In the past, the makeup of a foundation or NGO board, trustees, directors and board members have primarily consisted of people who had a vested interest in the organization. They were founding members, some were early investors, or lead donors or people the organization’s leader knows well and trusts. Board chairs would look to match certain kinds of experience and expertise, such as legal or financial. And everyone needed a healthy database of friends and peers with influence to tap for monetary and other donations, visibility and entree to new spheres of opportunity.
But, in the face of increasingly pressing systemic inequities, boards must change the traditional ways they have worked and instead prioritize an organization’s purpose, show respect for the ecosystem in which they operate, commit to equity, and recognize that power must be authorized by the people they are aiming to help.
As we live in rapidly changing times, so boards must evolve to truly support today’s modern organisations, foundations, and enterprises. What we are now seeing is a change of the old guard, and board selections therefore must change as well.
The uniqueness of boards
Boards are a unique and curious leadership structure. They have significant power, but only as a collective since no individual board member can enact anything independently. They sit both atop and outside of the organisational structure, with a role that is accountable to those outside of the organisation as well as those within. And, except for basic parameters around structural guidelines, they have a completely flexible structure, governed only by their bylaws, which they themselves are entitled to change.
For all these reasons, a board can be redesigned in any number of ways, provided it has the collective will to do so. This is both the beauty and the challenge of a board structure: only a board has the power to change itself, and boards can interpret and apply their own expectations of their roles and responsibilities. In most of the ways that matter, boards are their own accountability mechanism. This structure can work beautifully or fail miserably, depending on how a board is populated and self-managed.
In a study conducted by BoardSource – Leading with Intent – more than 800 public charity CEOs and board chairs, as well as non-profit boards were surveyed: Notable findings included:
- Preoccupied with fundraising above all else: When asked how important the board’s performance is, across 18 areas of board responsibility, 70 percent of chief executives rated fundraising as “very important” – above most other categories of board performance (including thinking strategically as a board, setting the strategic direction of the organization, knowledge of organizational programs, and understanding the context in which the organization is working).
- Disconnected from the communities and people they serve: Half (49 percent) of all chief executives said that they did not have the right board members to “establish trust with the communities they serve.” Only a third of boards (32 percent) place a high priority on “knowledge of the community served,” and even fewer (28 percent) place a high priority on “membership within the community served.”
- Ill-informed about the ecosystems in which their organization is operating: Only 25 percent of boards say that “knowledge of the organization’s work or field” is a high priority in board recruitment, and only 11 percent place a high priority on “prior or current experience with a similar organization/mission area.”
- Lacking in racial and ethnic diversity: Not only are boards overwhelming white (78% of board members are white and 19 percent of boards are all white), but boards lacking in racial/ethnic diversity self-report that their boards’ racial/ethnic makeup negatively impacts their ability to understand the organization’s operating environment and work, attract and retain talent for both the board and staff, enhance the organization’s standing with funders and donors and the general public, understand how to best serve the community, and cultivate trust and confidence with the community served.
The social sector and the different parts of the humanitarian ecosystem have changed. And this change is also driven by the Next Gen of givers and philanthropists, Next Gen volunteers and development practitioners, and Next Gen organisations. What we are now witnessing is:
- New models for giving: for Next Gen philanthropists the vehicle for their giving might not be very central or steeped in a strict organisational structure, as long as it is agile and flexible enough and helps with fulfilling of the ‘what’ and ‘why’ they give.
- New funding areas: the Next Gen development practitioner are concerned about new topics and development practices, additionally, they may also be interested in issues which have been historically neglected by institutionalised philanthropy.
- New drivers and motivations for giving: social justice, climate change and inequalities in wealth distribution might feature way higher for the Next Gen of volunteers whilst at the same time being aware of the limitations of traditional grantmaking and philanthropy (e.g. that it does not instantly equate to social change and requires time).
- New realities and realisations: many Next Gen practitioners might share concerns around sustainability and the future of the planet paired with a view that business as usual in terms of resource use and means of production cannot go on forever given current predictions around the impact on human life on earth due to climate change.
- New views on social justice: Next Gen volunteers and philanthropists might be open to conversations around inequalities in wealth distribution and access to resources, in particular on the global level, while embracing discourses around the power of philanthropy to drive transformation and social change (in particular when looking at climate change and achieving global goals such as the SDGs, but also taxation of wealth).
- New views on power and history: in parts of the field there could be very open discussions around topics such as the decolonisation of wealth, and questions of historic debts to communities when it comes to wealth accumulation. Issues of diversity and the inclusion of the communities’ funders want to serve could become more to the forefront for Next Gen philanthropists.
- New networks and peers: Next Gen philanthropists, volunteers and practitioners have formed their own collaborations and networks; therefore, they are differently motivated around obligations to share and give back, and they are influenced by new role models and peer groups; and there is also an increased desire to link up with social movements (and pick up their topics) or engage with movement-building efforts.
- New attitudes towards transparency and tech: Next Gen philanthropists were socialised in the new digital age; this makes them more inclined to engage with transparency, data sharing and collaborative efforts.
Based on the changing context as outlined above, it has become critical not only taking into consideration diversity and inclusion, but even specific subject expertise and knowledge. For example, to prepare organisations for the future, potential board members with in-depth knowledge in fintech, edtech and health tech will become critical. And many of these experts are coming from a younger base of individuals looking to disrupt more conservative thinking. In short, boards must look at embracing different generations, diversity in makeup and establishing their brands with different non-traditional partners such as impact and social investors, venture philanthropists and global financial development institutions to be recognised as leaders in their respective fields.
Broadly speaking, this can be interpreted into some modern board “must-haves:” racial, age and gender diversity; wide swaths of superior business, financial and industry experience; and, now more than ever, cutting-edge tech acumen. In addition, potential future board members will have to be hard-working and contribute to an organisation’s future vision, goals, objectives, aspirations and targets.
Embracing new trends
Over the last few years governance practices have evolved tremendously. And as governance practices have evolved, stakeholders’ expectations have grown and now extend to all organisations with public accountability. At the same time, the work of Foundations, Trusts and NGO boards have expanded. In the impact economy – much is expected of boards and trustees. But what does this mean in practice?
Your future board members may not be who you think they are – or should be:
Previously board members were selected based on their status in society. The hope of course was that they would be able to influence others, add gravitas to your organisation, and most important of all, attract additional funds to your organisation. Yet, the reality is, that very little of this materialised and in most cases board members just became pictures in annual reports.
In addition, board members were older – because of the knowledge and expertise they could add to organisations. This also may not hold true in the future – as their experience might not be relevant in a new world order that will be characterised by technology, digitization, and completely different business and social dynamics.
We are encouraging organisations to seek out board members that represent their future, more so than their past. People who can bring new energy, new thinking, and new insights, and most important of all, understand a hyper connected, technology driven world.
Embracing new skills
Development practitioners are now regarded as professionals. This also means as the sector change and become more specialised, a variety of new skills will be required from boards to supplement staff and management’s expertise. Some foundations and trusts have also grown over the years, and now they work across geographical boundaries, and across development disciplines.
At the same time, board members with deep expertise in a given field or industry will always have to understand and respect the boundary between their role relative to direction, oversight and resources versus the daily management and operations of the organization.
So not only will future boards have to consist of people with a large range of skills and competencies, but they will also have to bring different expertise to the table. For example, as organisations grow, they will have to have not only scaling expertise, but also networks and insights of different geographic locations and stakeholder groups.
In the past, board members were chosen based on their board and sector experience. However, as good as their work acumen may be – the reality is that board experience is a far different animal and requires deft diplomacy to manage the diverse personalities and wants and needs of a range of stakeholders—board members, employees, analysts, lobbyists, investors, regulators, bankers, and policy makers, for example. And, though none of us has a crystal ball, the board member who helped you when your organisation started, may not be the right fit when you are embarking on a new direction. Times have changed, priorities have changed, stakeholders have changed, so keep in mind that board members have a limited lifetime.
Therefore, boards committed to staying on top of the critical issues affecting their organisations should consider the potential benefits of appointing at least one next-gen director, not just for their subject expertise but for their ability to bring alternative thinking and multi-stakeholder perspectives into the boardroom. Backed by a supportive board chair and open-minded directors, next-gen directors can have a lasting, positive impact on the board’s effectiveness during a time of unprecedented change.
Embrace a future orientation
The argument that boards should be as much concerned with the future as the present is unanswerable, but how to achieve that future focus might be less clear. Here are some things about which boards should be thinking:
- Ensure the board is agreed about the need to focus on the future. If the board is not already spending time thinking and talking about the future, then the first step should be to reach consensus on this issue. If necessary, an outside advisor could be used to help convince the board.
- Create time for future-focused thinking. Once convinced, the board needs to find the time to act on its convictions. Ways to do this would include putting strategy items at the beginning of board meetings, and shifting more monitoring work to board committees, so the board simply receives a report. Another tactic could be to convene special meetings for future-oriented thinking. Board needs to distinguish strategic thinking from strategic planning – the latter being an important annual cycle of planning documents as opposed to a change in the organisation’s mindset.
- Foster a culture change. Following on from the preceding points, the board will need to set about intentionally changing not only its own culture but also that of the organisation as a whole. Needless to say, board culture must be conducive to active participation and blue-sky thinking.
- Pay attention to board composition. Board composition is vital in providing a board that can help the organisation understand its stakeholder universe and a complex global business environment. It is equally important that the board ensures it has the skills and perspectives among its members to understand the competitive landscape and developing market trends. Having members who are up to date on technology is non-negotiable.
Reana Rossouw is the owner of Next Generation, a specialist management consultancy in the impact sector that assist organisations with strategic and impact management and measurement. For more information – www.nextgeneration.co.za or www.impactinvestmentindex.org