Nonprofit leaders and management consultants often talk and think about “best practices.” These are proven methods for getting things done – anything from program delivery to fund raising to accounting to organizational management. By some objective criteria (in principle), these methods appear to be better than others. Best practices exist in every field of work (think medicine, carpentry, and graphic design, to name a few).
The general perception of what’s “best” evolves over time. It’s also subject to varying opinions and interpretations. In some fields of work, there’s no official endorsement of best practices, and a shortage of hard data to judge “bestness.” Nonprofit management is such a profession. While this leaves lots of space for creativity, it also carries a dark side: conventional wisdom can pump up practices that may not actually work.
For this reason, Public Interest Management Group developed a new organizational assessment process in 2015. Called Success Factor Analysis, this methodology allows nonprofits to see compare their own set of traits and practices to a population of similar organizations. Importantly, the process also allows us to collect data from many nonprofits, and understand statistical associations between various management practices (i.e. success factors) and actual organizational success. We first applied it to a historical sample of 40 organizations. Next, we deployed it with an additional 43 nonprofits in California, Oregon and Washington. As a result, we now have rich set of data on over 35 factors, covering strategy, culture, operations management, external relations, and revenue structure.
What does the data reveal? A lot. For example, only 49% of the presumed best practices we tested are actually linked to programmatic and financial success. We’ll be publishing more detail in the near future. For now, I want to highlight one headline – the single worst practice, revealed by our research, and the only one that shows an inverse association with organizational success in both study groups:
The Board’s role in decision-making
In short, the greater the board’s role in making key decisions in the organization – for example, around strategy, management, and partnerships – the less likely it is that the organization will be successful in meeting its mission goals and achieving financial health.
In other words, the most highly engaged boards tend to preside over the least successful nonprofits.
I call it Over-Engaged Board Syndrome. It’s a nasty illness and can be fatal in some cases.
But doesn’t all of the literature say we want engaged boards and isn’t this contradicting that? Yes and, to an extent, yes.
Our data shows us associations between A and B, with B, in this case, being an organizational success (we have a metric called the Organizational Success Index, or OSI). You may have read that statistical correlations don’t, in themselves, establish causality. That’s true. But they do show a clear relationship, and this one has now appeared in two different studies. So, what’s happening here?
For starters, there may be multiple things going on. For example, one obvious hypothesis is that nonprofits led by staff who play a predominant role in decision-making are generally more successful, because this is a more effective structure. A related hypothesis is that dominant volunteer boards either handcuff their staff, or perhaps add so much process that the organization is inefficient. It also may be that boards of nonprofits with weak staff or poor results have no choice but to step in and fill the void, essentially reversing causality. Another possibility, combining the ideas above, is that domineering boards create weak staff leadership roles by design, reinforcing the board’s dominance, regardless of the capabilities of staff.
The data in itself doesn’t tell us which explanation is correct, and it could be that all of these hypotheses have elements of truth in different situations. The good news is that the remedy is the same, regardless, and a clear best practice emerges: the strong staff model of nonprofit leadership.
Our research and many examples emerging from organizational assessments suggest that the most effective nonprofits are likely to be led by strong, autonomous chief executives and other senior staff.
Does this suggest that board engagement is bad?
Not exactly. The data does suggest that some kinds of board engagement are signs of possible problems that can hinder the organization. It does not say that all kinds of board engagement have negative results. For example, the study shows a small positive association between board engagement in revenue development and success. The study shows high associations between robust organizational strategies and success, and boards played a major role in strategy development for over 90% of studied nonprofits. Boards can also play essential roles in fiduciary oversight and community relations, and none of our data casts aspersions on these roles.
The lessons:
We cannot say that “board engagement is good,” generically. Be wary of books, articles, and consultants who suggest otherwise.
Instead, effective board engagement is a nuanced matter – boards should be engaged in the right ways, but intentionally not engaged in the wrong ways.
Board development training should, therefore, focus as much on unlearning bad practices as on learning productive ones.
Great nonprofits will generally be led by strong staff, empowered to play their leadership roles. Boards are set up to support staff and serve as a check and balance, both essential complementary roles.
Some of you will read this and think, “well, that’s obvious.” Please spread the word – I regret to say that this is far from obvious throughout the nonprofit sector. Over-Engaged Board Syndrome is widespread, and not well understood.
I know from various seminars and group discussions that this is a fascinating topic, and a single blog entry can’t do it justice. To be continued…
One good outcome here is that hardworking nonprofit board members, who are paid $0.00 per hour for their efforts, are hereby granted a permission slip to delegate a lot of decision-making to staff. The nonprofit world’s countless unsung volunteer leaders can conserve their time, focus their efforts, and still be vital parts of successful community-based enterprises.