My perspective is based on my work helping businesses with their CSR/philanthropy strategies, training and placing business executives and professionals on nonprofit boards, and consulting to global, national, and regional boards over the past 15 years. The corporations range from Fortune 100 companies, to the world’s largest global professional services firms, to $3 b funds. 80% of the nonprofits I work with have budgets between $1m-$10m, 15% from $11m-$100m, and 5% up to $1 b. Here is my take:
Down Arrows:
Companies: Many companies are giving less in 2009 than in previous years.
Board candidates: There are fewer board candidates prepared to make substantial financial contributions. Also, some business people who were interested in serving on a board last summer decided to postpone board service until they have a clearer sense about their jobs and income.
Nonprofit boards: Organizations that were becoming more ambitious in their financial expectations of board members have had to adjust their expectations. On some boards, board members (or their spouses) are losing their jobs, or seeing their personal investment incomes dwindle, affecting their ability to make contributions and even to ask friends for the levels of contributions they had asked for previously.
Up Arrows:
Companies: Are becoming more strategic about how they invest their more limited philanthropic dollars, so they are realizing the exponential impact of encouraging and supporting the participation of their executives and professionals on nonprofit boards. With fewer dollars to spare for philanthropy, marketing, and human resources, companies are seeing the multiple benefits of supporting nonprofit board service for their executives: leadership development for their executives/professionals, strengthening nonprofits, strengthening communities, and enhancing the company’s brand. I call it “leveraging good will” by strategically integrating philanthropy, board service, and volunteerism. This is an approach that is being more broadly adopted by companies large and small.
Board candidates: There continue to be an abundance of candidates in businesses of all sizes who are eager to serve on nonprofit boards and prepared to make meaningful financial contributions. The over-riding concern of each and every board candidate I meet is to find a board where they can add value. (That’s my job in my practice: to find each candidate a board where he or she can add value, from the candidate’s perspective and the nonprofit’s perspective. Also to prepare board candidates to be effective, and coach them once they are placed, since many of them rise to board leadership roles.)
Nonprofit boards: Because of new financial challenges, and greater scrutiny and transparency from media, watchdog groups and regulators, nonprofit boards are increasingly aware, seeking to understand their roles and responsibilities.
Boards are:
- downsizing to be more effective
- updating their bylaws, including establishing conflicts of interests policies with annual disclosure statements
- becoming more rigorous in creating board member statements of expectations and establishing systems of board member accountability, including with highly attentive and well-functioning Board Governance Committees. (When I created and introduced the statement of expectations and board governance committee description to boards in 1994, some old school board members were quite offended! Today, these materials and practices are quite commonplace.)
- engaging in leadership succession planning to recruit well qualified board chairs to lead, as well as board members to provide a full complement of expertise and diversity of backgrounds and perspectives
- becoming more rigorous in ensuring that the organization has a viable and sustainable revenue model; it’s important for boards to understand, however, that it is incumbent on them to help the organization to achieve financial success for the organization through their support.
Bottom line: There is more interest than ever among businesses and business people in serving on nonprofit boards, and among their companies in using their philanthropic dollars to match their contributions. And nonprofits are as eager as ever for talented business people to join as long as candidates are thoughtfully prepared and introduced based on their interests and qualifications.
The win-win-win is powerful. With tens of thousands of business people, properly prepared and matched to boards, we can help to elevate the nation’s and the world’s nonprofit organizations, while preparing the next generation of leaders to build a greener, more peaceful, just, and prosperous world.
Imagine the scene. 200 game-makers, along with academics, funders, and journalists convening for two days to explore how to create and use digital entertainment – video games - to address the most critical issues of our day, from poverty, climate change, global conflicts, to human rights.They are meeting this week at the Parsons New School of Design for the Sixth Annual Games for Change Festival.I hear the numbers of attendees have doubled each year; oh, to have been there in 2004 with the first 6 people!
Who funds such a festival and why?AMD for one. Advanced Micro Devices (NYSE: AMD) describes itself as “an innovative technology company dedicated to collaborating with customers and partners to ignite the next generation of computing and graphics solutions at work, home and play.”First, let’s understand that the shareholders can be happy. Because AMD makes money by selling microprocessors and graphics chips.
So a corporate social responsibility (CSR) strategy that advances and leverages AMD’s brand and products is good for business.Next, how is AMD’s CSR strategy good for the world?Let’s look at MacArthur Foundation’s ground-breaking study that shows that time spent online is critical for teen development.Mizuko Ito, University of California, Irvine researcher and the report’s lead author says “spending time online is essential for young people to pick up the social and technical skills they need to be competent citizens in the digital age.”That kids are learning astronomy, creative writing, and foreign languages, while they are also developing social skills.
With their products in mind, and an awareness of the value of video gaming for educational purposes, AMD launched a signature education initiative called Changing the Game, taking gaming beyond entertainment and by inspiring youth to learn critical education and life skills through the creation of digital games with social content. The program focuses in particular on youth game development as a tool to improve science, technology, education and math (STEM) skills, and to spur career interest in game development or a similar field.
AMD is building its initiative to be high-impact and aligned with their company purposes by being global, engaging employees (in online mentoring and in the communities where they have offices), and partnering with nonprofits that have expertise and community relationships.
I was first introduced to the world of gaming for social impact through Reach the World and its GeoGames.See my Fast Company post here.
As Allyson Peerman, President, AMD Foundation explained, “Video gaming is ubiquitous and global, it transcends all languages.Through video gaming, we can reach kids in schools, at after-school programs, and at home on their own.Our end goal is to inspire kids to learn through games.”
The challenge facing a number of nonprofit organizations is that the boards are not suitably organized, structured, or prepared for their authority to guide, shape, and govern the organization.And some boards are lacking board members or leaders with the necessary experience or diversity of backgrounds to address the important global, national, and community challenges they face. Then, too often, when well-qualified business people do join nonprofit boards - if the board is not well organized or led, then the new members find themselves stymied in their attempts to add value.
Furthermore, many very talented nonprofit CEOs are frustrated by boards that are unprepared to be effective partners in advancing the mission and work of the nonprofit.
In order for a board to be fully effective, it needs to work in partnership with an expert CEO to do the following:
understand its role as a board
envision the organization’s greater potential in addressing a compelling need (fulfilling the nonprofit's mission in education, healthcare, the environment, etc.) by creating and achieving a robust revenue model
establish the board’s agenda and work for the board to add value, working in partnership with the CEO to accomplish success
establish an efficient board structure (size of board, number of meetings, board agendas, committee structure, etc) to allow the board to work effectively and efficiently; (by the way, board structures need to be customized by board)
determine the optimal board composition – exactly what expertise, experience, and diverse perspectives and backgrounds, networks and relationships will be most useful for the board in achieving success for the organization
create a plan to build the board with the right people, and prepare them for their roles
identify and transition to the right board leaders and establish a framework for ongoing leadership development and leadership succession planning
establish ongoing board education systems re: governance and the substantive work of the organization
What I learned over 15 years ago, when I first began training and placing hundreds of business executives to serve on nonprofit boards of directors, is that some of the boards I placed them on wanted professional consulting to help revamp boards from where they were to where they wanted to be in terms of board effectiveness.
That’s when I began creating and facilitating new change processes to transform boards into high-functioning bodies.There is a hitch….good results always require that the board and CEO be earnestly willing to change the way they function as a board (sometimes, resistance from the old guard or entrenched powers can be quite firm and stymie those who seek progress).
The good news is that there are many new drivers for boards and CEOs of nonprofits to shift to more effective governance, not the least of which are challenging new financial forces, demands for greater transparency, and greater acceptance of innovation, diversity of backgrounds and perspectives, and younger generations.As we see in all sectors, the business models of the past are no longer working.It is time for new ways of doing business, and the public is also beginning to see that boards are a major factor in leading the way.
According to Harvard Business Review, “decisions are the coin of the realm in business. Every success, every mishap, every opportunity seized or missed stems from a decision someone made-or failed to make. Yet in many firms, decisions routinely stall inside the organization-hurting the entire company's performance.The culprit? Ambiguity over who's accountable for which decisions.”
In this classic HBR article from 2006, Bain partners Paul Rogers and Marcia Blenko describe the RAPID Decision Model, instructing that for every decision, there are roles and responsibilities that must be assigned for who plays the part of Recommend, to gather the input and do the analysis to recommend a plan; who plays Agree, to negotiate and modify the proposal; who plays Perform, to execute the decision once it is set; who provides Input, to consider feasibility and implications; and who plays the role of Decide, ultimately committing the organization and being accountable.
In a nonprofit, the board of directors is the D for Decide. The board makes the key organizational decisions regarding the direction, strategy, and revenue model of the organization.The chief executive officer (sometimes referred to as president or executive director) and his or her team, should be the experts, and so they should play the roles for Recommend, Input, and Perform, and perhaps, Agree.But only the board, based on discussion with the executive, can fully commit the organization; it is the board that has ultimate accountability.
It is valuable for business people to know this for these reasons:
1.For business people who are considering joining nonprofit boards, it is important to understand the role of the board.
2.For for-profit consulting firms that traditionally work with for-profits and tend to work fairly exclusively with management rather than boards, it is important to understand that in the nonprofit sector, strengthening the board is essential if you are addressing the larger organizational matters of mission, vision, strategy, or revenue model.Organizational consultants can only help elevate a nonprofit to its greatest potential by helping the board to understand its role, how to work collaboratively with the organization’s CEO, establish a useful board structure, build the board’s composition, plan for leadership succession, and function at the height of board effectiveness.
3.When nonprofits are exploring organizational partnerships, much of the R and I work from the RAPID Decision Model can be done by the respective organizational staffs.But the boards (or representatives of the boards – perhaps a task force, or leaders from each board) must be involved at key points in the negotiation, and certainly in the ultimate decision.
4.Business people who truly want to have an impact in helping to advance an important cause - if you have valuable business skills and some resources to contribute - consider joining a board.
5.For corporations and funders deciding where to invest contributions/philanthropy, it’s useful to look at who is on the board, assess whether there are board members who appear to bring business experience as well as people with “industry” expertise (from the field of work of the nonprofit itself) from diverse perspectives and backgrounds.It’s also a good idea to look at the extent to which board members (and their companies, for those who come from the business sector) are supporting the nonprofit financially.A nonprofit’s revenue model is always bolstered by philanthropic dollars to help support the organization’s important work.If board members are not voting with their own wallets, why would an outsider invest?
I’m all for businesses engaging in corporate social responsibility, philanthropy, service, and any and all good for the world.But it was never smart to sell good deeds to businesses on the sole merits of being nice neighbors (that only works in houses of worship).The role of a for-profit corporation is to increase shareholder value, not to do acts of charity.Not surprisingly, companies are re-assessing their CSR approaches in light of today’s economy, as reported in “A stress test for good intentions.”
Whether the good times roll, or times are lean, corporate social responsibility has to be good for business.
So how does a company build a CSR model that is good for business?
Tie your CSR strategy to your company’s overall purpose and mission:Whether you sell professional services or consumer products, create a CSR program that advances your company’s purpose, helps your company develop your people – your most valuable assets, and also identifies you in the public eye with your services or products.
For the greatest impact, integrate your philanthropy, human resources, and marketing strategies:Make your corporate contributions where employees volunteer (that reinforces team-building and loyalty to the company), where professionals provide management or technical assistance (fostering professional development), and where executives serve on nonprofit boards (that fosters leadership development).An integrated, strategic CSR approach that is aligned with the corporate mission and identity will increase your company’s impact in building stronger communities where your customers and employees live.The integrated approach will also help your company build valuable relationships (good for business development and also “crisis glue”), and establish a positive brand reputation for your business.
Achieve multiple benefits with your green strategy: Improve the environment and cut costs by being greener.You will also attract and retain the best talent in today’s workforce by being environmentally conscious, and build your reputation as a company.
Engage employees and customers in creating and implementing your plans:By involving employees in developing your green programs, you provide new opportunities and experiences for team-building and leadership development, while also paving the way to easy program implementation. American Express has taken the concept of “engagement” even further by partnering with a national nonprofit, and most creatively, involving the general public in online voting to help them choose where the foundation will make its funding contributions – a great way to develop public awareness of important community organizations while also building the company’s reputation and relationships. Note that this didn't cost more in philanthropic dollars....but the company achieved exponential benefits for itself and for the community by being smart in how they used their dollars.
Partner with nonprofits that are experts:Conservation International recognizes its partnerships with Wal-Mart, Starbucks, and McDonald’s “to help them establish green benchmarks and embrace environmentally sound practices. These efforts enable them to reduce their impact on critical habitats and create economic opportunities for local communities that respect the need to use natural resources responsibly.”
As President Clinton said to a group of us in Washington, D.C. last week, strong communities are good for business.Now we need to make sure that CSR strategies are as powerful and effective as possible in maximizing the win-win for businesses and the community. It's in all of our interests to achieve a greener, more prosperous, peaceful, and just world.
Consulting firms, law firms, and banks are reconciling their desire to build talent with their need to cut costs by deferring “start dates to new hires, giving them six months or a year to travel or do public service. This approach has been embraced by consulting firms, law firms and banks. Some, like Credit Suisse, offer around six months’ salary to new employees who agree to start a year later,” according to Economist.com.
Over 100 large law firms have delayed start dates for this fall’s new hires, with some firms offering as much as $80,000 to new hires to perform community service or learn a new language and travel rather than come to work for at least another year.
Teach for Americaprovides a good model for us to see the consequences when new college graduates work in communities before going on to other careers. With 14,000 TFA alumni now working in a broad variety of professions, including business, medicine, and law, Teach for America intends for its alumni to become lifelong leaders and advocates because they have been affected – in fact transformed – by their TFA experiences teaching children in underserved communities.
While it is certainly not stress-free, many whose start dates are postponed are excited about the opportunities to participate in community service, learn languages and travel. While they wait for their jobs to begin, many will learn first hand about important community needs through their service experiences, others will develop and grow through new language skills and understand the world better from travel experiences.As they move on in life, many of the “alumni” of this fall’s entering class will integrate these experiences with their business skills to become valuable civic and global leaders.I believe we will see benefits for decades to come.
“My daughter, who is studying healthcare policy in graduate school, is schooling me that the biggest financial burden on our healthcare system will not be the aging baby boomer population; it will be the outdated healthcare delivery system.”President Bill Clinton used this as one of the examples of delivery systems and financial models that need to be reinvented – healthcare, energy, financial services, and product distribution.
President Clinton also talked about the increasing popularity of corporate social responsibility (CSR) as it proves its merits to the financial bottom line for businesses and the social good."The perception that businesses must choose between turning a profit and improving the communities where they operate is outdated and irrelevant in our interdependent world," said President Clinton.He noted the expanding success of the Clinton Global Initiative (CGI) now in its fifth year.CGI has gained commitments valued at $46 billion, many by some of the world's leading companies. “They are demonstrating that investments in social and environmental programs in local communities and on other continents benefit both society and the bottom line."
President Clinton made his comments at a small gathering of business and nonprofit leaders at the Brookings Institution.Also featured were Muhtar Kent, Chairman and CEO, The Coca-Cola Company, and Patricia Woertz, Chairman of the Board of Directors, CEO, and President, Archer Daniels Midland Company.
With messages from the morning on my mind about reinventing service delivery models, CSR, nonprofit/for-profit partnerships, and economic development, I went to lunch with Jeff Franco, the executive director of City Year Washington, DC.Franco talked about Michelle Rhee, Chancellor of DC Public Schools, the role she is playing in transforming the education delivery system in DC, and the expanding collaboration between City Year and DC public schools through City Year’s “Whole School, Whole Child” initiative. Franco talked about measuring success by increasing the graduation rates above present levels (about 50% in many urban communities). He also talked about City Year investing in its core members as future leaders, much as Teach for America develops its alumni (one of whom is Rhee herself).
Next stop in my day was to a highly enterprising nonprofit business model.Julius Walls, Jr. is the CEO of Greyston Bakery in Yonkers, New York, whose motto is “We don’t employ people to bake brownies.We bake brownies to employ people.”Greyston is a hybrid for-profit/nonprofit that generates revenues from the sales of brownies to fund its jobs programs, childcare, healthcare, and housing (including new green housing) for the underprivileged.
New business models, systemic changes, and public-private partnerships that foster economic development and environmental sustainability.
While you ponder how your business can engage productively while serving its own economic interests, buy a scrumptious brownie from Greyston Bakery here.
J. Richard Hackman says there is “no question that a team can generate magic.But don’t count on it.”He lays out a plan for leaders of companies and other organizations to build effective teams in his book Leading Teams, that is summarized in the May issue of Harvard Business Review.As I read Hackman’s observations, I noted many parallels with the 400+ nonprofit boards I have worked with.My recommendations are below.
Hackman: “Teams must be real.People have to know who is on the team and who is not.It’s the leader’s job to make that clear.”
My take on nonprofit boards: Board composition is key to success.Boards and their leaders who are rigorous in determining who they need in terms of qualifications, diversity, experience, and commitment build the most effective boards.
Hackman: “Teams need a compelling direction.Members need to know, and agree on, what they’re supposed to be doing together.Unless a leader articulates a clear direction, there is a real risk that different members will pursue different agendas.”
My take on nonprofit boards:Boards need to set aside time at least once a year with the organization’s CEO to discuss the nonprofit’s origins, where it is now, and the organization's greater vision….where the board and CEO are taking the organization.And most importantly, what the role of the board is to help achieve success – financially and strategically.The board needs to establish a clear role and agenda for its work for the coming year.
Hackman: “Teams need enabling structures.Teams that have poorly designed tasks, the wrong number or mix of members, or fuzzy and unenforced norms of conduct invariably get into trouble.”
My take on nonprofit boards: Essential! Nonprofit boards are comprised of well-meaning volunteers who need very much to have a structured plan in order help the nonprofit to advance its important work.Once the board has established a clear plan for itself for the year (the point directly above), the board can become clear about what it is expecting of its members in terms of attending meetings, serving on committees, making contributions, and fundraising…that is, working on the board’s agenda for the year.
Hackman: “Teams need a supportive organization.The organizational context – including the reward system, the human resource system, and the information system – must facilitate teamwork.”
My take on nonprofit boards:Absolutely!The nonprofit CEO and his or her team need to work in collaboration with the board to help ensure success – providing the right information, for example.And the organization needs to recognize, thank and appreciate board members for their service.
Hackman: “Teams need expert coaching.Most executive coaches focus on individual performance, which does not significantly improve teamwork. Teams need coaching as a group in team processes – especially at the beginning, midpoint, and end of a team project.”
My take on nonprofit boards:This is vital.
Nonprofit organizations will only achieve their potential in elevating our communities - regionally and globally - when their boards of directors are encouraged and supported in reaching their greatest heights of success.
Business people and nonprofit leaders participated this week at a forum convened in Washington, D.C. by leading international law firmClifford Chance.The event explored ways to advance global, national, and regional agendas in education, social justice, healthcare, and economic development. “We have always had a strong interest in corporate social responsibility, as evidenced by our more than 33,000 hours of pro bono and public service work in the US last year,” said David DiBari, Office Managing Partner.“We now have close to 40 partners serving on nonprofit boards supported by firm resources.This leadership initiative is a key element of our corporate social responsibility goals.”
Business leaders agreed that nonprofit board service provides a unique opportunity for personal and professional development. “I was invited onto the board of the Corporation for Supportive Housing (CSH) to contribute expertise and make introductions to help advance the organization, and I am glad to do that because I believe in CSH’s important work, but I am also learning a great deal through the experience,” shared Douglas Weill, Managing Director of Credit Suisse, based in New York. Weill is Co-Head of the Real Estate Investments Group in Alternative Investments.
Stephen Nickelsburg, a Partner at Clifford Chance who serves on the board of Northern Virginia Family Service (NVFS), agreed with Weill.“In the past year, NVFS has been involved in a merger as well as developing innovative revenue strategies.I am glad that the firm and I can be useful to such an outstanding organization, but this is also a unique and valuable experience for me to be part of the governing process.”
Panelists and participants shared insights from a variety of perspectives.
Advice to business people in choosing nonprofit boards is to join boards where:
you can add value in addition to making financial contributions – especially by engaging in governing discussions and decisions about the future of the organization and core strategies;
the board is functioning well and ready to engage with new members;
there is effective CEO and board leadership; and
the mission is personally meaningful.
Advice to people after you join a board, if you want to be useful to the organization,develop yourself, and have a rewarding experience:
Do more than just attend the four board meetings per year: Learn about the organization, and figure out how to add value.
Participate on committees; that’s often where board members can really be useful.
Help articulate the case for the organization, sometimes even finding a way to boil down complex issues into an “elevator speech;” or to make the case by showing the negative consequences of not addressing the problems that the organization remedies – such as hunger, or homelessness, or loss of jobs.
Nonprofit CEOs who shared their perspectives about developments in nonprofit board governance included Deepak Bhargava, Executive Director, Center for Community Change, and Mike Curtin, CEO, DC Central Kitchen.A few of the nonprofit leaders who participated included Jane Lang, Founder and Chair of the Atlas Performing Arts Center, Debbie Hance, Treasurer, Northern Virginia Family Service, and Uma Lele, Ph.D., Board Member, EngenderHealth, where Clifford Chance partner Wendy Wysong serves on the Board.
Having attended over 30 high school, college, and graduate school commencement ceremonies (my children’s, and also institutions where I have been involved), and having been a graduation speaker myself, I have noticed that effective graduation speakers usually give the one and only important speech: the “rules of life.”And often having had the privilege to sit with the speaker’s spouse, I have also heard that the speaker spent arduous hours toiling over this speech – honoring the profound responsibility of addressing the graduates.
The rules of life speech always centers on honesty, integrity, and service. What makes the speech unique and powerful is the speaker and the life he or she has led.People who have contributed meaningfully – in their professional or volunteer lives – to advance human rights and social justice, the education, health, and welfare of children and families, the environment, global peace, and the arts, for example - carry serious weight with the audience.
The speaker’s message is really only meaningful because we are processing his or her comments along with our understanding of how the person actually lives a life of social responsibility.Each of us makes similar choices about the lives we live and can contribute to our communities personally and through our companies, and can serve as role models.
At my son’s college graduation, he bounded out of a private chapel service with The Reverend Peter J. Gomes and repeated something he heard that has stayed with me ever after.The words of Reverend Gomes, author of The Good Life, were: “God, grant me work until my life is over, and life until my work is done.”
