Memphis has recently witnessed a disturbing trend: four major nonprofits have closed their doors within the last six months. These are not small, barely functioning organizations. In fact, they are well-known organizations with a long history in our community. More nonprofits are, behind the scenes, underwater, and we will see more of these closures coming. In Nashville, Knoxville, Chattanooga, and rural parts of the state, the same is happening. This is not merely a string of unfortunate events, but a crisis that should sound alarm bells throughout the nonprofit sector, philanthropy, and our community as a whole.
Sure, we can blame the after-effects of the COVID epidemic, lower-than-expected giving, political polarization, and more. Those certainly haven’t helped. In each of these cases, though, the root cause of failure can be traced back to a common denominator: ineffective board governance. It’s time for a frank conversation about the critical role boards play in the success or failure of nonprofits and the urgent need for a dramatic shift in how we approach board leadership.
Board Governance: More Than a Rubber Stamp
Too often, board service is viewed as an honorary title, a resume builder, or a social networking opportunity. It’s time to dispel this misconception. Boards are not merely figureheads or rubber stamps; they are the governing bodies legally responsible for the organization’s mission, finances, and impact.
When boards fail to fulfill their duties, the consequences can be devastating. Mismanagement, financial instability, and a lack of strategic direction can quickly lead to an organization’s demise. The recent closures in Memphis are a stark reminder of what’s at stake when boards fail to take their responsibilities seriously.
Beyond the 30-Minute Orientation: The Need for Continuous Board Development
One of the most glaring issues in board governance is the lack of adequate training and development. Many boards rely on a brief orientation that barely scratches the surface of their responsibilities. This is akin to sending someone into a battle without any training or equipment.
Board members need a robust onboarding process that covers both the organization’s specific mission and strategy as well as their broader legal and fiduciary duties. This should include a deep dive into the organization’s financials, programs, and impact metrics, as well as an overview of nonprofit law, ethics, and risk management.
But onboarding is just the beginning. Boards need ongoing professional development to stay abreast of the latest trends, best practices, and challenges in the nonprofit sector. This can include workshops, conferences, webinars, and peer learning opportunities. Boards should also regularly engage in self-evaluation and seek external feedback to identify areas for improvement.
Rethinking Board Recruitment: From Speed Dating to Strategic Partnerships
When I first joined Tennessee Nonprofit Network (then Alliance for Nonprofit Excellence), I quickly ended a “board speed dating” event in collaboration with another organization. The traditional “speed dating” approach to board recruitment is outdated and ineffective. It often prioritizes superficial criteria like social connections or professional titles over a genuine commitment to the organization’s mission. When nonprofit CEOs are going through multiple steps of an interview process, why aren’t board members treated the same? Yes, they are volunteers, but they are the most important people in the organization. To reduce their roles to be only worthy of a five minute conversation at a “speed dating” event is to diminish the role and hurt the nonprofit sector.
We need to shift towards a more strategic approach that focuses on recruiting board members who bring a diverse range of skills, perspectives, and experiences to the table. This includes individuals with expertise in finance, law, marketing, fundraising, and program management, as well as those with lived experience of the issues the organization addresses. And they need to be vetted. Who cares what law firm they work at or which country club they belong to? That doesn’t equal good board participation.
Board service should be viewed as a partnership, not a transaction. Board members should be passionate about the organization’s mission, willing to roll up their sleeves and get involved, and committed to holding themselves and their fellow board members accountable.
Accountability: The Key to Continuous Improvement
Boards need accountability measures in place to ensure they are fulfilling their duties and making progress towards their goals. This can include regular self-evaluations, external reviews, and performance metrics tied to the organization’s strategic plan.
Boards should also create a culture of transparency and open communication, where members feel comfortable raising concerns, challenging assumptions, and holding each other accountable.
The recent nonprofit closures in Memphis are a wake-up call. We cannot afford to continue with business as usual. It’s time to prioritize board governance, invest in board development, and build a culture of accountability within the nonprofit sector. The future of our communities depends on it.