As humans, we like to solve problems as they occur, but, as the pace of change quickens, we also need to flex the muscle of intelligence gathering so that we can prepare for a different reality. Boards, in particular, need to develop this future orientation so they can set strategy to effectively address the inflection points ahead. But are governance structures and operations set up for this kind of work, or are they better equipped to handle short-term challenges? Although independent schools face a myriad of problems now, is the current governance orientation serving today at the expense of the school’s future health? Many who study nonprofit governance would say yes and suggest that it’s imperative that we widen the governance lens.
BoardEffect, a board portal service, describes the challenge and opportunity this way: “Long-term goals take time to bear fruit. Continual successes over the short term may set up situations in which the long-term goals are not being addressed. In the long run, goals that will take several years to accomplish create greater value.”
Through a 2018 NAIS governance study, we asked both heads and trustees how well they performed in balancing short- and long-term goals. Seventy-nine percent of board chairs agreed or strongly agreed that they do this well, while only 65% of heads shared the same sentiment. Given what is at stake today, there is room for improvement.
A good place to start in building a long-term orientation is with board structure. Many independent school boards are structured so that the bulk of the work takes place in committees. Although this can be efficient and effective for short-term goals, the very siloed nature of that work can create an over-emphasis on the short-term. Finance committees, for example, may be overly concerned with performance against budget, development with meeting annual fund goals, and buildings and grounds with short-term maintenance needs. This is important work, but it centers the work of the board on oversight, perhaps at the expense of foresight.
The Key Elements of a Sustainability Orientation
Jeanne Bell, the former CEO of CompassPoint, writing in Nonprofit Quarterly, makes the case that if we want our organizations to have longevity, boards need to move from an oversight orientation to a sustainability orientation. One independent school board, seeing the massive challenges ahead for its school, made that move by merging three committees—finance, investment, and buildings and grounds—to form a more generative one, the Assets Committee. One trustee reported that this action had immediate effects:“First, it focused the board’s conversation upward, away from operations and toward strategy. Second, it made trustees more engaged in the work of the board and more collaborative. Third, it has made the head’s key relationships more manageable. Most importantly, the intersections between different areas were exposed and explored in committee―rather than at the board meeting—saving valuable full-board time to execute business through big-picture conversation rather than rehashed details of specific committee work. In short, the work is kept in committee so the board can focus on strategy and vision built upon the committee work instead of repeating it for the benefit of the whole.”According to NAIS’s 2018 governance study, few independent school boards are currently examining committee structure. Only 32% reported that they had considered collapsing committees to create more generative ones. The bulk of schools reporting (67%) noted that their boards had four to six committees, with 22% noting that they had six or more committees, with finance, development, governance, and executive being the most common.
BoardSource reports that many nonprofit boards are moving to fewer committees so that board work can be focused on the strategic and generative. They employ task forces when needed to address both short- and long-term challenges. Some have even moved to zero-based committee structures, starting each year with a clean committee slate and recreating only those that are needed for the work ahead. Crucial in this structure is an assessment of what worked and what did not so that the board can continually evaluate the optimum structure. The main benefit of the zero-based approach is a more flexible and future-oriented board.
In addition to examining structure, Bell also suggests that a key step in that long-term orientation is changing the way we define sustainability so that it “encompasses both financial sustainability (the ability to generate resources to meet the needs of the present without compromising the future) and programmatic sustainability (the ability to develop, mature, and cycle out programs to be responsive to constituencies over time).”
She provides this example: “Board finance committees can look at annual budgets, financial statements, and audits forever, but if some group of board members is not considering those financial results in light of the organization’s programming mix and its results, then their efforts are very unlikely to contribute to sustainability.”
If you are considering making the pivot from an oversight orientation to a sustainability orientation, Bell suggests starting a board meeting with these questions:
- How financially literate are we as a group? If we have knowledge gaps, how will we work together to close them, and by when?
- Is our finance committee engaging in the key business-model questions facing our organization, or is it focused primarily on monitoring budget variance and preparing for the audit?
- What major sustainability decisions are before us as an organization, and how will we structure our board and committee-meeting agendas over the next three to four months to ensure we make those decisions effectively?
- Overall, how healthy is our organization financially? Is it healthier today than it was three years ago? Why or why not? When our board terms end, where do we want to leave the organization financially?
- How strong is our partnership with staff leadership around issues of sustainability? Are we sharing information and ideas across staff and board in a way that truly leverages our individual and collective strengths and networks as board members in the sustainability pursuit?
Finally, in moving toward that orientation, boards should consider two other factors: board makeup and overreliance on major donors. A board that is too overpopulated by current parents can focus the board more on the issues of today. And, if a school is overly reliant on a few major donors for its financial sustainability, it can keep the school from building the kind of long-term financial strategy it needs to carry them through good times and bad.
Reshaping a governance model that has worked in the past but might not be up to future challenges is a tall order. But by establishing this as a goal for the board, and making some simple changes, any board can begin this journey toward long-term sustainability for their school.
For more from NAIS this week, read "Legal Tip of the Week: Livestreaming and How to Avoid Running Afoul of the Law."
