Boards. Love them or hate them or somewhere in between, they are a critical part of an organization’s success. In fact, if you buy into the trickledown theory in leadership (as opposed to economics) you believe that good or bad, it all rolls downhill. You believe that good or bad leadership at the Board level will have the greatest of impact on an organization. Our conversations with social profit sector staff over the last few months have certainly held this to be true. In fact, there was such a focus on governance that we felt it warranted a conversation.
The Institute of Corporate Directors (ICD) recent survey cites the key finding that Board Directors have confidence in their organization regaining strength in 2021, so what say the management of these organizations? How is Board leadership impacting organizational success during this crisis? Are we satisfied with Board’s leadership? What do we hope will be different in the days ahead?
Of the 40 organizations who responded to our survey: 24 were staff, 15 were Board members and one was a consultant. 70% said their Boards have been engaged to highly engaged during this crisis and 76% of these are satisfied to highly satisfied with the Board’s response. This aligns with the aforementioned Director Lens Survey (the ICD surveyed both private and not-for-profit Board Directors) of Board Directors found that three-quarters of directors (74%) say their boards already had a crisis response plan in place prior to the COVID-19 and almost all of those who say their boards had a plan think that it has been effective. According to verbatim comments, top reasons for being optimistic include strong risk mitigation planning, managing expenses and cashflow carefully, good long-term planning, constant attention to day to day operations, the experience of management team, and being essential businesses.
Ninety-two percent of those we surveyed responded that their Board looked at this crisis through a growth mindset and 94% said the Board prior to COVID-19 was functioning from good to excellent in terms of governance best practice. While there was a wide range of suggestions for areas of growth in the future, the most often cited were:
We know that Boards are critical to ensure organizations have financial resources to survive significant revenue setbacks, the ability to manage risk and to put crisis communications plans in place. Major Gifts/Campaign Consultant Mridula Joyner, CFRE shared:
“Strong governance is vital for organizations during times of crisis - especially with respect to budget and contingency planning. Many organizations do not have funds set aside to cover six months of operations should there be a crisis. Boards and management teams need to work together to have contingency funds set aside to ensure continuity for their missions.”
Financial reserves are a luxury for most small to mid-sized organizations, whereas organizations including hospitals and post-secondary institutions may be privileged with large unrestricted reserves. Boards must be part of ensuring organizations can survive difficult times and also know when to raise funds. Many of us have seen examples of organizations claiming to be in a state of emergent need when in fact they have access to significant unrestricted reserve funds and/or they are not providing direct, front line services.
This may have a long term and negative impact on those organizations. Take for example for profit corporations whose advertising leads us to believe ‘we are all in it together’, though news reports have us learning that the ‘all’ they refer to does not include their employees, many of whom are deemed essential service and not paid a living wage. Consumers are not ignorant to this double speak, nor are donors – the authenticity with which we position our causes and urgency of our needs will impact our long-term relationship with our donors, who can easily access data about a charity’s financial status including reserves online through the CRA Charities Directorate. Sue Wilkinson points out that,
“Organizations that have not been able to act quickly, risk being irrelevant. If risk tolerance is low at a governance level, this has led to either temporary shutdowns or wait and see attitudes. This is not strong organizational positioning and leads to reputational risk. I imagine that in the future more attention will be placed on the role of boards, risk tolerance and the need to support leadership to do what it does best - help people. “
This is fully supported by other leaders. We were interested in a conversation with consultants as they bring a multi-organization, unbiased perspective. In one interview, with Peter McKinley and Chris Steeves from Global Philanthropic who work with multiple clients and have held conversations with organizations from coast to coast to coast, Steeves said:
“One of the informal questions I'm asking is, has your board engaged more since COVID-19? Has it stayed the same? Has it pulled back? The response rate is split fairly evenly, about a third, a third, a third. So a third of teams say their boards are stepping up, are doing more, and understand the urgency and immediate need because they see the big holes in their fundraising pipeline for 2020. We see some teams, the ones that I think are managed well, the ones that understood the risks, the ones that diversified, the ones that invested in online and digital channels are probably staying relatively flat. They're like, "Hey, we prepared for this or we were prepared." And then you've got the final third with boards who have elected to pull back or retreat. We are telling these teams that you have to resist that urge to be silently respectful.”
Peter McKinley, Senior Consultant with Global Philanthropic pointed out:
“One of the positive things that I've seen over the last few years with a lot of boards, whether I was working with them directly or as consultant or just observing, there was an enhanced focus on risk. So, making sure that risk was on the table and that they weren't just glossing over things. Now nobody could have predicted what we are experiencing now, but there was a movement I thought I saw in a number of instances towards the healthy side of scenario planning.”
We heard a desire to look at governance from a less rigid perspective. Beyond some of the practical implications of electronic meetings and activities outlined in an organization’s by-laws e.g. the AGM that Miller Thomson detailed in their March 2020 Social Impact Newsletter, to how an organization is optimized to perform in a crisis? How change-ready are they? What does collaboration look like?
Comments emerged about the need to look more closely at organizational culture and to ensure Board leadership considers this. According to the Global & Regional Corporate Governance Trends January 2020 report from Russell Reynolds,
“Investors are asking what the board is doing to ensure the culture is robust and can withstand transformation and change. Investors would like more transparency on board involvement in culture and HCM (human capital management) to determine whether boards are providing adequate oversight. Data and analysis on corporate culture will play a key part in this oversight by boards. Directors in 2020 should appreciate the impact of culture on hiring, retention and productivity.”
Sector leaders recognize that we need to reboot how we look at governance. The idea that is expressed in many organizations where only the CEO/Executive Director has a relationship with the Board and there is a strict line that determines what is considered operational versus governance will be challenged. A recent post in the BoardSource blog is explicit: “as stewards of the organization who are responsible for the financial and legal oversight of the organization, the board should assess the current and future impact that COVID-19 will have on the economy, the organization, staff members, and the community it serves. A collaborative and adaptive approach to crisis planning and management will ensure that both staff and board perspectives are heard. A plan should also clearly define the roles for the board and staff to avoid confusion.:
Cathy Taylor, Executive Director of the Ontario Non-Profit Network asserts that the role of Boards as organizational leaders will be tested and revised to reflect the complexity of the sector more fully:
“On governance, I do think this (the pandemic) does shine a light on what we've been thinking already about reimagining governance. We’ve seen that organizations are really struggling with archaic systems of governance structures that aren't very nimble. I've heard many examples from E.D.s, about Boards focused on minutia when we need them to focus at a different level right now. So, a broader implication of this crisis is an opportunity to imagine new futures to reshape what we need that governance to be. So that's a bigger system change, but I think there are going to be some really great examples of how boards have both given wind to new opportunities and also found themselves in the weeds and kept organizations from being creative and nimble.” Ultimately, it comes down to leadership and partnership and, though she uses the dreaded “p” word (not pandemic) this was beautifully captured by Caroline Riseboro, CEO of Trillium Health Centre Foundation, as we wrapped our conversation:
“I think what's going to happen is it's going to come down to the type of leadership that these organizations have. And I'm not saying just the CEO or executive director, it's about the board and the entire leadership team. Are they going to partner, be innovative, be agile, look to diversify, try new things? Or are they going to be the ones that say, "Okay, we're going to dig our heels in and hope we're going to survive through this?" The latter is one of the scariest things you can do because in this new normal, we've must be pivoting nonstop.”
As we sign off from our three-part series, our thanks, once again, to the leaders who took the time to demonstrate true leadership by speaking with us despite everything else on their plates. The sectoral insights they offered are imperative, and they saw this not just as an obligation but a privilege to share their learnings and wisdom at a time when we are learning rapidly, while relying on instinct and experience to guide us through these choppy waters. We are all juggling more than ever, and it is not enough to say we are in this together, we must act in this together. Consider the perspectives around your board table, and consider whose voices are not included that should be. Finally, please reach out. Your sector associates are here to help. #strongertogether
Maryann Kerr is Chief Happiness Officer/CEO and principal consultant with the Medalist Group. Maryann has worked in the social profit sector for 34 years and helped raise over $110M. Maryann knows that successful organizations create and nurture a climate where everyone understands their role; politics are minimal; engagement is high and turnover low. Environments where employees co-create the road-map to mission delivery. Compassion, kindness, a commitment to the profession and deep respect for the professional fundraiser are at the core of her work. Maryann brings a loving and critical lens to the sector in an effort to facilitate difficult discussions to affect change.
Tanya Hannah Rumble is a leader in the philanthropic sector who has raised millions of dollars for some of Canada's largest charities including the Heart and Stroke Foundation, Canadian Breast Cancer Foundation, the Canadian Cancer Society and now McMaster University. Tanya's approach to her work in the fundraising sector is greatly influenced by her lived experience as a mixed-race woman in an interracial partnership who is a third culture kid - first-generation Canadian daughter of Jamaican and English-Irish immigrants who spent her formative years in the United Arab Emirates.
