Late last year, BoardSource published an important new book on nonprofit governance, Putting Purpose First: Nonprofit Board Leadership Today. The book incorporates the governance framework first introduced in the article The Four Principles of Purpose-Driven Board Leadership written by BoardSource CEO Anne Wallestad for the Stanford Social Innovation Review. This highly influential piece sparked several follow-up articles, including my Purpose-Driven Board Leadership, Legally Speaking and Phil Buchanan’s Re-Purposing Foundation Boards.
I recommend nonprofit leaders give this book a 30-minute skim and see if it’s worth a closer review (I definitely think it is!) as a resource to share with their boards. Below are some of the highlights from the book:
Introduction: Three Leadership Roles
- Set strategic direction. This work is done in partnership with the executive and staff and produces an articulation of the nonprofit’s purpose, guiding values, vision, goals, strategies, and progress measurements.
- Provide oversight. The board must ensure that the nonprofit is accountable to its purpose and operating ethically and responsibly, including through its evaluation and support of the executive, mechanisms to ensure legal and ethical integrity, financial oversight, strategic deployment of resources, risk management, and monitoring of progress.
- Ensure organizational resources. Three interconnected types of resources are necessary: people, money, and connections.
Principles of a Purpose-Driven Board
Purpose-Driven Board Leadership is a mindset characterized by four fundamental principles that define the way that the board sees itself and its work:
- Purpose before organization: prioritizing the organization’s purpose, versus the organization itself.
- Respect for ecosystem: acknowledging that the organization’s actions can positively or negatively impact its surrounding ecosystem, and a commitment to being a respectful and responsible ecosystem player.
- Equity mindset: committing to advancing equitable outcomes, and interrogating and avoiding the ways in which the organization’s strategies and work may reinforce systemic inequities.
- Authorized voice and power: recognizing that organizational power and voice must be authorized by those impacted by the organization’s work.
A purpose-driven orientation to board leadership changes board conversation in deep and meaningful ways.
Purpose-driven boards … avoid conflating their organization’s purpose with the organization itself. They embrace the wisdom that there is strength in numbers, and they are eager to explore how their work fits into a bigger picture, a larger cast of players, an ecosystem of organizations working to serve our society and create positive change. They steward their organizational resources in a way that acknowledges that they are but one part of that larger ecosystem – and recognize that a strong ecosystem, supported by many, offers powerful opportunities to maximize their potential and amplify their purpose and impact.
Setting Strategic Direction
In setting the strategic direction, a board should start with purpose, which is the nonprofit’s reason for being and a melding of the concepts of mission and values in pursuit of vision. Vision is the desired future state. Mission is the nonprofit’s role in working towards its vision. And values are the principles and beliefs that guide how the nonprofit furthers its mission.
To practice the three modes of governance – generative, strategic, and fiduciary – the following questions should be considered:
- Do we have the people we need around the table to lead this organization’s strategic work effectively?
- Do we understand the board’s role in relationship to management?
- Do we structure our time together to allow for meaningful engagement in important work?
- Does our board’s culture encourage thoughtful deliberation that is inclusive of all?
In setting strategy, a purpose-driven board focuses on advancing the nonprofit’s purpose; understands and respects the nonprofit’s ecosystem; has a values-driven mindset; and is willing to operate, adapt, and change in support of its purpose, the community it serves, and the ecosystem in which it operates.
When things are going well, the board’s oversight role may not seem as critical. But circumstances can change quickly, and it’s important for a board to maintain its ‘muscle memory’ with respect to its oversight function. Board members need to exercise their independent judgment, ask reasonable questions, and maintain objective oversight over the nonprofit’s executive, finances, and programs. But they should also focus on consequential outcomes without wading too deep in the details. And they must remember that strategy is separate from purpose and mission. The focus must remain on the questions: What are we trying to accomplish, and is this the best way to do it?
Three legal oversight questions boards should ask:
- Are we complying with the law?
- Are we following our own policies?
- Are we acting in accordance with our own values?
Ensuring Organizational Resources
Talent. Strategic board composition requires strategic recruitment, effective engagement, and intentional revitalization. Diversity, equity, and inclusion are critical for multiple reasons, including sharing power with the persons the nonprofit seeks to serve.
Money. Boards may participate directly in fundraising but also must understand how fundraising strategy fits into the overall business model and organization’s ethics and values.
Connections. The board must recognize that the nonprofit’s success is linked to what’s happening within its community and ecosystem. Connections must be understood, established, cultivated, and developed with the community served, the broader ecosystem, policymakers and community decision-makers; and financial supporters.
A large-scale move toward this new way of thinking and being will create a powerful upswell of deeply connected boards and organizations focused on accelerating the social sector’s critically important work. When we put our purposes first, we can and will make meaningful progress in strengthening the communities we serve, solving society’s most complex issues, and realizing our hopes and dreams for a more equitable world.