Don’t check your business hat at the door
Most nonprofit board members serve because of a passion for the mission. And while many nonprofit boards carry a certain amount of prestige, status or cachet, most board members would eventually quit if status were the only motivation.
Along with passion, fundraising is essential, so most board members are expected to give or get financial support. Unfortunately, that’s often all that is asked or expected from nonprofit board members, which is a far cry from what is expected of a for-profit corporate board member.
Worse, many business representatives are so busy with their day job that they simply cannot or do not chose to engage in the functioning of the nonprofit board. Indeed, many seem to check their business hat at the door and attend meetings as almost a passive observer. That’s if they attend at all.
This lack of engagement is a tragic situation for nonprofits. The failure to capitalize on board members” business acumen diminishes the value of the very people who can be true strategic assets to the nonprofit they passionately support.
Here are five topics where business thinking makes a difference:
1. Ask about controls.
Your nonprofit, nongovernmental organization (NGO) may not have net income, but it still has a statement of revenue and expense. Ask questions about the sources of revenue and what kinds of expenditure controls are in place. Who is authorized to spend? Financial controls are often the lowest priority in the mind of a passionate NGO staff member or leader.
2. Ask about staffing levels.
Most NGOs are heavily reliant on staff and not necessarily on a lot of capital equipment. Ask about the mix of volunteers vs. paid staff members. Every NGO needs volunteers, and the right ones can inject passion and save money. The wrong volunteers can damage the brand and actually cost more to attract, retain and train than paid staff.
3. Ask about forecasting.
Many NGO leaders and staff are eternal optimists about revenue-raising success. Make certain you watch the forecasts carefully. Spend time evaluating the planning process: How does the executive director or president do the budget and the actual forecasts? Start watching carefully how successful the staff is in forecasting and hitting budgets. Revenue shortfalls are common in NGOs. Will you get early warnings in time? Are you paying close attention?
4. Ask about fundraising.
In most businesses, product sales generate revenue. Sales management and selling skills are the keys to success. In NGOs, fundraising requires superior selling skills, yet not all NGO leaders have sales experience. Often, too much attention is paid to the passion of the leader and not enough on the selling skills. Shortfalls here, and in the development function, can almost always foreshadow revenue shortfalls, and even organization failure.
5. Ask about management.
Drill down on how much leadership and management skill the president has. Even if a president has the passion and skills to effectively fundraise, he or she may have little or no experience in actually leading and managing an organization. If you want success, evaluate this quickly.
Gerry Czarnecki is founder and chairman of the nonprofit National Leadership Institute (nationalleadershipinstitute.org), which helps boards of nonprofit organizations become strategic assets to the leadership team. His extensive background as a C-suite executive and CEO is coupled with current board leadership of corporate and nonprofit organizations. He is also chairman and CEO of the Deltennium Group. Contact him at 561.293.3726 or firstname.lastname@example.org. ?