Wednesday, July 25, 2012

Passion in the Boardroom: Balancing Heart and Head

By Neil Bohnert

A selection from Origami in the Boardroom and Other Misadventures in Nonprofit Governance©

The agenda promised this would be a routine board meeting and the holiday spirit created a special ambience.  Less than a week remained until Christmas.  It was also mid-way through a year that had been a financial tight wire walk for the board.  The treasurer’s report was disconcerting, but in the holiday spirit, optimism prevailed.  Just as all the stated business had been covered and the group was anticipating adjournment and a holiday evening, the chairman distributed a letter requesting a sizeable investment for a project that was neither budgeted nor supported with any assessment.  The letter was accompanied by a memo from a committee chairman with a one-line statement: “We support this project.”  The issue was not on the agenda.  It was not in a committee report.  To add to matters, it was a sequel to an earlier project that had already created a hole in the operating budget.  But everyone was ready to approve it.  Why not?  It was a worthy endeavor.  It had all the hallmarks—social sensitivities, a “feel good” aspect, the right motives, a “sure thing” (according to the project manager)—and it was Christmas.  What was not to like? 

As I followed the discussion with some consternation, the locomotive began to move down the tracks, faster and faster as one person after another praised the project and “felt” it would surely be a good thing.  The passion was rising.

Then one person asked a startling question.  “Mr Chairman, since we’re already in a deficit for the year and this is an unbudgeted expense and there is no financial forecast for the project, how can we approve this on such little evidence?  A silence fell on the group.  Someone actually questioned the worthiness of the project!  The question struck at the heart of the issue.  One member rose to her feet and exclaimed that “we would certainly be remiss if we didn’t approve the project,” and walked out of the room in dramatic fashion.

How many times have we witnessed boards impulsively acting on the emotional aspects of issues and dismissing or ignoring the fiduciary responsibilities?   We regularly approve unbudgeted expenses because there is no alternative or because it “seems right” or because to do otherwise might be misunderstood.  “If it feels good, do it” seems to be a strong, unseen hand in many board actions.  No one wants to risk appearing opposed to an action that has the right “feel” about it.

So what’s wrong?  Isn’t that what nonprofit organizations are all about?

Not really.  Nonprofits, in the strictest sense, provide services that the free market cannot and that governments cannot, will not, or should not.  That really means that nonprofits do good works for a community or for society as a whole, but they cannot be irresponsible or careless in carrying out that mission.  Yes, there are many instances of nonprofits engaging in projects that lose money, intentionally lose money.  There are certainly examples of organizations taking up a critical mission when there is no one else to step into the breach.  But nonprofit boards are duty-bound to direct the organization in responsible stewardship. 

So how do boards strike the balance of heart and head”?

Let’s start by understanding the real responsibilities of boards under the umbrella of stewardship and governance.

Let’s start with channeling the passion in the boardroom.  Passion is an important ingredient in the nonprofit organization.  Without it, the mission that stirs people to become dedicated to the organization loses its appeal.  Emotional energy is good, but it is best directed at advancing the mission.  It is dangerous to allow passion a free reign in board decisions.

Let’s start with organizing meeting agendas to accomplish the important business of the board. Board work is a vital link between the mission of the organization and the strategic objectives.  Questions before the board must be linked to these strategic objectives.

What are the lessons to be learned?

Boards will be ruled by emotion.  Needed projects will be approved.  What’s important is channeling the emotion and passion for positive, effective outcomes.

The epilogue to my story, a true-life misadventure, is that the board decided to postpone action on the proposal, pending further assessment.  The Executive Committee approved the project the following month (in violation of the bylaws limiting Executive Committee authority, a misadventure to be told another day) and the board ratified the project, committing funds in the next fiscal year to the project.

Passion is the true energy source of nonprofit boards.  Use it wisely.

Let’s get started!

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