Greg Mortenson’s lessons for non-profit boards

Last year 60 Minutes and Jon Krakauer investigated Greg Mortenson, the executive director of the Central Asia Institute (CAI) and author of the best-selling, and, it seems, largely fabricated, Three Cups of Tea. They discovered that he had violated the trust of the people who donated money to the CAI and of those he was claiming to help. This past week Montana’s attorney general said Mortenson must repay $1 million to the CAI. He is allowed to remain with the charity, but can no longer serve as a board member, nor is he allowed to hold a position of financial responsibility.

This case offers some lessons about the role and responsibilities of boards of non-profits that are too important to ignore.

A good board can be hugely beneficial to the stability, growth and effectiveness of a non-profit. On the other hand, a bad or self-indulgent board can be a time-consuming distraction or a drag on scarce resources. In the worst cases, it can allow the abuse of funds and trust on a large scale, as seen with the CAI.

Non-profits come in all shapes and sizes. Some are small niche organizations that come from the passion of one or two people and have limited resources. Others are large, complex organizations with significant donations and operating costs that rival many global corporations. No matter the size or scope, the principles behind the board’s responsibilities are the same: Donors give money to an organization in the belief that their money will be used for a specific cause. The organization and the cause are at stake, and the ethical imperative behind the organization goes beyond the bottom line.

Non-profits require deliberate care and attention in building a strong, capable board, one that will ensure that the mission of the organization is honored in word and deed, and that the donated funds are used in responsible and careful ways. These boards have multiple “grounding and stargazing” responsibilities, from governance and oversight to fundraising and strategic planning. These responsibilities are made greater in challenging economic times.

Board seats of non-profits should be filled not simply by those who give the most money or even those who have the greatest passion for the organization or regard for the person running it. To do so discounts the seriousness of the role of a non-executive board member or trustee. A board should be carefully curated to ensure that the skills and abilities around the table will safeguard the health and well-being of the organization and its mission.

Who needs to be around the table and what skills should they have?

Governance

The board is about governance. It is about ensuring that the organization remains healthy, adheres to the mission and uses funds responsibly. Not every person who donates money, even sizable amounts, should automatically be given a seat at the board table. It is possible to honor donors and to value their input in places other than the governing board, including a separate advisory board.

Financial acumen

The board must have people who are financially astute and who understand the finances of the organization. Their role will include oversight functions, such as serving on the audit committee, as well as financial and strategic planning. The combination of financial oversight and planning is critical to a non-profit’s long-term strength.

Independence

Commonly overlooked is the value of genuinely independent board members. As with corporate boards, it is useful to have people who are neither donors nor beneficiaries and who bring true independence to the discussion and the oversight role of the board. One good choice for this role is an accountant who can serve as chair of the audit committee and in other oversight capacities.

Fundraising

Fundraising is a critical part of a non-profit’s existence. Having board members who take this role seriously is vital. However, a board member’s role is about more than fundraising, since the primary role of the board is governance and ensuring that raised funds are used as intended. Separate bodies can be created to ensure that there are enough people doing the necessary fundraising.

Relevant skills and abilities

A good board has members who have skills, abilities and knowledge relevant to the organization. This means that if the organization is building schools in Afghanistan, it needs board members who understand building, education and the country. These same board members can help bolster the skills and abilities within the organization. That often happens through mentoring and skills matching, where a board member is coupled with a full-time staff member to ensure that the organization has access to valuable, and sometimes costly, expertise, ranging from marketing to human resources.

Increasingly, public-sector responsibilities are being taken on by charities, especially as governments around the world are forced to cut back on services that they have provided in the past. As such, non-profits are touching the lives of more people every day. In the end, serving on a non-profit board is not about loyalty to the founder, personal agendas about the direction of the organization or the prestige that comes with sitting on the board. It is about ensuring that these non-profits are strong, capable organizations with integrity that honor those they are intended to help and those who have entrusted the money to fulfill their mission. Serving on these boards is about ensuring that organizations are sustainable and can help those in need for many years to come.

Date

13 April 2012

Greg Mortenson’s lessons for non-profit boards

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