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Stuff To Ponder: Professionalizing Non-Profit Boards

August 5, 2014

by:

Joe Patti

Via Tyler Cowen at Marginal Revolution is a proposal put forth in the Stanford Law Review suggesting replacing board members with a professional board services company.

When I first saw the title “Why Not Put a Firm on Your Board” on Cowen’s blog, I thought maybe the Stanford article was going to be a satire of the whole “corporations are people” idea that is the basis so many recent Supreme Court decisions. However, they are completely serious and there is some sense to what they propose. (Though I suspect they may still have been inspired by the court.)

As I read the article, I started to wonder if something similar might be good for non-profits. The article is definitely aimed at large for-profit corporations, but the fundamental problems are the same:

-Both for and non-profit boards are comprised of people who have other day jobs and don’t have the time, either during or outside board meetings, to exercise proper oversight of the corporation.

-Board members either get too little information about the corporation to do their jobs, or are overwhelmed with too much.

-Board members often don’t possess specialized knowledge about the entity they are overseeing and therefore can not make good decisions.

-Finally, board members are in a position where they are more loyal to the management of the company than to the general community of stakeholders.

The articles authors propose a company, which they dub “Board-R-Us,” to provide professionalized oversight of management and assume legal liability for decisions made. I am not convinced that these companies wouldn’t succumb to pressure and influence from their clients like Arthur Andersen did or via their own corporate owners.

That aside, there were some compelling reasons for speculating on whether something like this might be viable for non-profits. In addition to the problems with effective oversight mentioned above, non-profit arts organizations often express frustrations trying to recruit a board that better represents the demographics of their community or target audience.

A board services provider (BSP) could recruit and train board members for a non-profit organization. A BSP would likely have extensive contacts at many companies, service organizations, universities, etc developed in the process of searching on behalf of many organizations which would make the search easier for them than for board nominating committees.

The BSP could advise both the organization and the board members about how to more effectively interact with each other so that neither dreaded attending regular meetings.

I am not sure if a BSP would essentially just be a recruitment firm or if the board members would work for them. The former situation would more easily permit board members to serve voluntarily. The latter might require a stipend of some sort.

I am not sure how a stipend might be resolved legally, but if a board member was paid by a separate company and if it wasn’t much more significant than gas money, it might pass muster.

One of the benefits of engaging a BSP for a non-profit is that you could actually have a healthy rotation of people through your board when the BSP assigned new people as terms expired.

A robust rotation system might also prove an incentive to companies to encourage employees to participate in non-profit boards via a BSP. The networking opportunities available as people rotated through the boards of different organizations can be valuable to companies. If the BSP is helping the non-profits provide pertinent information in an organized manner and the board meetings are being run efficiently, few may feel the experience is a waste of their time.

These scenarios assume a situation similar to the current arrangement of part-time board members helping to manage a non-profit with some guidance and oversight from a BSP rather than full-time oversight from a BSP simply because of the costs involved with the latter option.

In terms of how even part time services from a BSP might be paid for, I envision a dedicated good governance fund administered by a state arts council. If the arts council can’t find a source willing to specifically fund this, they might charge participating arts organizations a nominal fee and create a pool of money to pay a BSP.

The participating arts organizations could then choose from among a number of available board service providers.

Boards, Business Models, Info You Can Use, Leadership, Legal Topics, Working In The Arts

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We Need To Stop Optimizing Our Synergies

August 4, 2014

by:

Joe Patti

Yesterday, I was speaking with a friend who was learning English as a second language. I don’t remember which word it was exactly, but we got on the subject of corporate speak, the nigh-meaningless terminology that businesses use to recast their activities as something impressive sounding.

I ended up sending her a link to Weird Al Yankovic’s recent video, “Mission Statement” which makes fun of corporate speak.

I let her listen to Weird Al sing about synergies, operationalizing strategies, monetizing assets and other esoteric phrases set to “Suite Judy Blue Eyes,” preparing to be asked what the heck those words meant.

As I waited, it suddenly occurred to me that my hopes for simplified grant reports where non-profits honestly reported the results of the project rather than claiming everything went as well or better than planned, were probably impossible.

As long as for-profit companies are using this self-aggrandizing language to talk about themselves, non-profits are going to be expected to mimic them to some degree to provide the appearance of competence and effectiveness. Most granting entities are either the non-profit arm of companies employing this blather or are foundations with boards comprised of people who work for these companies. For them, use of the latest corporate speak buzzwords are indications of organizational health.

It also occurred to me that the difficulty in attracting audiences from all strata of society might be rooted, in part, in the need to employ an esoteric vocabulary. The need to sound impressive for funders probably influences marketing text. .

But it doesn’t mean much to the audiences you wish would show up.

Certainly there are plenty of other factors which might inhibit a decision to attend an event. Programmings choices that don’t resonate with the interests of local audiences being one.

However, I wouldn’t be surprised to learn that new employees who understand how to communicate in a way that interests desired community demographics find themselves pressured either overtly or subliminally over time to use more “polished” language.

I’m afraid that just as like death and taxes, the influence of corporate speak is going to persist until we can actualize a paradigm shift by distilling our core identities into a bleeding edge proactive client centric modality.

Arts in an Age of Technology, Business Models, Fundraising, Marketing/PR, State of the Arts

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ArtWashing Sounded Reasonable When I Suggested It

July 30, 2014

by:

Joe Patti

Over the years I have written about the gentrification effect of artists in neighborhoods. While artists are often displaced as they make a neighborhood increasingly trendy, there have been cases where artists went into an area knowing their stay would likely be short term.

By and large, these voluntary arrangements sounded reasonable. Artists would occupy empty storefronts making them look less dismal, helping to lower crime rates and providing a little bit of revenue for landlords in spaces that would otherwise generate none. As long as no one was under the illusion that this arrangement would last long, everyone can be generally satisfied.

However, a recent story on The Atlantic’s CityLab labels the intentional use of artists by London developers to enhance property values as ArtWashing.

When a commercial project is subjected to artwashing, the work and presence of artists and creative workers is used to add a cursory sheen to a place’s transformation. Just as greenwashing tries to humanize new buildings with superficial nods to green concerns (such as wind turbines that never turn), artwashing provides similar distraction. By highlighting the new creative uses for inner-city areas, it presents regeneration not through its long-term effects—the transfer of residency from poor to rich—but as a much shorter journey from neglect to creativity.

The author, Feargus O’Sullivan, discusses a number of cases in which artists were welcomed in wholeheartedly and then either forced out or subjected to unfriendly lease terms when their leases were up. He expresses some resentment for struggling artists being displaced by trust fund kids who like the lifestyle but don’t really need the space. Though he notes that even these people are, in turn, being nudged out in favor of the next higher grade of tenants.

He acknowledges that the situation is a little murky at times leaving some artists semi-complicit in the whole process due to the way they receive support. He cites a group that is producing a work with a critical tone that “art institutions sit comfy in the pockets of big corporations” in a space provided to them by a big developer who is eager to be associated with an artsy group.

O’Sullivan also asks us to consider that while artists may be subject to displacement as a result of their success, in some situations they may be displacers themselves. Although in most of the cases he cities, they were economic peers of those they lived among. (My emphasis.)

In celebrating their role, we are allowing the process of displacement to be mystified, and thus masked. An attitude has arisen which says, “Before, there was crime and emptiness; now we’ve got galleries and coffee. You’re telling me you actually preferred crack dens?” This shuts down debate by asserting that art and cafés for incomers were the only viable antidotes to lawlessness and poverty, when in fact they merely shunt them elsewhere. It erroneously suggests that creative uses of urban spaces are an end point, and reveals the ugly undertone beneath much talk of neighborhood change: That these inner city areas are just too good to be squandered on the low-income people being displaced from them.

So while artist inspired gentrification has long been recognized to be a mixed blessing for artists at best, it needs to be recognized that this gentrification isn’t actually solving the basic problem that existed. It is bringing much welcomed renewal to the physical elements of the area, but those in residence when the renewal begins don’t really experience much benefit at all.

State of the Arts, Working In The Arts

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Best Leaders Are Internally Motivated

July 29, 2014

by:

Joe Patti

There was a post on the Harvard Business Review blog site about a recent leadership study – Why You Lead Determines How Well You Lead.

According to the study, people with an internal motivation to lead are more effective than those with external motivations. More surprising, a person who has a mix of internal and external motivations, does very poorly.

“As one might predict, we found that those with internal, intrinsic motives performed better than those with external, instrumental rationales for their service — a common finding in studies of motivation. We were surprised to find, however, that those with both internal and external rationales proved to be worse investments as leaders than those with fewer, but predominantly internal, motivations. Adding external motives didn’t make leaders perform better — additional motivations reduced the selection to top leadership by more than 20%. Thus, external motivations, even atop strong internal motivations, were leadership poison.

Many believe that the best way to influence behavior is to incentivize it, and such external incentives certainly work with lab rats. In our study, however, adding external incentives clearly did not improve leader performance.”

and later

“If those we seek to develop as leaders adopt external justifications for leading well — such as an increase in shareholder value, better pay or perquisites, or increased profits — they are likely to be less successful as leaders in comparison to those who seek to lead for more internal, intrinsic reasons alone.”

If you have been reading my blog for awhile, you probably can see where my mind is going here. These results made me wonder if non-profit leaders might not make the most effective leaders since internal motivation for doing the job is all but given.

Now remember, effective leader doesn’t necessarily equate to successful. This is a “if you are so smart, why ain’t you rich” situation. Non-profit organizations are notoriously underfunded and lack the resources to achieve the success they aspire to. Not to mention many are pursuing work which others won’t because there is no profit to be made.

Likewise non-profit leaders may make really stupid choices because there was never any time to properly develop and cultivate them throughout their careers. (Not that this type of grooming has kept their for-profit colleagues from making stupendous mistakes either.)

Yes, I am flirting with suggesting that for-profit corporations pull something akin to the movie Trading Places consider looking for effective leaders in non-profit organizations (sans the whole bet thing).

Yes, this regrettably will take talent out of the field, but it would put them in a place with greater resources to provide their leadership skills with more impact. Without maximizing shareholder value as a central goal, the general business environment may shift for the better. Though that might be as big a fantasy as the movie.

http://www.youtube.com/watch?v=ZjDbJQKDXCY

Business Models, Leadership, Management Philosophy

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