By Josephine Victoria Yam, J.D., LLM.
2016 August 23
Hundreds of thousands of highly-skilled professionals volunteer their time, talents and treasures in nonprofit boards around the country . And rightly so. They want to give back to society. They are passionate about the mission and vision of the nonprofits they serve. They are keen to contribute their strategic expertise to help nonprofits achieve their goals - whether their expertise is law, accounting, IT, human resources, strategic planning, marketing and communications. Through volunteering, they develop a strong sense of personal gratification for doing good.
Yet, when they cross the divide from the for-profit world to serve on nonprofit boards, many of them are taken aback. They realize that they have grossly underestimated how tough it is to run a nonprofit organization.
In the Stanford Social Innovation Review article, “What Business Execs Don’t Know- but Should - About Nonprofits”, the authors Les Silverman and Lynn Taliento keenly observed that “Business executives need to understand the leadership challenges faced by their nonprofit counterparts if they are to cross the border between the two worlds gracefully…Too many business leaders take their nonprofit board membership less seriously than they do their corporate board membership…[T]oo many well-meaning businesspeople who move into nonprofit leadership roles end up frustrated and ineffective because they don’t fully appreciate how uniquely hard their jobs will be.”
Thus, here are 3 pointers from the article that professionals should remember when serving on non-profit boards:
Professionals should remember that the nonprofit sector is the most understaffed, most under-resourced and most under-appreciated sector vis-a-vis the for-profit business and government sectors. And yet, despite this fact, nonprofits are expected to continue, if not expand, their programs with meagre resources to serve their constituents and solve some of society’s most complex problems.
In the article, Judy Vredenburgh, a successful business-turned-nonprofit executive remarked:
“For-profit executives don’t understand how difficult our jobs are…Every time we in nonprofits satisfy customers, we drain resources, and every time for-profits satisfy a customer, they get resources back. That sounds very simple, but it has huge implications, and I don’t think the for-profit people really get that.”
Harold Williams, another celebrated business-turned-nonprofit professional likewise explained:
“They’re [nonprofits] difficult to run …In many respects the typical nonprofit leader is much more entrepreneurial than the typical chief executive in the corporate world. You have fewer resources, fewer staff, and less certainty.”
The goal to achieve in the for-profit sector is clear and unmistakeable: increasing shareholder value. Professionals should remember that, juxtaposed against this crisp and firm business goal, the nonprofit sector’s goals are more complex, amorphous and fuzzy. For example, a symphony orchestra’s goal is to achieve artistic excellence so as to enrich people’s lives. An environmental education program’s goal is to increase consumer awareness to combat climate change. An hospice care’s goal is to care for terminally ill persons to alleviate their suffering and promote their dignity.
The management guru Jim Collins eloquently expressed this complexity in his book “Good to Great and the Social Sectors”:
“In business, money is both an input (a resource for achieving greatness) and an output (a measure of greatness). In the social sectors, money is only an input, and not a measure of greatness.”
With these intangible, squishy goals of creating positive change in society, how does one measure such impact in dollar and cents? How can one tell if a nonprofit is genuinely successful in achieving its goal? It is admittedly extremely difficult to demonstrate value, impacts and benefits with cold and calculating metrics. But nevertheless such demonstration is crucial, no matter how imperfect, for running sustainable nonprofit organizations.
In the business world, a senior business executive can get things done fast decisively and without much question. Executive power is centralized and wielded in a top-down fashion.
Professionals should remember that decision-making power in the nonprofit sector is more diffused and distributed. Particularly, decisions are made through inclusive-oriented consensus-building. Exhaustive, time-consuming consultations are conducted with an organization’s myriad of stakeholders. Many board members from the business world become frustrated that such consensus-building approach can be too slow and cumbersome.
As Robert Higgins, who has led many large US foundations, said in the article:
“In most for-profit organizations, people arrive with common goals. The board of directors may have different viewpoints, but shareholder value as a fundamental goal is something shared by the board, by the CEO, and by senior management. You start off differently in the not-for-profit world, with each board member arriving with a different set of goals and often different agendas. To manage that as a CEO is much more complex.”
By keeping these three points in mind, professionals will have a more nuanced, more informed approach on how to best leverage their time and talents when they serve on nonprofit boards. And Alice Korngold, in her book “Leveraging Good Will”, captured this point so well with this sage advice:
Although businesspeople have valuable talents to offer, they are entering a new realm, with its own culture, language, and challenges, when they volunteer on a nonprofit board. Businesspeople need to approach this new role with openness and humility, be prepared to learn, and then figure out how to use their business skills to advance the organization.”