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Nonprofit Boards and The Duty of Stewardship

Published in the April 8th issue of Phoenix Business Journal

How is it that very intelligent individuals, highly accomplished in their own fields of endeavor, enter the board rooms of nonprofit organizations and act so unintelligently?

The Arizona Republic’s recent expose regarding the Fiesta Bowl reminds us that neither is this an idle question nor is the problem an isolated one.

It is not that men and women who serve on boards are not smart or talented or passionate about their cause. It is rather that they require a special intelligence that accounts for the distinct nature of the nonprofit business.

Yet, Boards are often inadequately prepared to understand their profound duty of care as stewards of the public trust and their fundamental roles and responsibilities.

In each case where an organization is at risk or on the verge of insolvency, the board typically is either asleep at the wheel or unversed in the things they need to know to monitor organizational performance. I have yet to see a situation where the red flags of financial irregularity or distress weren’t waving well before the crisis escalated. They were undetected because members didn’t understand the nonprofit business model or how to read its financial statements or feel comfortable about asking the right questions.

For whatever reason they have been recruited or have chosen to serve, their duty is to set aside personal interests and agendas and to act selflessly on behalf of the organization’s mission and the constituencies whom they serve. Board work is not just about doing good, but it’s about doing good well.

Good intentions are no substitute for solid business practices and mindful governance. While we daily celebrate the caring and charitable side of nonprofit business, we must be ever reminded of the fundamental need for vigilance on the business side of caring.

It is this kind of vigilance and stewardship that is promoted by such groundbreaking initiatives as the Arts & Business Council’s Business on Board – an in-depth training program that prepares members of the business community for their leadership roles on nonprofit boards.

It is this kind of vigilance that every nonprofit organization should exercise as they recruit and appoint new members to their boards.

When it’s not profitability but the common good that is at stake in the board room, the stakes are higher. The factors that drive the decisions of boards of directors are different from those they encounter in their for profit enterprises. Lives hang in the balance. Every dollar must be judiciously allocated and leveraged with an eye to how it may impact the education of a child, the caring of the ill, the inspiration of a soul, the protection of a habitat.

The quality of community life thus hinges on the priorities and decisions of individuals who report to no regulatory body. Their ultimate accountability is to the community and, hopefully, to their consciences. If they fail, their names become the fodder of whistleblowers and investigative reports.

We all, therefore, share a collective responsibility to hold boards accountable and to ask them the tough questions about how they are upholding their trust. A lot of work still needs to be done to elevate the quality and effectiveness of governance in entities that play such a vital role in serving our community and enhancing the quality of our lives.

Thus, a word of advice to current and prospective board members: If you’re prepared to be a steward of the public trust and wear this profound duty of care on your sleeve and in your mind, then get on Board. Otherwise, get off.

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