Lessons From Being on A Board –

The Nonprofit and For-Profit Kind

I also saw this with charitable organisations during the Covid pandemic. Many nonprofits were hugely impacted by a halt to operations caused by nationwide lockdowns, combined with a reduction in income owing to an inability to hold fundraising events as well the reprioritisation by donors of their charitable giving. From my experience, those Boards that remained clear sighted about their mission, albeit adapted for the new environment, fared better than those who simply dwelt exclusively on the tactical challenge of the day. That is not to suggest that simply having a clearly articulated and understood mission could save even the best nonprofits from the catastrophe of Covid, but it most certainly helped protect many from the worst of the pandemic.

It’s easy to talk about the impact of ‘people’ – but this is a critical commonality with respect to Boards. Whilst there has been a focus on seeking the right skills around the table for some time in commercial Boards, there is now a welcome focus on getting the right blend of personalities in the room too. The ‘emotional intelligence’ (often called ‘EQ’) is now a growing priority for the commercial non-executive sector. There is also a very welcome focus on better diversity and inclusion. I have seen this change over the past ten years, with one commercial Board evolving from a group of majority white males with similar financial backgrounds, to a diverse group from a gender, ethnicity, and skills perspective. Without any question, the Board that emerged performed far better than the previous one, connecting better with both investors and employees.

In the nonprofit world, in my experience, the reverse trend is underway. There has always been a stronger ‘EQ’ focus at Board level, but now there is growing recognition of the need to balance the ‘EQ’ with the demand for skills (‘IQ’). The best Boards in this sector have secured this balance. It’s also important to ensure, when you’ve secured the IQ and the EQ around the same table, that you don’t then create a series of sub-committees where you divide yet again. Yes, good governance requires different skill sets to take leadership in their respective areas, but a good Chair will make sure that the IQ and EQ is blended even within this sub-structure.

And that’s one final success characteristic common to both environments: a good Chair. One that ensures equal voice to all around the table, who understands the totality of the stakeholders they represent, holds the organisation to its clarity of mission and deals fairly with the executive leadership and employees.

It is also important to recognise a vital difference: shareholders. The Board of a commercial organisation is not simply responsible to the leadership and employees, it’s accountable to the shareholders – and, often, this is a rather binary relationship focused on the maximisation of profit. In nonprofits, as the name suggests, the Board has a responsibility for a more equitable group of stakeholders; staff, users, doners, charitable recipients, etc. It’s often part of a much wider eco-system of stakeholders, and as distinctive a focus as profit might be, a nonprofit purpose can be even more compelling and demanding.