Giving Compass' Take:

• Many individuals who participate on nonprofit boards start with inaccurate preconceptions which can interfere with organizational purpose and progress.

• How can nonprofit leaders and board members come to a better understanding of relationships, fundraising, and overall dynamics? 

• Read more about board leadership and governance here. 

Late one night, not too long ago, one of us got a phone call from a desperate executive director. The nonprofit he led was on the verge of bankruptcy. Over the years, the organization had thrived as a government provider, but a number of its big contracts were ending. For a long while, the executive director had been convinced the providers would renew. After all, they had done so innumerable times in the past. But as a new federal administration took over, it became clear the contracts were ending for good.

During the call, he took full responsibility for the situation. But he also couldn’t help questioning whether his board—filled with successful businesspeople—should have been more on top of things. In particular, he felt the board’s treasurer, a well-known CFO of a big corporation, wouldn’t have missed a looming crisis like this at her own company.

Ultimately, the nonprofit didn’t fold. But the crisis stressed relationships up and down the organization, and within a few months, the treasurer resigned. It was everybody’s loss.

Few organizational issues are clear-cut, and this was no exception. But in hindsight, the executive director and board directors agree that the board wasn’t primed for effectiveness. It had many talented members, but few of them had any real understanding of what being a good nonprofit board member entailed.

Unfortunately, in our experience—more than 30 years combined working in and with nonprofit boards—this problem is pretty common. Nonprofits actively court trustees from the business sector, believing their experience will add a lot of value to the organization, but many of these recruits don’t appreciate the complexity of the sector or the need to learn how to be a good trustee. As a result, they stop being the observant, motivated people they are in their for-profit roles. They stop thinking critically.

Why does this happen? We think it’s because a lot of business people who join nonprofit boards enter their role with two very wrong preconceptions: 1) businesses are more efficient than nonprofits, and 2) nonprofits are more ethical than businesses.

Read the full article about board membership by Daniela Barone Soares & Jon Huggett at Stanford Social Innovation Review.