colonial government. In fact, the Board model that has developed into what we know today developed from that time as a uniquely American construct and is linked to the enduring American culture of volunteerism, civic engagement and democratic rule. Alexis de Tocqueville punctuated that point, writing in the 1830’s that America’s philanthropic spirit, including the formation of Boards for decision making, distinguished it from Europe at the time.
Today, as the philanthropic marketplace in the Jewish world and throughout the country continues to evolve, we engage every day in revitalizing and updating an enduring model created in an earlier age. The nonprofit model, led by a Board and based on a strong commitment to a mission, may be old, but it has never become outdated.
Mary Ellen Jackson, noted authority on nonprofit leadership and the Executive Director of the New Hampshire Center for Nonprofits, noted that “the nonprofit Board requires that a group of volunteers, many of whom do not know each other nor possess expertise in a mission, come together and, through committees and four to six Board meetings a year, assume primary legal responsibility for the organization.”
This encompassing statement underscores the commitment to mission as the underpinning of a productive Board – not expertise or technical knowledge. Together with professional colleagues, Boards project legitimacy, credibility, community support and connection, and the ability to do business.
In fact, as I have been writing in most of my postings on eJewishPhilanthropy.com and elsewhere, successful organizations, and organizational ROI, are driven by the power of new ideas and innovation, leading to effective approaches and solutions. Looking to the future, and staying with established best practices, Boards and organizations in the 21st Century thrive and lead by recruiting members who are serious about the mission, their fiduciary and fundraising responsibilities, and who employ critical, entrepreneurial thinking.
Driving the point one step further, and underscoring the centrality of a strong and meaningful vision to organizational success, Naveen Jain, Founder of the World Innovation Institute, added that “Philanthropy is not about giving money but about solving big problems.” We echo Jain’s challenge and encourage organizations throughout the charitable arena to step up to meet it.
All Boards debate and approve budgets, set financial and administrative policies, and are charged with the task of ensuring that the organization has adequate resources. What truly sets successful Boards apart is their commitment to gathering the courage to push boundaries, not micromanaging the operational details, and encouraging organizational investment of thought leadership and finances toward innovation and creative thinking among their volunteer and professional colleagues.
To stay true to this increasingly important ethos with a commitment to entrepreneurial thinking and generation of intellectual and financial investment, the Board must:
- Collectively and continually question assumptions
- Take the “10,000 foot” or even the “30,000 foot” view, and look at larger visionary issues and concerns
- Balance efficiency, opportunity, and mission
- Create and sustain a culture of transparency and accountability to their funders, stakeholders, and their community
- Always look through the prism of the organizational mission and consider the “end user,” the reason why the organization is in business
- Allow the CEO and the professional team to execute, and support new “products” and initiatives
- Expect every Board member to make a financial contribution at a personal level of capacity
To do this, as noted above, organizations must recruit the right people and make them aware of expectations before they sign on. Prospective members should not be “two dimensional” collections of friends, relatives, or only like minded people. Further, organizations should not merely go for a person because he or she “has time,” but they should find the right person, even (especially!) a busy person with the skills, attitude and resources to be successful.
And, speaking of ROI, Board giving is an obvious and important element. Across the country, according to the 2012 Board Source Survey, Boards average 74% participation in giving, and just 46% of Boards reported 100% participation, though we are making progress. Nearly 70% of nonprofits report a policy requiring annual Board giving – a number that has been growing over time.
When seeking to measure ROI, philanthropy can be a calculated risk, and successful nonprofits must make sure that every dollar has a multiplying effect. Thus, Board giving, as a motivator and first step to an organization’s broader annual giving program, can show the way for an organization and its donors to leverage personal giving through relationships with donors and funders.
In conclusion, and in keeping with our themes of leadership driven by entrepreneurial thinking, investment of financial and intellectual capital, and measurable ROI, we encourage nonprofits to see and utilize the Board as the basis and nucleus of their success. In doing so, organizational leaders must:
- Make sure everything relates back to the organization’s mission, purpose, and vision
- Focus messaging so that Board members are on the same page when they discuss the organization publicly and privately
- Create opportunities for volunteer leadership and synergy with professional activity
- Encourage Board members to be “brand ambassadors” for the organization
- Create mechanisms for the Board to review programs, services and operations without heading down the proverbial “rabbit hole”
- Press the CEO to focus on major issues
- Emphasize that one’s presence is not present enough: Board members must contribute ideas and dollars and be engaged
- Keep meetings concise to foster creativity, productivity, and collaboration
- Expect and obtain 100% participation in financial support from the Board
- Stress the role of the Board member as strategic philanthropic multiplier through identification and engagement of new donors
Stay tuned for the final installment of this series in the weeks to come…
Avrum Lapin is the President at The Lapin Group, LLC, a prominent fundraising consulting firm located in Jenkintown, Pennsylvania, outside of Philadelphia. The Lapin Group inspires and leads US-based and international nonprofits seeking fund, organizational, leadership, and business development solutions, offering contemporary and leading edge approaches and strategies. Avrum is a frequent contributor to eJewishPhilanthropy.com and speaker in the US and in Israel on opportunities and challenges in today’s nonprofit marketplace.
The Lapin Group on Facebook: www.facebook.com/thelapingroup
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