Widely held mental models for good governance — stressing competition and a narrow focus on single institutions — simply don’t make sense in a philanthropic and nonprofit context. But what does?

Enter Anne Wallestad, the brilliant president and CEO of BoardSource, with an alternative governance framework that, if adopted, could be the most important mindset shift in the nonprofit sector I’ve seen in my two decades in this job. In a crucial, must-read article in the Stanford Social Innovation Review, just published last week, Wallestad contends that nonprofit boards have to put “purpose before organization” and that, if they do, certain principles follow.

Wallestad argues for boards to abandon a common misreading of “duty of loyalty” as “the responsibility to think only of the organization when making governing decisions”:

This interpretation unnecessarily focuses board members on loyalty to the organization as a corporate entity. Instead, boards should focus their loyalty to the organization’s purpose or reason for being, fidelity to the reason that the organization exists and — by extension — to the people and communities its work impacts. What is best for purpose and community is not always synonymous with what’s best for the organization.

It bears repeating: “What is best for purpose and community is not always synonymous with what’s best for the organization.” 

This simple but profound statement has far-reaching implications. In the article, Wallestad describes four principles of purpose-driven board leadership and their implications for nonprofits, focusing in particular on operating nonprofits. I’ll list the principles here and suggest some foundation-specific implications that come to mind — acknowledging full well that there are many more.

To every leader in the social sector, I recommend you read the article yourself and distribute it to your board. Meantime, here are Wallestad’s four principles of purpose-driven board leadership and some musings about what they might mean for foundation boards:

“Principle 1: Purpose before organization — a prioritization of the organization’s purpose, versus the organization itself.”

“Principle 2: Respect for ecosystem — an acknowledgment that the organization’s actions can positively or negatively impact its surrounding ecosystem, and a commitment to being a respectful and responsible ecosystem player.”

“Principle 3: Equity mindset — a commitment to advancing equitable outcomes, and interrogating and avoiding the ways in which the organization’s strategies and work may reinforce systemic inequities.”

“Principle 4: Authorized voice and power — the recognition that organizational power and voice must be authorized by those impacted by the organization’s work.”

Read the full article about re-purposing foundation boards by Phil Buchanan at The Center for Effective Philanthropy.