The following is a conversation between Anne Wallestad, President and CEO of BoardSource, and Denver Frederick, Host of The Business of Giving on AM 970 The Answer in New York City.
Denver: When Darren Walker, the President of the Ford Foundation, was on the show, he said the following, “Everything that is right or wrong with an organization, whether a for-profit or nonprofit, can be traced to the doorstep of the board of trustees.” It all begins with the board. The recognized leader in nonprofit board leadership, as well as supporting, training and educating nonprofit leaders from across the country and throughout the world, is an organization called BoardSource.
And it’s a great pleasure to have with us this evening their President and CEO, Anne Wallestad.
Good evening, Anne, and welcome to The Business of Giving!
Anne: So happy to be here. Thanks for having me.
Denver: Provide us with some of the history of BoardSource and how it came upon this all-important mission.
Anne: Sure. BoardSource is about 30 years of age. We were founded actually by the Association of Governing Boards of Colleges and Universities and the Independent Sector. As the story goes, folks were going to AGB and asking for support around their boards of directors, and AGB said, “Well, we only work with colleges and universities; surely there must be someplace else for folks to go…” and in fact, there were not. They turned around to Independent Sector, again as the story goes, and said, “You must help folks.” And IS said, “No. That’s not what we do either.” And so they got together and started what was then the National Center for Nonprofit Boards as a project of AGB’s and then a couple of years after that, decided that there really was a need for us to be an independent organization. And so the National Center for Nonprofit Boards became its own organization in 1990. And we’ve been focused on this mission of: how do we strengthen nonprofit boards and position them to really provide the leadership that social sector organizations need to do their best work ever since then.
Denver: And what are some of the common mistakes that boards — and I’m even talking about good boards — frequently make?
Anne: There are a lot of things that boards can do wrong, but I try really hard not to pick on them too much because there’s also a lot that boards do really well. But I think when we are looking at the things that tend to create dysfunction or lack of achievement when it comes to boards, it really comes down to two categories. One is around expectations. So, how do you really make sure that when you’re bringing on new board members and you’re orienting them to what it means to be a strong board leader, that you’re actually getting those expectations well-aligned? And that everybody knows exactly what’s needed of them? I think a huge mistake that a lot of organizations make is they really undersell the commitment of board service. And then, of course, they’re disappointed when they turn around and somebody says, “Well, I’m giving you exactly what you asked for. You just didn’t ask for very much.”
Denver: What they really wanted was a YES! And they will undersell it to get that “yes.”
Anne: That’s right. That’s exactly right. And the second category I would say is — once folks are on board — really not taking the time to effectively engage people. And I don’t mean engagement for engagement’s sake…making folks feel good about their board service. I really mean thinking about the highest and best use of the board: How do we really take advantage of and leverage all of the work that we’ve hopefully done to get the right people around the table, to get the right people leading the organization at the board level, and making sure that we’re really tapping into that insight expertise rather than just going through the motions and creating a scenario where you’ve got all of this talent that you’re not just tapping into. And unfortunately, that happens way, way too much.
…the current findings, as of the 2017 study, are that boards are 84% white in terms of the racial and ethnic make-up. And even more striking — 27% of all boards are actually 100% white.
Denver: Oh, I know that well. Let’s talk about some of the current issues with boards in the nonprofit sector. There’s a real dissatisfaction regarding board diversity. Now, many organizations acknowledge this, and they’ve expressed a desire and an intent to address it, but I know you, BoardSource, have recently issued quite a comprehensive report looking at this very issue. Is any progress being made?
Anne: Well, the sad truth is… very, very little. BoardSource started first looking at the demographics of board composition with a study that we did in 1994… so more than 20 years ago. And we’ve made really tiny, tiny, tiny progress since then. We’ve moved the needle only very slightly when it comes to the racial and ethnic diversity of boards. And the current findings, as of the 2017 study, are that boards are 84% white in terms of the racial and ethnic make-up. And even more striking — 27% of all boards are actually 100% white. So there’s a real challenge in terms of getting boards to a place where not only are they more representative of the communities that they are serving, but that they really have the perspective that they need in the boardroom to be able to make good decisions and strategy for an organization that don’t have huge gaps in terms of perspective insight network, and we think those potential strategic blind spots are real, real issue.
Denver: Yeah and I think what’s really striking about this most recent report is that those numbers were actually worse in terms of diversity than they were in 2015.
Anne: That’s right.
Denver: So it’s not as though this progress is being made slowly, it’s almost as if it’s in reverse.
Anne: That’s exactly right. We’re really not seeing the movement that we would hope to be seeing in terms of becoming more diverse and, of course, we wanted to understand well, why might that be? And so we took a look at some of the practices of boards to see if there’s anything that we could learn about why haven’t we made more progress. And it’s actually disappointing, but it’s a very straightforward answer, and that is: organizations’ boards are simply not prioritizing demographics in board recruitment. And even more striking is there’s real dissonance in terms of what boards and executives are saying is important to them in terms of diversity and what they’re actually doing. Close to one in five of all of the executives that responded to the Leading with Intent Survey indicated both that they were unhappy with the level of racial and ethnic diversity that they had on their board and that they were not prioritizing demographics and board recruitment. So when you think about the fact that one in five of all organizations that responded said, “We’re not happy. We’re not doing anything about it.” That’s a huge challenge. But you really don’t have to look any further to understand why we haven’t made more progress.
Denver: You’re absolutely right. You know, there’s been a lot discussion about measuring the impact of nonprofit organizations’ program work, and everybody’s looking to evaluate their effect in this and make it better. How prevalent is that practice among boards themselves: assessing their own performance as it relates to their key responsibilities?
Anne: It’s not happening as much as we would like it to. Boards are not doing regular and rigorous board self-assessment, and I would add boards are also not very good about regularly and formally assessing the performance of executives. So certainly the majority are, but a huge percentage are not. And that’s a real challenge in terms of being a performance-oriented organization. The thing that I’ll add there that is really fascinating is when it comes to board’s self-assessment, there seems to be — or the data suggests — that there’s a real connection between those boards that are assessing their own performance and those boards that rate their performance higher. So you can’t say that there’s causation there, but there certainly is a relationship between those organizations and boards that are being thoughtful about their performance and those that are doing better. And we can actually see that there is a stronger relationship for those that have done it more recently. So it does matter; it’s not just a waste of effort. It’s not a waste of time.
Denver: Oh, absolutely. No. That’s a very interesting observation. And I also bet within these organizations too, that the performance review process for the staff is not going to be that good or rigorous when the CEOs themselves are not being reviewed by the board. It’s just going to trickle down in more cases than not.
Anne: It certainly could. We don’t ask questions about the evaluation practices for the rest of the staff, but I do think just as it’s challenging to not have both the board and the executive being assessed, it’s challenging to have a staff be assessed and not have the executive.
Collaboration requires an openness, a level of comfort with lack of certainty, a willingness to experiment, a willingness to take risk, a willingness to define your success, not only by what you’ve accomplished, but by what you have enabled to make happen…
Denver: Right. There’s an awful lot of clamor for greater collaboration. You can’t pick up an article and not see somewhere in the piece: “We need more collaboration in the sector between and among organizations, plus eliminate some of the duplication. Let’s get better outcomes.” But often left out of all these articles that I look at is the role of the board and how their mindsets need to change in order for these collaborations to really be meaningful. How does the board need to alter their perspective and orientation?
Anne: That’s a great question. And it’s something that I think a lot about and I think is really important for more of us to think about. I guess I would start with: how are we defining success, and how are our boards defining success? And if we have a really narrow definition and are looking only at what has this organization, in the most narrow sense, accomplished, that is not necessarily an orientation that encourages a leader or an organization to invest in collaboration.
Collaboration requires an openness, a level of comfort with lack of certainty, a willingness to experiment, a willingness to take risk, a willingness to define your success, not only by what you’ve accomplished, but by what you have enabled to make happen… and that is not necessarily the way that even we, BoardSource, have trained boards to think. We need to, in my opinion, really open up the way that we think about what our organizations are designed to do, and what and how that requires us to operate differently.
Denver: Yeah, that’s really, really hard, but it is so critical and important. I mean one thing that I see that is encouraging, is that younger people tend to look at these things from an issue perspective, where the older you are, you sometimes tend to look at them from an organizational perspective. I think it’s our whole idea of we had our Rolodex and they have their Facebook. There’s a sense that it’s more open. And I think that that is hopefully a positive trend for the future, but I’ve really seen that in a lot of different places.
Anne: Well, I certainly agree with the sentiment that thinking about the issue — or the word I would use is “purpose” — and really what are we trying to accomplish, thinking about that first instead of the concept of who are we as an organizational entity and what-have-we-been-doing type of orientation is really important. And this is not an original Anne Wallestad thought… Plenty of other folks have said this. There’s great work talking about the networked leader and the way leaders can operate differently and really position their organization to be better at collaboration by thinking that way. I do think that the boards need to recalibrate around what that takes in terms of the relationship between the board and the executive in terms of trust and flexibility. I also think it goes back to the way that we think about strategic planning. If we’re focused on predicting what we should accomplish, that’s really going to limit us in terms of what we are able to do. It shouldn’t be about predicting what we can do; it should be about remaining open to what’s possible.
If we’re focused on predicting what we should accomplish, that’s really going to limit us in terms of what we are able to do. It shouldn’t be about predicting what we can do; it should be about remaining open to what’s possible.
Denver: Absolutely. One of our favorite themes on The Business of Giving is corporate culture of nonprofit organizations. As a matter of fact, I had the great pleasure to visit your place, and you have a wonderful one down there. But we’ve never really examined the leadership culture and dynamics of the board of directors and how it conducts its work. But you have! What are some of those insights?
Anne: Yeah. We talk about culture as being the secret sauce of boards, and really what makes the difference in terms of how boards operate and how they perform. Leading with Intent asks a lot of questions related to board culture and what really defines a positive culture. We did some interesting things with this particular study to take a peek at what might matter most particularly as it relates to overall organizational performance. And the thing that stood out from a culture perspective was the extent to which the board operates as a collaborative team working towards shared goals, which sounds a little squishy, but it turns out really, really matters, which is probably no surprise to anyone. But to see it in stark relief in terms of the data I think is important. And it also, to me, is a real signal that boards that miss the opportunity to invest in that culture are really putting the effectiveness of the board at risk.
We asked some questions related to how much is the board investing in social time between board members and being really intentional about building the team. Some boards are meeting only three or four times a year. If you need that group of people to operate as a team, you need to be intentional about building that bond. And those were some of the questions that got the lowest responses in the affirmative in terms of those investments in social time. So when you see how important that is and you see that it is not necessarily happening as much as we would like it to, I think that’s a real opportunity for boards to think about some high leverage investments in change.
Denver: That makes a lot of sense. You recently held your BoardSource Leadership Forum, which was attended by 1,000 social sector leaders. Another sell out… Congratulations!
Anne: Thank you.
Denver: And at this forum, you touched upon four things that you believe organizations need to do to unlock their full potential. And if you don’t mind, I’m going to ask you to say a word about each one, if you would. The first was purpose. And this is not the same as the mission statement, is it?
Anne: That’s right. We talk about purpose as that deeper level of understanding about what your organization is really seeking to accomplish in the world. And the reason we use that word instead of “mission statement” is folks get really wrapped up in “Here’s what our mission statement says…” And mission statements are actually more of a description of what you’re doing. They’re not necessarily capturing the reason for existence, and that’s what I mean when we talk about purpose. And for some organizations, that really goes back to the reason that they were founded. For others, the purpose has shifted over time, and that’s okay.
But it’s really understanding “Why are we here? Why do we do the work that we do?” And one of the things that I think is so powerful about focusing on purpose is there is an opportunity to think about purpose-aligned organizations in a different way. When you’re thinking about mission statement or organizational structure, you’re thinking about brand and unit-level success.
Denver: That’s right.
Anne: When you’re thinking about purpose, you’re thinking about: What are we seeking to accomplish? And who can help us? And I think that is a subtle, but really powerful shift for organizations to be thinking about and talking about at the board level.
Denver: Yeah. It’s the why of the organization.
Anne: That’s exactly right.
Denver: The second thing is for an organization to define its values and live into them. And that last part of that statement is really key, isn’t it?
Anne: Absolutely. What’s the point of having values if they don’t actually mean something in terms of the way that your organization operates? I told the story at the conference about — a story that a lot of business school professors tell — and they talk about corporate values and they share these four words: communication, respect, integrity, and excellence. And then they turn around and ask their students, “What’s wrong with these?” And of course, everyone’s confused because there’s nothing wrong with them. What could possibly be wrong with them? But then the professors will go on and say, “Well, actually what’s wrong with these is that they were Enron’s corporate values in the midst of the huge corporate ethics scandal… ” And the point being that the organizational values need to really come from what an organization has committed itself to do and to be, and they need to live them with each and every decision that they make.
Denver: I thought your third recommendation was most interesting, which is cultivate resilience through flexibility. Speak to that.
Anne: I’m a firm believer that there is just no strength in rigidity or predetermined plans that do not acknowledge that we are in a constant state of change and flux. I think that we can really get into a trap. Any organization can get into the trap of thinking “Well, here’s what we want to accomplish three years from now. Here’s how we’re going to do it, and these are all of the steps and sort of tactics that we’re going to put into place.” And it’s almost laughable. It really doesn’t reflect the reality of how our organizations and our world exist. And I think it sets boards and staffs up for failure in some ways in terms of thinking: Is it about what we said we were going to do? Or is it about: what is the right thing to do in this moment? And so we really encourage boards to think: How do you build some sense of shared understanding about the direction that you’re headed, and really get clear about what’s most important for you to do… but then leave a whole lot of flexibility about how you get it done.
Denver: I don’t think a lot of people would have anticipated three years ago that Donald Trump would be President. That’s one example.
Denver: So you have to be able to pivot and adjust some of your plans according to that. Your final thought was: build power and influence, and perhaps that message has never been more important than now.
Anne: Well, I certainly think that’s right. BoardSource as an organization, we’ve been talking about the importance of power in the public policy context for a number of years. We launched a campaign several years ago called the Stand for Your Mission campaign, which is really focused on helping board members understand the role that nonprofits can and should play in public policy… and helping board members themselves understand how they as individuals can really play a powerful role as advocates for their mission. Well, when you’re talking about all of the things that nonprofits are facing in terms of radical shifts– or potential shifts in public support, policy changes that are impacting the communities that they serve, and the ways in which they do their work—to your point, really never has there been a more important time to talk about that!
Denver: And now you have the Stand for your Mission Awards.
Anne: That’s right! We announced at the conference that we are inviting organizations to apply for the Stand for your Mission Award, which will honor an organization that is really standing for its mission and that has thoughtfully engaged the board in that work of advocacy.
Denver: Very cool. Let’s move on to another issue. You know, a frequently debated topic in the sector is fundraising effectiveness. Now, many will argue that how much of each dollar goes to program is really a poor proxy for impact. Although I think most donors and average donors look at that still more than any other. On the other side of the spectrum, people will say, “Hey, don’t worry about how much money you spend. Your job is to accumulate as much as you can to serve the mission.” BoardSource, along with some of your colleagues in the sector, have developed a new framework for measuring fundraising effectiveness. What does that look like?
Anne: The dynamic that you’re articulating– in terms of some folks saying that cost of fundraising shouldn’t matter at all– other folks looking at it as not just a good measure of fundraising effectiveness, but a good measure of organizational effectiveness…
Denver: THE measure.
Anne: …which is from my perspective so wildly off-base, but we saw that there was a real need to make sense of that… or to attempt to make sense of that– both for boards and for the public. And so you mentioned colleague organizations, this is a joint initiative with GuideStar, BBB Wise Giving Alliance, and the Association of Fundraising Professionals. And what we came up with was a very, very simple way of articulating the risks associated with over-emphasizing cost of fundraising. So we introduced something that we called the dependency quotient which is a measure of the extent to which an organization is dependent on its top five donors. And the point that we’re trying to make is that sometimes in an effort to spend as little as possible on fundraising, we are actually under-resourcing the very tactics and approaches to fundraising that give us resilience, flexibility, and sustainability for our organizations. And so we want boards to understand that. So we created this initiative with this very simple framework. And then what’s really most powerful about it… at least in my opinion… is a discussion guide that we created for boards to actually talk about it.
Denver: Very good and much needed. Sticking with fundraising for a second. What is BoardSource’s business model? And what are your streams of revenue that support the work of the organization?
Anne: Well, it has certainly shifted and changed over our 30 years of existence. But the way that we operate now is really we’re a 501(c)3 organization ourselves, but we have sort of a hybrid model in terms of the way that we support our work. So we have programs, services that we offer to individual organizations and leaders. Some of the things that probably folks are most familiar with when they think about Boardsource: board self-assessment, consulting services, publications; those are fee-based, and we are fortunate that thanks to the efforts of the past several years, those programs actually support themselves. So we rely on philanthropic support to do things like Leading with Intent, investing in research, and then all of this growing leadership agenda that’s really focused on: where are these opportunities for us sector-wide that boards are not necessarily thinking about, but they should be. It’s a combination that for us has been quite powerful in terms of unlocking our full leadership potential and our ability to really create and push for culture change at the board level.
It used to be that when folks were going into their careers, if they wanted to make a difference, if they felt like “I’m about social good,” the place that they naturally felt that they should land was in the nonprofit sector… or perhaps in the public sector in the government or public service. That’s really shifted, and there’s plenty of other evidence around that. And folks coming into the workforce are sector-agnostic… or many are sector-agnostic in terms of where they feel they can have the biggest impact.
Denver: Let me get your take on this, and I don’t know if BoardSource has ever done any study on this…so it may be your own personal opinion. It has to do with the ability of the sector to attract and retain talent. There’s an article I read in Fast Company the other day that suggested that social good and purpose-driven organizations are really beginning to poach some of the very best talent from nonprofit organizations over to them. Do you see this as a real concern?
Anne: You know, it’s interesting. I don’t have a lot of– we don’t have any of our own research on it, but certainly, I pay attention just thinking as a nonprofit CEO, and as a CEO who is thinking about the sector as a whole. It used to be that when folks were going into their careers, if they wanted to make a difference, if they felt like “I’m about social good,” the place that they naturally felt that they should land was in the nonprofit sector… or perhaps in the public sector in government or public service. That’s really shifted, and there’s plenty of other evidence around that. And folks coming into the workforce are sector-agnostic… or many are sector-agnostic in terms of where they feel they can have the biggest impact.
I do think that as leaders of nonprofit organizations, that means we need to think differently about the way that we operate and the way that we compete for talent. And we need to think about talent more than we do. And really being thoughtful… and there is a board role here making sure that we have talent strategies, and I’m not sure that that’s something that nonprofits have typically… at least historically… spent as much time thinking about. It was sort of “Well, if people wanna do good, they’ll come, and if they don’t, that’s okay because we got plenty who will.” And I just don’t think that’s the way that things are going to be.
Denver: No, no, no. They’ve got a lot of competition. There’s a war on talent, and I think again if you look at millennials, they just want to do good in this world, and the rest of it is just a decision an organization makes with the IRS as to how they’re going to form their organization.
Anne: That’s right.
Denver: Let me close with this, Anne. Every industry is going through incredible disruption, and they’re doing so at an unprecedented rate, and philanthropy, certainly the nonprofit sector, would be no exception. What do you hope for and aspire to see in the boards of this sector, in terms of being able to navigate the turbulent waters that lay ahead?
Anne: Oh, what a fun, great question… You know, I go back to what you asked me initially in terms of the big challenges or mistakes that boards make. I really hope that boards can become what they were always designed to be — or at least what I think they were always designed to be — which is a group of thoughtful, talented leaders from all walks of life, with lots of different exposure, perspective, experience… coming together around a common goal, a common purpose… and really truly leveraging all that they can do for an organization. And there’s obviously a ton wrapped into that, but I think helping boards understand that they are not there just to prevent bad things from happening. They are there to make sure that good things do. And that means really moving beyond the role of the board as risk prevention. That’s still important, but that is, in my opinion, a relatively small– it’s an important but small portion of what boards really need to be doing.
And thinking about: How do we lead more in community? How do we expand our way of thinking about our leadership beyond what happens around the boardroom table, and really become the connection to community… the insight in terms of dynamics, trends, changes, the seeing around corners, the thinking differently outside of the social sector industry… I just think there’s such chemistry and power in what that could be, and you see it sometimes. We don’t see it enough, but when you see it, it is so incredibly powerful. I hope that every organization can have that.
Denver: That’s great. Well, Anne Wallestad, the President and CEO of BoardSource I want to thank you for coming by this evening. Tell us about your website and what information visitors might find there.
Anne: Wonderful. Yes, our website is www.boardsource.org. There’s lots of information there in terms of resources for boards, as well as all of the research that we’ve mentioned, which is also available at leadingwithintent.org. I would encourage folks to visit that to learn more about our work on the Stand For Your Mission campaign, to learn more about the power of possibility and lots of things that we could have going on that are relevant to organizations and leaders today.
Denver: Great. Thank you so much, Anne. It was a real pleasure to have you on the program.
Anne: Thank you.
The Business of Giving can be heard every Sunday evening between 6:00 p.m. and 7:00 p.m. Eastern on AM 970 The Answer in New York and on iHeartRadio. You can follow us @bizofgive on Twitter, @bizofgive on Instagram and at http://www.facebook.com/BusinessOfGiving