Empowering Your Board to Make Informed Decisions By William Ferstenfeld, FTA

So you just walked out of your nonprofit’s board meeting.  You spent an hour listening to minutia about upcoming events and committee activities.  But, you also spent barely ten minutes listening to the organization’s financial reports and concomitant policy recommendations.  At the conclusion of the Treasurer’s report during which she revealed the extent of the current year’s deficit, you were amazed that there were no questions asked by any of your colleagues or nor any expression of concern.

Does this scenario sound familiar? What is wrong with this picture?

In my experience, most nonprofit boards spend an enormous amount of time listening to reports which should have been distributed in writing and in advance of the meeting.  Each trustee could then take a few minutes to read the material and note any questions or concerns in advance to discuss at the meeting.

It is especially important that board members receive financial reports in advance of meetings that are clear and informative.  A written commentary with the financial reports as well as annual collective or individual tutorials may be needed. When a trustee does not understand the financial reports, he or she may be forced into an embarrassing silence.

In addition, providing the documents in advance prepares the leadership with knowledge that will enable meaningful discussion to take place and assist in the development of appropriate strategies sooner than later. A call to action to meet a deficit or financial crisis three months before the end of the fiscal year is, in reality, a futile effort and doomed to fail.

The Executive Committee Dilemma
In all too many organizations, the board suffers from an inability to respond to important policy questions.

Perhaps, you have you heard this scenario.

Most often, serious discussions take place at Executive Committee meetings.  Then, the typical pattern that follows is that the President reports to the Board, states the issue and the results of the discussion held by the Executive Committee.  Silence is the usual response when the Board is asked to then discuss the issue and or recommendation.  Many Trustees will hesitate to speak up in fear that they will be seen as an “action blocker” or even worse, unsupportive of the administration.  A vote is taken and the recommendation is unanimously approved.

After the conclusion of the formal meeting, in the parking lot where the meeting continues, a few Trustees will say that they did not agree with the recommendation even though they voted for it and view the Board as only a “rubber stamp” to the Executive Committee and staff professionals.

So what happened here?

While the leadership really wanted the Board’s input, the real message was , “The Executive Committee discussed this and there is no need for you to add or change anything to our recommendation.”

It is obvious that a clear presentation of facts and possible solutions, regarding finances and or policy issues, presented in advance of a meeting will enable Board members to feel that their input is important.  The presentation of advance material is an invitation to each Trustee that they are being counted upon to bring their informed views and potential solutions to the table when these items will be discussed.  To attain unanimous approval requires “buy-in” by Trustees and the sense that they had the opportunity to participate in an open, honest discussion.

An effective Board operates at a very high level when Trustees are provided with timely, informative, understandable information in advance of meetings that shouts, “Your input, suggestions and comments are welcome and necessary.”

It has been said that people spend more time planning a two week vacation than planning their financial security in retirement.  Nonprofit boards should focus on the issues and challenges and opportunities that they confront.  They should allocate sufficient time and energy to the matters that impact plans for the current and future stability and growth and much less time on the equivalent of the “two week vacation.”