Getting the Governance You Deserve!

Strategies to Invest in Board Leadership for Sustainability and Growth

Presenters: Melanie & Jason Friedman, Friedman Associates

Friedman Associates• Our mission is to help MDOs and CDFIs to achieve your

vision for a sustainable and economically vibrant community – and demonstrate the results that lead to increased funding and long-term success.

• Areas of specialization include: Product development and staff training in microfinance

and business development services Developing systems for client tracking and program

performance Market Analysis and Capital Gap Analysis Strategic planning Board development Fund development strategies CDFI Certification and TA/FA Applications

What is Sustainability?

“Most CDFIs view sustainability as balancing a focus on mission, organizational capacity and capitalization such that a CDFI can sustain or increase it's impact over time.”

Mary Reynolds Babcock Foundation, CDFIs: A Study on Growth and Sustainability, June 2011

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The Role of Governance in Sustainability• A critical piece of the "sustainability puzzle" is

leadership, especially your Board of Directors.

• Demands for self-sufficiency and the need to demonstrate mission-driven success prompts us to take deliberate steps to increase the active governance of our organizations and ensure for our own renewal and development.

• In a recent study of CDFIs by the Mary Reynolds Babcock Foundation, half of the ED’s surveys cited smart, committed staff and board members as the most essential catalysts for their own past growth.

You can avoid this…

“The motion has been made and seconded that we stick our heads in sand”

“Perhaps it would help if I go over it one more time”

Key Questions/Issues

• Our CDFI is changing and evolving but our Board has not. How do we make the transition?

• How do you encourage more active board engagement?

• What is the process to build the capacity of our board?

• What tools can we use?

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Our Agenda for Today

• Board Roles and Responsibilities

Normal Evolution of Nonprofits & Impact on Board Roles

Board Member Job Description & Annual Agreement

Differentiating Between Board & Staff Roles

• Ongoing Board Development

Identifying Board Development Needs Through Self-Assessment

Board Tool Needed for Excellent Governance Board Composition, Recruitment & Training

I. Board Roles and Responsibilities

Basic Roles and Responsibilities

• Define, protect and advance the mission

• Organizational ambassadors

• Safeguard assets (human, financial, property)

• Recruit, hire, support & review the ED

• Ensure adequate resources to carry out the mission

Nonprofit Organizational Lifecycle Model

START UP

Begin

Grow

SustainDecline

Dissolve

ADOLESCENT

DEFUNCT

MATURE

STAGNANT

Renew

Normal Evolution of Nonprofits & Impact on Board Roles

Stage I: Organizing

BoardTend to be one of two types: (1) Following a founder and passive or (2) a group actively working to get the organization up and running as hands-on workers.

Stage II: Governing

BoardBoard & staff relations are better balanced with board focusing more on its governance role, establishes committees to organize the board's work with focus on policy & strategy .

Stage III: Institutional

BoardTends to be large and shift to focus on members with capacity to give or provide access to funders. Governance role is well established & formal.

Organization V. Board

Mode Organization Board

Start-Up Establish programs, secure funding, prove viability

Hands-on, operational, focused on Mission & program delivery

Adolescence

Additional paid staff, grow community awareness

Less day-to-day, various committee formation to fill staffing gaps

Mature Strategic growth, improved operations, diverse fundraising

Shift to governance/strategy focus. Fundraising and board recruitment become priority

Decline Shift in community needs, loss of funding, lack of strategy or vision

Disengaged board or disagreement on organizational future, high-turn over

Lifecycle and Governance

• Good governance is understanding where your organization falls in its cycle of development and how to build capacity along the way.

• Board members and executive staff must work together to articulate a vision for the organization at every stage of the nonprofit’s life and find the best ways to make it a reality.

• The role of the board will change in the organization’s lifecycle. Accept it! Embrace it! Plan for it!

How Do You Make the Transition?

Phase Board Roles

Start-Up Clarify board member roles, responsibilities; Create formal governance structure

Adolescence Formalize board recruitment process;Develop orientation & mentor program; Focus on policies

Mature Institute an annual board evaluationEnhance board fundraising capacityEnhance board committee structure

Decline Re-energize or develop new boardExplore partnerships with othersEngage third party to mediate conflicts

“What I am I supposed to do on this board?”

Tool: The Ultimate Board Member Job Description and Annual Agreement

Board Member Job Description & Annual Agreement

• Regardless of where you are in the life cycle, it is critical that you have a detailed board member job description.

• Sample job description and annual agreement.

• The job description is a tool for engagement with board members.

• Identifies board responsibilities and staff support.

Work towards…..

• Committees have chairs, job descriptions and work plans with deadlines like staff.

• Each committee has a staff liaison. • The Vice-Chair is responsible for obtaining

committee reports for Board meetings. • The Executive Committee develops board meeting

agendas with ED.• The Chair, and not the ED, holds board members

accountable for their work and meets with them individually each year to review performance.

• The board conducts a self-assessment periodically.

How Do You Make the Transition?

II. Ongoing Board Development

How Do We Take Care of Ourselves?

Familiar?

• Lack of participation, engagement

• Forgetfulness

• Weak leadership

• Drama/Gossip

• Great ideas, no follow through

• Founder Syndrome

• Micro-management

• Stray from the core

• Lack of time

• Lack of understanding

I.D. Board Development Needs Through Self-Assessment

• Establish a baseline in the attitudes, perceptions and experiences about board participation and functioning.

• We recommend an anonymous board survey.

• Visual results

• Board and staff roles• Policy making practices• Planning practices• Fiscal management practices• Fund raising practices• Board structure and practices• Board committees• Board meetings• Board Membership &

Orientation• Board-Executive Relationship• Monitoring & Evaluation

Practices• External Relations

The Tool for Excellent Governance

• Board Policy Manual (BPM): A thorough and easy-to-use manual of board policies to orient new board members and for continuous education of existing board members.

• Orientation handbook that provides useful information about the organization, board structure and operations, and fellow board members and staff.

• Indispensable working tool and a central resource about the organization and the board.

Why the BPM?

• Efficiency of having all on-going board policies in one place

• Ability to quickly orient new board members to current policies.

• Elimination of redundant, or conflicting, policies over time.

• Ease of reviewing current policy when considering new issues.

• Clear, pro-active policies to guide the board and staff.

Board Development Cycle

Board Composition, Recruitment & Training

Board Development Cycle: Board Composition, Recruitment & Training

• The Board Development Cycle: A basic responsibility of the board is to ensure its own renewal and development. The board development cycle is one way of describing the key steps in this process.

• Year round process.

Develop a Board Profile

• Develop a profile of the skills, qualities and knowledge that the board will need in order to address the challenges facing the organization in the next few years.

• The board profile is a way of translating the organization's strategic goals and priorities into a description of the kinds of people who are needed for the board.

• Please note that a board profile is much easier to create if the organization has a vision and a strategic plan. It is recommended that a board profile be reviewed annually.

Create an Annual Board Calendar

• Governing boards have an annual agenda of things to accomplish.

• Creating a work plan or annual calendar can help a board get organized and manage its responsibilities effectively.

• To get started, think about which activities are ongoing and regular, which are annual, and which need attention only occasionally.

• Take your board activities and procedures and map out on the calendar.

For more information

Jason Friedman, Principal

Friedman Associates

www.friedmanassociates.net

jasonj@friedmanassociates.net

319-341-3556