 Foundation
governance is distinctly challenging. After all, foundation
board members are responsible for organizations whose performance
is inherently difficult to assess.
Our research on the experience of hundreds
of foundation trustees suggests five keys to foundation board
effectiveness:
- Appropriate mix of trustee capabilities
and utilization of those skills
- Engagement in strategy development and impact
assessment
- Focus of discussions on important topics
- Positive relationship with the CEO
- Opportunity for influence and respectful
dissent in board members
This all sounds intuitive —
obvious, even. Of course these are the keys to foundations board
effectiveness. But doing well on each of these dimensions requires
taking real steps that many foundation boards are not taking
today.
This special issue of Effective
Matters is devoted to shedding light on the challenges
of performing well in two of the five areas listed above —
focus of discussions on important topics and opportunity
for influence and respectful dissent — and what
we've learned about how foundations can be effective in
each.
What we discuss here draws on
analysis of surveys of hundreds of foundation trustees, discussed
in our 2005 report Beyond
Compliance: The Trustee Viewpoint on Effective Foundation Governance
and on a recently completed rigorous analysis of in-depth interviews
with 25 trustees and 20 CEOs. We also draw on our experience
delivering our foundation-specific board self-assessment tool,
the Comparative
Board Report (CBR), to a wide array of foundations and presenting
results and facilitating discussions about what's working
and what isn't.
We hope you find this useful.
Please don't hesitate to contact
me directly to discuss how CEP could be helpful to your
foundation's board.
Lisa R. Jackson, PhD
Vice President - Research
Susan Marsh, CEO of Montana's Drift
Foundation, was preparing for Drift's quarterly board
meeting. She was determined to focus the board discussion on
whether Drift's current program strategy was right given
its goals. She knew it would be a challenge to engage trustees
on this topic because they often became bogged down in discussions
about foundation operations.
Meanwhile, Stu Shepard, Drift's board
chair, had just finished a phone call with Ed Jones, one of
Drift's trustees. Not only was Ed dissatisfied with the
substance of Drift's board meetings, he did not feel as
though the other trustees valued his input. "I can barely
get a word in edgewise," he complained. "The same
folks always have the floor, and when I do try to voice my opinions,
I am largely ignored."
Stu shares Ed's pain. He, too, is
frustrated with the quality of Drift's board discussions.
He and Susan work hard to create effective agendas. But even
when the board doesn't get mired in minutia, the conversations
never seem to focus on the most important issues.
Stu took a deep breath and then dialed
Susan's number. When she picked up, he said, "Listen,
this board is not nearly as effective as it could be. We are
spending way too much time down in the weeds when we should
be taking a strategic view of the foundation and its work. We
also have to find a way to improve the way board members relate
to one another during meetings — Ed just told me that
he feels as though other board members do not respect his views.
What should we do?"
Beyond Board Drift:
The Right Topics, Healthy Dynamics, Productive Trustees
Foundation boards cannot be effective if they
spend their time in meetings with poorly focused agendas and
unconstructive group dynamics. By making a few small changes,
foundation leaders can improve the quality of their boards’
discussions, enhancing board performance and thus boosting their
foundations’ impact.
CEP's research identifies five
keys to effective foundation governance, and one is that meetings
focus on the topics of greatest importance
to the board. This hardly seems surprising —
few of us would set out to focus on inconsequential topics.
Yet, too often, discussions on the topics of greatest importance
simply aren't happening.
Our research and experience suggest
that the discussions board members characterize as important
focus on the following issues:
- Foundation strategy
- Assessing the foundation's impact
and performance against strategy
- Evaluating the CEO
Equally crucial is what topics
do not emerge as most important to trustees:
- Grant approval
- Operational decisions
- Operational policy
Yet it is these very items — grant approvals
and operations — that often comprise significant portions
of board agendas. To be most effective, boards and staff must
work together to structure agendas that focus on the items of
greatest importance to the board, dealing with other necessary
business in as efficient a manner as possible.
Teeing Up Important
Discussions: The Right Materials, the Right Agenda
Poorly structured agendas and voluminous, unfocused
materials are enemies of foundation board effectiveness. In
our survey of 550 trustees, only two reported that they received
"too little" in the way of board materials, and
more than half said they received "too much."
It's no surprise, then, that fewer than
half reported reading all board materials.
Materials need to be streamlined and focused.
The goal should be to enlighten, not to overwhelm, so discussions
are richer, better questions are asked, and better decisions
are ultimately reached.
Agendas should be structured to mirror the
board's sense of what the most important issues are —
with these issues receiving the most time and attention. Board
agendas often allocate much more time to grant approvals than
questions of strategy or assessment of foundation impact and
performance. Yet the latter two areas are the only ones in which
a significant proportion of board members feel more board involvement
is warranted.
Foundation board members describe their best
board discussions as the ones that were on crucial topics, supported
by the right information, and structured to allow for adequate
time full participation — without a feeling that time
was too limited to discuss the issue fully.
As one trustee told us, the best discussions
were ones where "everybody had… the pertinent facts.
We would go around the room and we would talk. It would take
as long as we wanted. And then… we would have a vote and…
live with the outcome."
CEP Vice President - Research Lisa R.
Jackson, PhD, says the role of those who staff the board is
often overlooked in discussions of board effectiveness. "Who
prepares the materials? Who types up the first draft of an agenda?"
Jackson asks. "Almost invariably, it's staff, and
they need to understand the crucial role they are playing."
Sometimes, of course, staff seek to keep the
most important issues off the board agenda, in an effort to
maintain control and keep the board relegated to roles that
staff see as less threatening to their autonomy. "This isn't
good for board effectiveness," says Jackson. "And it almost
never works in the long term. When boards sense they are being
controlled, and kept out of the important, strategic issues,
they eventually rebel. It may take years, but it happens eventually."
Simply focusing on the important
topics isn't enough. Survey research and interviews we
conducted with trustees and CEOs suggest that the very best
discussions share another element: the opportunity for
influence and respectful dissent.
- Board members praise dynamics when they
see that respectful conflict is encouraged, because they perceive
that it leads to better decision making.
- On the other hand, board members frustrated
with the quality of board discussions often point to a "culture
of politeness" that inhibits substantive discussions
even when the right topics are on the agenda.
What prevents better dynamics?
One challenge is that the person in the best position to address
problems — the chair — is also the least likely
to be able to see them. Another is that problematic dynamics
often go undiscussed: No one wants to be the first to raise
concerns about board dynamics.
That's why we have found
that the best way to identify how trustees really feel about
board dynamics and other issues related to board effectiveness
is a confidential, comparative self-assessment. Knowing how
board members really think it's going — and how
their assessment compares to what is typical — is the
only way to chart a path to improved effectiveness.
Board
Chair Myopia
Analyzing hundreds of surveys
of foundation board members, we noticed a curious fact. Chairs
rate their perceptions of key measures of dynamics, such as
equality among members and comfort in trustees challenging each
other, higher than do other trustees.
Chairs, it seems, are least likely
to be able to see the boardroom dynamics clearly.
That's a problem, because
they're also the ones in the best position to shape —
and improve — dynamics. We were struck in our interviews
with trustees by how frequently board members, in describing
their best boardroom discussions, recalled how the board heard
from, as one board member put it, "everybody who had anything
to say." Equally important was this board member's
emphasis on the freedom board members felt to "to be candid
about their reactions."
Full participation and candor,
then, are keys to board effectiveness, and there are simple
steps chairs can take to ensure that everyone has a say and
honesty prevails.
- Chairs need to recognize that it is their
role to create the environment in which everyone can contribute,
not just those predisposed to talk the most — or the
loudest.
- Chairs also need to take steps to be sure
no one holds back their substantive questions or concerns
in the interest of "being polite."
There is a wide range of techniques
that too few chairs utilize, from going around the room to hear
from each member without reacting, to taking polls of board
members on key questions, to assigning board members to advocate
for particular positions, to gathering anonymous feedback.
The difficulty is that most foundation
board chairs are accomplished, high-powered professionals —
used to being in charge, but not necessarily accustomed to dealing
with the peculiar challenge of facilitating a discussion among
a similarly high-powered group of equals.
"In our work with boards,
we have observed that effective chairing is often not really
about leadership in the traditional ways we think of that term,"
says CEP President Phil Buchanan. "Those qualities of
leadership — vision, inspiring others to act — are
what is needed in the CEO, but being chair requires different
skills."
"Chairs more often need
to subjugate their traditional leadership qualities and instead
become the guardians of process, ensuring that each board member
feels fully utilized and heard," says Buchanan. "And
board chairs need to be self-aware enough to know that, unless
they are proactive, they'll be the last to know how board
members really think it's going."
To find out more about CEP's
Comparative Board
Report (CBR), the only board self-assessment that includes
foundation-specific comparative data, contact CEP Manager Romero
Hayman at (617) 492-0800 ext. 211.
Many foundation boards worry about diversity.
Too often, they think their work is done once they have recruited
one or two people of color to join them.
Not so. CEP's research indicates that
that the number of minorities on a board is related to ratings
of equality of opportunity to influence the board — with
members of minorities who are one of only one or two minorities
in the boardroom perceiving less equality of influence than
their white colleagues. Once there are three or more people
of color on a board, the difference in perceptions of equality
of influence disappears.
In an interview, one CEO described the board's
struggle with this issue:
"The decision the board made to expand…
they made that decision on their own, believing that they needed
greater diversity on the board. It would have been very comfortable
and very easy for them to have continued as a small, self-contained
board, and there was nothing pushing them in any broader direction
except their own sense of their stewardship and what they needed
to be as effective as possible. So I think [it was] an exceedingly
thoughtful discussion about how to expand the board, the process
by which they would expand the board, the way that new board
members would integrated, what skills, what strengths they needed."
CEP's experience is that many foundation
boards are not even having the discussion.
"Foundation boards should understand
that checking a box doesn't mean you're getting
a full contribution from everyone," says Lisa R. Jackson,
PhD, CEP's Vice President - Research. "Really
getting the most out of each board member requires an understanding
of the dynamics in the foundation boardroom. The facts of our
analysis about race in the boardroom are tough to face, but
for boards to be most effective, those facts need to be faced
— and faced squarely."
 CEP
launched the Foundation Governance Project in 2003 to investigate
the distinct challenges of foundation governance. Prior to this
effort, virtually no large-scale research on foundation boards
had been conducted, and the assumption was often made that lessons
learned in the nonprofit board room could be applied to foundation
boards.
But foundation governance is
different because foundations are unique institutions —
with unusual freedoms from competitive pressures or worries
about resource generation. These differences make governance
more challenging.
Over the past four years, we
have worked to document foundation board structures and practices;
explore the ways in which CEOs and trustees define board effectiveness;
and address board involvement in a range of areas, such as strategy
development, performance assessment, public accountability,
and board development. Along the way, we have released two major
research reports: Foundation
Governance: The CEO Viewpoint (2004) and Beyond
Compliance: The Trustee Viewpoint on Effective Foundation Governance
(2005).
We also developed a new board
self-assessment tool, the Comparative
Board Report (CBR), piloting it in 2004 and 2005 and making
it broadly available during the past two years. Foundations
including the W.K. Kellogg Foundation, Marguerite Casey Foundation,
The Commonwealth Fund, Lucile Packard Foundation for Children's
Health, and Kalamazoo Community Foundation have obtained CBRs.
What did they get?
- First, a detailed report that puts their
board structure and practices in a comparative context, relative
to a set of 60 other foundation boards, and gauges board members'
views on effectiveness. The CBR is based on confidential surveys
that explore board functioning in a number of areas, including
board dynamics, capabilities and expertise of board members,
and the board's role in strategy development.
- Second, a facilitated discussion that uses
the CBR results as a basis for improvement. With the assistance
of experienced CEP staff or our partner facilitators, boards
move from reflection to action — charting what needs
to change for them to maximize their effectiveness and how
they will get there.
"The Comparative Board Report was helpful
because it focused our governance discussions." says Jim
Hoolihan, president of the Blandin Foundation. "While we
have always recognized general areas of responsibility and distinction
in our respective board and staff roles in governance and management,
the CBR helped move us toward more clarity and resolution on
our unique roles in specific areas, such as strategy and assessment.
The CBR was a tool that helped move us from discussion on the
topic to action and progress."
To find out more about CEP's Comparative
Board Report (CBR), the only board self-assessment that
includes foundation-specific comparative data, contact CEP Manager
Romero Hayman
at (617) 492-0800 ext. 211.
Effective Matters is a quarterly newsletter
published by the Center
for Effective Philanthropy (CEP), a nonprofit organization
focused on the development of comparative data to enable higher-performing
foundations. CEP's mission is to provide management and governance
tools to define, assess, and improve overall foundation performance.
If you have questions about this newsletter
or would like general information about CEP and its activities,
please contact Alyse
d'Amico at 617-492-0800 ext. 206.
Permission to use, copy, and/or distribute
this document in whole or in part for noncommercial purposes
without fee is hereby granted, provided that this notice and
appropriate credit to the Center for Effective Philanthropy
is included in all copies. |
