Leading Companies for Good by Alice Korngold

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How to Build A Better Nonprofit Board: It's About the Board Chair

Yes, positioning the right person as the board chair is key. Because the chair has the greatest influence on how the board uses its time in meetings and in between meetings, who will be on the board, and who will be groomed for future leadership.

I have seen organizations rise or fall, depending on the board chair's effectiveness. Even the most extraordinary nonprofit CEO cannot achieve the enterprise's fullest potential without a good board chair.

Here's how an effective chair uses her time for the greatest benefit to the nonprofit:

1. Understands and communicates the mission to investors and key constituents, including making the case for support.
2. Works in partnership with the CEO to create board meeting agendas that are focused on key strategic issues, and engages board members in productive and meaningful discussions, and decision-making.
3. Identifies and develops board members for future leadership. Leadership succession planning is vital for the organization's longer term sustainability.
4. Works in collaboration with the Board Governance Committee and the CEO to identify and recruit new board members from diverse backgrounds and perspectives who have the experience and relationships to be valuable to the organization.
5. Is a lead financial contributor to the organization and asks other board members for their support.
6. Meets with each board member individually at least once a year to help each person to discover how they can be most useful.

My advice to board members, nonprofit CEOs, and funders: the most important thing you can do to help build stronger boards is to position the right people as board chairs, and then give them your fullest support. That's how to strengthen the nonprofit sector in serving our communities--regionally, nationally, and globally.

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Motivating or Crushing Team Spirit: What We Can Learn from Nonprofit Boards

In training and placing business executives and professionals on nonprofit boards, I see which board environments motivate people to perform their best, and which environments crush the spirit right out of well-meaning, enthusiastic, and generous board members.

You see, nonprofit boards are revealing environments because people are there voluntarily. Board members don't have to be there nor do their best in order to earn a living. They are there primarily to serve their communities, to learn, for the psychic reward, and perhaps somewhat to build their professional networks.

The main point is that nonprofit board members are most likely to give generously of their time, expertise, and money, including opening doors to prospective donors, if the board environment is friendly, supportive, enthusiastic, and appreciative. That tone is set by the leadership--the board chair and CEO of the organization, and has everything to do with how people treat each other on the board.

Think of the ways that people signal their support for each other and the organization, or, on the other hand, squash the spirit. Here are a few recent stories I've heard:

• Same situation, but different reactions on two different boards: An email went out to the board announcing that an esteemed civic leader had just agreed to attend the annual fundraiser as one board member's guest. On one board, members emailed back to each other with enthusiastic notes. "Amazing!" "Great!" Then others chimed in by inviting people of interest and cheering each other on. On the second board, similar situation, but the response to the initial email was silence. Dead silence. Which board would you want to be on?
• On one board, the chair opens every meeting with thank you's to board members who have contributed in the past quarter, showing appreciation and also signaling the variety of ways that one can be helpful in advancing the organization's work. On a second board, the board chair rarely even makes it to board meetings, and no one at all acknowledges the few board members who use their business networks to raise money and other valuable services and assistance for the organization. On a third board, the board chair attends board meetings, but does his emails during board meetings from the head of the table. If you were on the second or third board in these examples, how motivated would you be to open up your most valuable contacts to invite them to do favors for the organization or to contribute generously?
• On one board, the board chair made the lead financial contribution, both personally and from his company, and people from his company volunteer at the organization. On the second board, the board chair asked everyone on the board to contribute $3,000 to an event (some did and some didn't), and then, in the end, he himself contributed only $200, and nothing from his company, even though he is a successful businessman. On the second board, how much would you stretch your family budget to give to this organization or ask your boss to contribute from the company?

In order to give and raise money generously, boards need to have a clear understanding of the case for support, a good website to refer to (and perhaps printed materials), and staff support. But, even more importantly, board members need to feel that they are part of a team that is working together to advance the organization in serving the community. It should be fun. Exhilarating.

There are many great causes, and many boards that will appreciate generous, enthusiastic members. Board members have choices, and can easily move on to other organizations where they can do good and feel good too.

Businesses that seek to retain the most talented employees can learn from these volunteer experiences how to build teams that are inspired and motivated to give their best and their most. High performers thrive in work environments where they engage with others to achieve the greater potential.

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When It Comes to Boards, Are For-profits Just Catching Up to Nonprofits?

Once I started training and placing business executives on nonprofit boards sixteen years ago, they began asking me to help their boards to become more effective; moreover, simply "training" them was not sufficient. Neither was board "self-assessment." So, I developed a board assessment and development model and mentored others how to do conduct the process as well. Elements of my approach are described in Leveraging Good Will, and in various blog posts.

Through the facilitated process, the board develops a plan and begins, if needed, to refine its board model and committee structure, transition and strengthen the board composition, focus the board agenda (and understand exactly what information the board needs that is relevant and useful), and prepare for leadership succession, in order to better fulfill its oversight responsibilities and achieve the enterprise's greater potential.

What drove the demand from so many board members and boards for an effective change process for boards? Financial pressures! By the mid-1990's, nonprofits were having to adjust to drastic changes in funding patterns from all sources--government, foundations, corporations, and individuals.  Additionally, demands for services from the community were increasing, and expectations for accountability and measurement were heightening. Boards were waking up and realizing that they needed to understand what it meant to govern and how to govern well. It was no longer business as usual for nonprofit boards.

Not surprisingly, consultants from major global consulting firms and CEOs of major corporations whom I placed on nonprofit boards, as well as those who served on boards where I consulted, often commented to me that for-profit boards could use board development services of a similar nature to help address similar matters of board composition, leadership succession, the focus of meeting agendas, the information the board needs (either through first-hand observation or prepared materials), and so on.

McKinsey's new article on Using the Crisis to Create Better Boards describes the new awakening among for-profit boards to improve governing practices in much the same way. I have always believed that market forces drive change; just as with nonprofits, financial distress is shaking up for-profit boards and will lead to better governance.

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Smart Giving: Look Who's on the Board

Whether you're an individual, company or foundation, making a significant contribution, you can get a good idea of an organization's vitality and prospects for success by taking a look at who's on the board.

As the editor and co-Founder of the Corporate Library, Nell Minow said in a recent Financial Times article about for-profit boards, that "in the years before its collapse...as with most of the banks, Lehman's board had almost no expertise in the kinds of financial instruments and transactions that were an essential part of its balance sheet." She gave an example of an audit committee of a company that in 1986 had just two members; "neither had expertise in accounting or finance; and one was O.J. Simpson."

For nonprofits as with for-profits, it is essential for the board of directors to be highly purposeful in considering the mission and goals of the enterprise and to identify and recruit a group of individuals with the diversity of experience, expertise, and perspectives to create an ambitious vision, establish and achieve a vital revenue model, and build and implement high impact programs that address vital community needs.

When deciding where to make your charitable contributions, you should be able to find a list of board members on the nonprofit's website, which should include their professional titles and affiliations, and ideally, brief bios. The board should be comprised of people with relevant and diverse backgrounds, and you should be able to see the logic. Generally speaking, there should be a mix of people with expertise in business and strategy, law, finance, accounting, and the substance of the work of the organization.

In many cases, you will be asked to make a substantial contribution by someone you know who is already supporting the organization. In those cases, you have an opportunity to ask your friend or colleague how they became involved and about their familiarity with an organization. And do consider how you, your company, or your foundation might even help the nonprofit become stronger by contributing expertise as well.

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Philanthropy and Service: Getting the Best Return on Your Investment

One year ago, I wrote a post here on "Building Your Nonprofit Investment Portfolio: Leveraging Your Impact." In the post, I recommended how to decide where to make your personal contributions in order to make a difference on the issues that matter to you most.

Given the economic challenges of the past year, I looked back on that post to see what I would update. Surprisingly, nothing, in terms of how to choose where to invest. What I would like to do, however, is emphasize the value of contributing your time and expertise as well as your dollars.

Many Fast Company readers are business people and entrepreneurs from diverse backgrounds. Many of you have such valuable skills, experience, and perspectives that you can help nonprofit executives to achieve new levels of success in tackling issues from economic revitalization in our communities, to global poverty, social justice, and environmental sustainability, just to name a few.

For example, last summer, I observed a two-week process during which a bright 25 year old management consultant volunteered to help a brilliant nonprofit CEO/entrepreneur as they worked together to articulate the CEO's new five-year global strategy. The freshly minted and measurable goal was so compelling that it has helped this organization to access powerful new sources of funding.

Management consulting, technology, marketing, public relations, organizational development, finance, accounting, investments, and law--just to name a few--are areas of expertise that many nonprofits seek for skilled volunteering and board membership. Knowledge or networks related to an organization's current or potential funding sources are also useful; these might include corporations, foundations, philanthropists, government sources, or multilateral/development funding institutions. Expertise related to global communities where the organization will be expanding can also be valuable.

So for the best return on your investment, I encourage you to consider how you can contribute time and expertise as well as money. You might be surprised how much you can help an organization to accomplish, and how great you feel about that.

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Moody's and Kiva at CGI: Rating Credit Risks for a Hand in the Future of Micro-lending Banks

While it's a thrill for me to help engage companies in strategic philanthropy, corporate social responsibility (CSR), skilled volunteering, and other forms of giving and service, I've always believed that corporate initiatives are only sustainable if there's a solid business case to be made. So after my initial excitement about a terrific new corporate-nonprofit partnership, my next question is: "How did you sell it to the board?"

At last week's CGI, I was delighted to meet with Premal Shah, President and CEO of Kiva, the world's first person-to-person micro-lending website, established in 2005. Kiva helps alleviate poverty by raising $1 million a week in small loans (many are $25) to invest in micro-businesses in Asia, Africa, South America, and Eastern Europe. Shah explained that corporate partnerships are essential to Kiva's success.

Shah described Kiva's new partnership with Moody's that was announced on stage at CGI. Moody's will do three things:

• "Moody's Investors Services will assign initial ratings, pro bono, to 20 of Kiva's MFI [microfinance institution] Field Partners, providing an independent assessment of creditworthiness that individuals can consider when selecting an entrepreneur to lend to."
• "Moody's Foundation will fund the establishment of a Moody's Field Specialist Program to recruit local microfinance specialists who will help MFI Field Partners implement best practices in lending and loan servicing, and to identify new MFI Field Partners."
• "Moody's Analytics will train Kiva staff, including Moody's Field Specialists, in credit risk management."

Kiva-Moody's relationship is potentially game-changing for microfinance. Why? Access to capital. "We will provide MFIs with the opportunity to access global markets, by bringing even greater analytical rigor, transparency, and information to the Kiva marketplace," according to Rob Sherman, Vice President, Communications, Moody's. "We will broaden the pool of investors interested in microfinance because they will better understand the credit risk," says Fran Laserson, President, Moody's Foundation.

So, what is the business case for Moody's? "The double bottom line," says Laserson, "social responsibility and responsibility to shareholders." And how is this good for business? "By offering ratings to MFIs which will evolve and grow into deposit-taking institutions--banks that will become regulated--Moody's is developing a relationship with them now through this initiative."

Another synergistic opportunity for both Kiva and Moody's was in the creation of the project itself. At the outset, Moody's asked Kiva, "What are your most pressing needs around the credit risk?" In developing the Kiva-Moody's initiative, Moody's wanted to apply their unique expertise and engage their talented people. "At the table to mold this partnership were Moody's senior people in corporate development, global banking, legal, business planning, philanthropy, and ratings administrators," says Laserson.

As with other sustainable and high-impact CSR programs I've described in this blog, the Kiva-Moody's partnership has all the hallmarks of excellence: alignment with company goals and objectives, research and metrics to demonstrate need and progress, partnerships and alliances, employee engagement, and leadership from the top.

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How to Lead a Great Panel Discussion

In my work in training and preparing business executives and professionals for service on nonprofit boards of directors, I facilitate panel discussions. The panelists include corporate leaders who chair and serve on NGO boards, and CEOs of global, national, and regional nonprofits. I've always said that the best panel discussions are more like Broadway shows. You get across the vital learning content--but with spontaneous drama, engaging the audience in the personalities and dynamics of the panelists and the stories and experiences they are conveying.

At the Clinton Global Initiative (CGI) during the past week, it was fun, for a change, to be part of the audience that observes panels led by others. The panel led by Diane Sawyer, "Investing in Women and Girls," definitely won the prize for best drama: There was diversity of opinion on the panel and Sawyer made sure we heard it, graciously.

Here's what it takes to put on a panel discussion that will rivet your audience:

1. Panelists from diverse perspectives, each of whom has expertise on the topic. I always felt that most of my job as facilitator was in identifying and recruiting the right people for the panel in the first place.
2. Comfortable seats that allow panelists to face each other, and no table as barrier to the audience.
3. A facilitator who understands the issues, listens carefully to the panelists, and can roll with the flow but keep to the key issues. Sometimes the facilitator has to gracefully interrupt panelists to keep a good momentum going.
4. An opening statement from the facilitator to lay out the key themes: short, focused.
5. No opening statements from panelists. The facilitator dives in, but with the right question to engage each panelist from the start. And with a pithy reference to each panelist's credentials. (The bios should be provided in a handout.)
6. For audience questions, I like to invite people to state their question themselves if the audience is small enough (under 100). In larger audiences, people can submit their questions electronically.
7. To build energy and foster learning, the facilitator encourages panelists to ask each other questions--and stimulates and respects different perspectives on issues and problem-solving.

The audience is there to learn. The facilitator's role is to engage the audience and the panel together in a learning adventure.

Photo: Janet Mayer / PR Photos

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Nike at CGI: Helping Girls and Women Achieve their Potential and Change the World

I have admired Maria Eitel since I met and interviewed her at last year's CGI. Talking with her again this year reminded me why. Imagine that just a few years ago, she was asked to create a purpose and a plan for the Nike Foundation. What she presented to the Nike Board of Directors was The Girl Effect-- the idea that when you invest in girls, you change the world. Eitel explains: "A girl is the mother of every child who is born into poverty, and a girl will determine the future of the next generation. The Girl Effect: you don't just transform her life, but the family's, the community's, the nation's."

As you saw in my Genzyme and Goldman Sachs posts from CGI, and previous posts on firms like Clifford Chance, these are the innovators that identify needs and opportunities. They also consider the resources they can offer to make a meaningful contribution, and build a corporate social responsibility (CSR) strategy that's aligned with the corporate mission. They envision the greater potential for the community and the world, and how their company can help make it possible in a way that makes sense for the business.

Find me a company with a robust, sustainable, and high impact CSR initiative, and I'll bet the CEO can tell you how and why the board supports the program--and why it makes sense to shareholders. Nike board member Jill K. Conway, former President of Smith College, and former board member Michael A. Spence, Nobel Prize winner in Economics in 2001 and Professor at Harvard University, led the way in supporting Eitel's proposal for The Girl Effect when she made her proposal. Eitel recalls how Spence declared that this initiative was the "smartest economic contribution that we could make as a foundation."

Just a few years later, Nike and Eitel are recognized as leaders at the forefront of one of the most prominent global movements by Muhammad Yunus and former President Bill Clinton. Eitel's partners and collaborators in helping girls and women include Peter and Jennifer Buffett, Goldman Sachs, ExxonMobil, and The World Bank Group, among others.

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Genzyme at CGI: Global Problem-Solving Gives You a Competitive Advantage

If your corporate social responsibility (CSR) program is ancillary to your corporate strategy, it's on the chopping block--or already in the waste bin. This is especially true in today's economy. On the flip side, you have a chance to gain a competitive advantage by creating a unique approach to making the world a better place.

Say the CEO or the board asks why the company is spending money on a particular CSR program. You need to have an answer ready, but you should also see it as an opportunity to make the case for a sustainable, strategically integrated CSR program.

Twenty years ago and earlier, with rare exceptions, the only corporate charity was a bit of gifting by the CEO, perhaps to the arts. Ten years ago, corporate philanthropy and volunteerism became popular as an a la carte add on. In these posts from the Clinton Global Initiative (CGI), I'm turning the spotlight on the avant garde of CSR: companies that make community and global problem-solving part of their business platform, thus making "doing good" sustainable.

Genzyme, one of the world's leading biotechnology companies, is a good example. Through its Humanitarian Assistance for Neglected Diseases (HAND) initiative, Genzyme supports efforts to discover and advance novel treatments for neglected diseases such as malaria, Chagas disease, and sleeping sickness. According to Genzyme, "The company does not seek to profit from the commercialization of any products it helps to develop under this program."

Sounds fantastic, but I wanted to know: "Why would a for-profit company do this?" I posed that question to James A. Geraghty, Sr. Vice President, Corporate Development, Product Acquisition, and Partnering Transactions, Genzyme. "If we don't do it, who will?" he replied. That response mimics what I heard from speakers at CGI--Genzyme saw a global problem, and used their company's expertise to solve it.

But I pressed him on this: "What's the case to shareholders, and how does your board of directors support this?" Geraghty explained that historically, pharmaceutical companies have not had great relationships with governments in developing and emerging countries. Yet those are, of course, important markets for companies like Genzyme. "Governments are the decision makers. We want to develop their respect as partners, so that we can bring forward our commercial portfolio in the future." Genzyme's portfolio includes drugs for rare inherited disorders, renal disease, cancer, orthopedics, and diagnostic testing.

The Broad Institute, Medicines for Malaria Venture, and the Harvard School of Public Health are among Genzyme's multiple partners in this initiative. Genzyme's "changemaking" commitment (as they refer to it at CGI) has the essential elements of successful and sustainable business CSR strategies: alignment with company goals and objectives, research and metrics to demonstrate need and progress, partnerships and alliances, employee engagement, and leadership from the CEO.

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Goldman Sachs at CGI: Women Offer the "Highest ROI"

That's what Lloyd C. Blankfein, Chairman and CEO of Goldman Sachs (GS), told us today. That providing business and management education to women in developing and emerging economies meets a "great need" for "enormous [investment] returns" and provides a "wide open area for us [GS] to go." The firm's goal of helping 10,000 women is just the beginning, he says.

GS's CSR investment in 10,000 women has the key ingredients for a successful CSR program: alignment with company goals and objectives, research and metrics to demonstrate need and progress, partnerships and alliances, employee engagement, and leadership from the CEO.

I have spent 16 hours at CGI, more than half of them interviewing C-suite corporate executives, always asking, "How is your corporate social responsibility (CSR) initiative in the interest of shareholders, and how does your board of directors feel about it?" In my posts from CGI, I will share their perspectives on this matter.

To give some background on the case for investing in women, according to former President Bill Clinton, who opened this morning's session, "Women perform 66 percent of the world's work and produce 50 percent of the food, yet earn only 10 percent of the income and own 1 percent of the property." Furthermore, based on GS's research, "Female education is a key source of support for long-term economic growth."

GS's 10,000 Women initiative fosters economic development by providing high-quality management and business education, wrap-around services, and access to capital for underserved women entrepreneurs. The initiative involves more than 60 of the world's leading academic and nonprofit institutions which are teaching in 16 countries that include Brazil, China, India, Nigeria, and Kenya.

Blankfein elaborated on GS's interests in the 10,000 Women initiative. In addition to promoting economic development and increasing the firm's reputation, the program has tremendous value as a "recruitment and retention tool. We lose people to public service in the middle of their careers. This initiative makes people feel more complete and fulfilled. People and reputation. We are fiduciaries to manage the firm for the long haul." Blankfein also commented on how engaged employees are in the mentoring component of the 10,000 Women initiative.

Later in the day, Dina Habib Powell, a Managing Director, GS, introduced me to Ayo Megpobe, a woman from Lagos, Nigeria who runs a catering business. Megpobe described how she grew her company after she participated in the 10,000 women program. Starting her business all alone, she now employs seven employees, has increased revenues by 500%, and serves corporate clients.

My posts from CGI will feature companies with CSR models that are integral to the corporate strategy, and CEO-led.