Monday, October 6, 2008

Boards and Financial Uncertainty

I’ve been carrying around a letter to the editor that I ripped out of the May 26th issue of Crain’s New York Business.  The letter by Chief Executive Gordon J. Campbell of the United Way of New York City is topped by this headline:  Nonprofit Boards Aren’t Piggy Banks:  Trustees Have Broader Duties.  It was written in response to an article about how nonprofit boards in NYC are scrambling for deep-pocketed trustees to help organizations weather this climate of financial distress.

Much of the grousing I routinely hear from executive directors is about how their boards aren’t raising enough money no matter the financial environment.  This is a long-standing complaint.  There are a lot of board members out there who don’t give much – or at all – in the way of personal financial gifts nor do they actively work on behalf of the organization to seek financial gifts from others.  One prevalent response to this state of affairs is, “I give of my time.”  And yes, that, too, is important.

As the letter-writer so aptly pointed out, “…the concept of nonprofit boards as essentially serving the function of a piggy bank overlooks the broader duties required for effective governance, including reviewing the organization’s mission, providing long-term strategic planning, articulating smart policy choices, maintaining constant fiscal vigilance and partnering effectively with executive staff to diversify funding streams.”

Deep-pocketed or not, every person around the board table bears a financial responsibility to the organization in the way of personal giving, financial oversight and shepherding of resources. 

(Looking for a board member job description?  The paragraphs above make an excellent starting point.)

Campbell concludes his letter, “If board members have been prepared to govern well – through governance training, new member orientation and group self-evaluation – a board is likely to be in a strong position to navigate through stormy financial times.  A nonprofit’s health, effectiveness and sustainability do not rest on emergency infusions of cash alone.”

Photo:  Piggy Bank 1 - S5isPiggyBank_1by Daniel Y. Go , Flickr


Linda Norris said...

I think your post raises a great point what board members do. I'm perpetually astounded at how little some board members know about the organization's functioning. The tales of lax financial oversight are everywhere, but equally critical I think are the board members who don't have an adequate understanding of the organization's mission and what professional standards, in whatever the field, are. I'm thinking of the places that adopt the boiler plate collections management policy because the state says you have to, and then ignore it; or the ones who have no real lack of understanding of museum's role as an educational organization. I'm sure other types of non-profits have an equal list.

As a staff member, I think it's your job to educate board members about your chosen field; but if you're on the board at an all volunteer organization, it's up to the board itself to become educated. At one all-volunteer organization I know, the board member with responsibility for cataloging shares one object per month with the board--its story, why it's important, how it connects to community history. There must be other ways for board members to gain and share knowledge. Knowledge IS power!

howardlevy said...

If you are looking for information on board governance, check out It is dedicated to explaining the importance of governance. Its website and monthly roundtables explore the roles and responsibilities of board members.