Who Owns Your Nonprofit?
Todd Cohen at Philanthropy Journal fittingly nails the “sleepwalking” Smithsonian board in this post for its dereliction of duty in letting Larry Small run amok as former CEO of the place. As he puts it, that board was MIA.
“Unless they start acting as responsible stewards of the resources invested in advancing their mission, boards everywhere run the risk of losing control over their organizations, triggering a crackdown by regulators, and turning off their donors.”
The Agitator seconds that emotion. Hell, boards like Smithsonian's could even cause directors' liability insurance to skyrocket!
But we are intrigued by his phrase … “boards everywhere run the risk of losing control over their organizations” (emphasis added).
Control implies a sense of ownership. Are boards really the owners of nonprofits?
We can think of other plausible owners … the biggest donors, the rank-and-file dues-paying members and activists, the staff. And other stakeholders like volunteers and clients, and even the at-large citizenry (whose public needs lose revenue to the chaitable deduction).
In fact, we believe the staff owns nine out of ten nonprofits, because control of information and day-to-day implementation is where the power lies.
The staff spoon feeds information to the other members of the typical nonprofit family, and when this is done adroitly, thereby frames each and every “decision” put to the board, pacifies major donors with soothing success stories, and channels the rank-and-file in whatever direction is propitious.
Control over day-to-day execution of the mission completes the power equation. The staff is in the trenches, making myriad daily choices, responding to events and other externalities, allocating people and money, deciding what's doable next week … always spinning its activities as faithful to “board policy.”
The only real option in most situations for the dissatisfied non-staff stakeholders is withdrawal.
We'd submit that most nonprofit CEOs secretly (many not so secretly) follow the mantra: Give me the strongest board I can control. Show us a nonprofit CEO with more than five years tenure and we'll show you a board eating out of his or her hand.
Is this necessarily bad?
Arguably the corollary is that strong, able nonprofit CEOs attract equally capable boards. Machiavelli says the wisest prince gets the best advice.
Sure, we also read the Federalist Papers. We believe in checks and balances.
But we also believe in meritocracy. Face it, the senior staff out-knows, out-lives, and out-sweats 99.9% of even the most dedicated board members.
So it should be the rare exception when the CEO or senior staff does not call the shots.
A board that truly wants to exercise “oversight” must do a ton of homework, some of it independently, and do it consistently, not episodically. It must earn the right.
Ted Turner's famous maxim works for nonprofit boards: Lead, follow, or get out of the way! How many lead?
Roger & Tom