company directors lifecycle of an nfp board
DESCRIPTION
Directors on not-for-profit (NFP) boards – both large and small, bring varied experience and knowledge to the boardroom. As a single NFP organisation grows and transitions, the board will require a diverse set of directors with varied skills to meet new challenges along the way. At inception, an NFP board may focus on fundraising strategies, stakeholder engagement, human capital and risk. As the organisation grows and matures, decision making on large capital investments, brand, acquisitions and M&A may become the focus. Good governance throughout this process is about ensuring the right people are around the table at the right time. So how can boards apply the right kind of succession planning for boards and management? A panel of highly experienced NFP directors analysed and discussed the different stages of growth for a NFP organisation and what capacity and competencies are required at each stage. Here are the slides from this presentation.TRANSCRIPT
NFP SERIES: The Lifecycle of an NFP Board
Stage 1 Grass roots/ invention
Stage 2 Start up/ incubation
Stage 3 Adolescent /growing
Stage 4 Mature/ sustainable
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Stage 5 Renewal/ Stagnant/ Merged
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Awareness of competitors
NFP SERIES: The Lifecycle of an NFP Board
BOARD SKILLS/EXPERIENCE: Entrepreneur/Founder, Volunteer driven, Passionate leaders,
Business Acumen
KEY QUESTION: Why are we doing this and who is it for? Is the dream feasible?
Stage 1 – Grass Roots/Invention (0-5 yrs) PURPOSE
Stage 2 – Start Up/Incubation (1-2 years) CAPACITY
BOARD SKILLS/EXPERIENCE:
Entrepreneur/Founder, History/Heritage Custodians, Strategy, Financial, Regulatory/Legal,
First outsiders/NEDs
Sharing organisational responsibility & hiring first paid staff
Incorporating & focussing energy on services/programs
KEY QUESTION: Building capacity and resources
How are we going to pull this off?
NFP SERIES: The Lifecycle of an NFP Board
Stage 3 – Adolescent/Growing (2-5 years) REVIEW
BOARD SKILLS/EXPERIENCE: Entrepreneur/Founder, History/Heritage Custodians/ NEDs
Governance Advocates/Legal
Seeking professional skills and community contacts
Formalising management systems, fundraising, board development
KEY QUESTION: How can we build this to be viable?
Stage 4 – Mature/Sustainability (7 – 30 years) EVOLUTION
BOARD SKILLS/EXPERIENCE: Strong Chair, Deputy Chair, History/Heritage Custodians, NEDs
with: Governance Advocates, Legal, Accounting, Funding, Marketing, Communicators (stakeholders),
technical knowledge (core understanding of business, Technology (inc social media)
Sub-committees for specific expertise
Board Evaluations required
KEY QUESTIONS: How can we sustain and maintain our edge?
Are we having fun whilst making a difference?
NFP SERIES: The Lifecycle of an NFP Board
Stage 5 – Stagnation/Renewal/M&A (2 – 5 years)
BOARD SKILLS/EXPERIENCE
Founder likely to leave, change agent required/new board
Explore Partnerships/Mergers
KEY QUESTION: What do we need to change?
Stage 5 – Decline and Shutdown (1 – 2 years)
BOARD SKILLS/EXPERIENCE
Board members decline, no new members and low attendance, dissolves itself
KEY QUESTION: Should we close?
NFP SERIES: The Lifecycle of an NFP Board
SUCCESSION PLANNING
• Board renewal guidelines/Constitution ie Limit the number of director terms (effective if
applied early in org lifecycle)
• Role of the Chair and relationships with Board and CEO ie The leader amongst leaders – a
steady hand
• “Permission for succession” ie Licence to leave but celebrate their success
• Board evaluation ee Introduce annual board and director evaluations - results must be used)
Clear understanding of what is to be evaluated
REASONS FOR FAILURE
1. Lost touch with members/supporter through deep dialogue
2. No real differentiation in the market (lack of unique value proposition)
3. Failure to communicate purpose in clear, concise and compelling terms
4. Leadership breakdown at the top (Founder Dysfunction)
5. Inability to develop and sustain a profitable business model with proven revenue streams
NFP SERIES: The Lifecycle of an NFP Board
NOTES: Lifecycle adapted from “the 5 stages of Nonprofits”, Judith Sharken Simon, 2002 and the Conversation Company, 1997.
Listen to the Minister of Social Services Kevin Andrews on the future of the sector (filmed at our recent lunch in Victoria) http://www.companydirectors.com.au/Director-Resource-Centre/Not-for-profit Thanks to our panel: Peter Fitzpatrick FAICD, Esme Bowen GAICD & Mike Gurry FAICD.
For more information please contact us at Australian Institute of Company Directors:
PH: 08 9320 1700 or [email protected] www.companydirectors.com.au