Did this Board act ethically?
Joan Harrington is the assistant director of Social Sector Ethics at the Markkula Center for Applied Ethics. Views are her own.
A new executive director is hired to lead a community nonprofit working with the homeless. The organization has an annual budget of $750,000 and a board of 20 people. Two-thirds of the board has served for more than 15 years.
The executive director believes the nonprofit has the potential to raise more funds and serve more people. However, the board is not engaged in moving the organization forward as demonstrated by, among other things, lack of attendance at board meetings and the fact that only six of the 20 board members attended the strategic planning board retreat. The executive director is frustrated and staff morale is low.
How can an organization use ethics to address a problem like this?
One way boards can better govern nonprofits and promote ethical behavior is to follow the Markkula Center for Applied Ethics’ customized Standards for Excellence® Code. This code builds on the standards developed by the Standards for Excellence Institute, and sets forth legal requirements, best practices, ethical reflections, and the Ethics Center’s Framework for Ethical Decision Making.
Nonprofits depend on effective leadership from both the executive and the board to enact their mission and programs. The Board is responsible for governing the organization and it must be an effective board to govern well. With respect to board effectiveness, the Standards for Excellence code provides:
- The board is responsible for its own operations, including periodic (i.e., at least once every two years) evaluation of its own performance.
Why? In order to govern effectively, the board must first take responsibility for its own actions. Self-evaluation helps a board maintain and improve the quality of its leadership and brings about positive changes in the group.
- The board should have stated performance expectations and hold board members accountable for attendance at meetings, participation in fundraising activities, committee service, and involvement in program activities.
Why? Board membership is a responsibility that comes with a set of legal and ethical duties including attending meetings and fully participating in the governance of the organization. The board is self-governing and as such must hold its members accountable.
- The board should establish a rigorous board development strategy for recruiting and selecting new members and ensuring that the board has an appropriate mix of talent, connections to the community and diversity.
Why? New members bring new energy, insight, and ideas. A pipeline of potential new board members means long-term board members feel the freedom to rotate off the board.
- Board policies should include limits on the number of consecutive terms a board member may serve.
Why? A nonprofit must serve a public interest, not a personal one, and rotating board members regularly protects against the self-interests of long-serving board members.
- The board is responsible for the orientation, education, and (where appropriate) the removal of board members.
Why? Providing education and training to new board members sets the standard for board-related work at the outset of board involvement, preventing any misunderstanding as to expectations. If a board member cannot meet the expectations, she may decline to join the board or, if already a member, be removed.
Applying the Standards for Excellence
Not attending board meetings, skipping a board strategic planning session, staying on a board for 15 years without a clearly identified purpose, having 20 board members for a $750,000 organization, not holding fellow board members accountable – these are signs of an ineffective board.
Many boards need to improve their effectiveness, and this board’s behavior is not unique. Changing board practices and culture is more difficult than getting it right in the first place. That said, boards can change when some members are willing to act, hold others accountable, and use the Standards for Excellence as a guide. Having such a roadmap keeps the process of change focused on making the organization effective, accountable, and ethical.
Follow the Markkula Center’s Standards for Excellence Program for Ethics and Accountability to guide your nonprofit. Learn more about the Markkula Center’s Framework for Ethical Decision Making and the Standards for Excellence Program.