July 2022

Mohammad Anas Wahaj | 25 jul 2022

Nonprofit governance is a challenging issue and typical measures like reducing boards size, identifying best practices etc arent' able to assure better quality governance. According to 2021 'Leading with Intent: BoardSource Index of Nonprofit Board Practices' survey, board performance receives average marks for key responsibilities. Researchers from UC Berkeley's Haas School of Business, Prof. Paul Jansen and MBA student Helen Hatch, conducted a research for Center for Social Sector Leadership and explored the new idea of having a dedicated Chief Governance Officer (CGO) who is a board memeber. They interviewed 30 experienced nonprofit directors representing over 100 nonprofit boards and found that CGO could catalyze improved board performance. Researchers summarize here the common sources of inconsistent governance quality and outlines the expected benefits of appointing one director as a CGO. EIGHT SOURCES OF INCONSISTENT GOVERNANCE: (1) Nonprofit directors often lack a shared understanding of what good governance means. (2) Nonprofit boards do not always have the right voices in the boardroom. (3) Pressure to help organizations meet annual fundraising targets shifts attention away from governance. (4) Boards fail to regularly assess governance performance and develop improvement plans. (5) Poor governance processes push boards to underinvest in critical issues and governance activities. (6) A low-accountability board culture leads to inconsistent effort by individual directors. (7) Confusion between the board’s role and that of management. (8) Governance has gotten tougher (Challenges - Financial complexity; Technology; Sociocultural shifts; Increased public scrutiny; Evolving legal duties). DEFINING THE CGO ROLE: (1) Ensure compliance with legal and social expectations. (2) Champion the adoption of proven governance practices that enable the board to help the organization fulfill its mission effectively and efficiently. Anne Wallestad, CEO of BoardSource, in her 2021 SSIR article 'The Four Principles of Purpose-Driven Board Leadership', defines 'Purpose-Driven Board Leadership', a mindset characterized by four fundamental principles, mutually reinforcing and interdependent, that define the way that the board sees itself and its work: (1) Purpose before organization. (2) Respect for ecosystem. (3) Equity mindset. (4) Authorized voice and power. The CGO should play a hands-on role in four activities: (1) Leading a bi-annual review of governance effectiveness and monitoring initiatives to improve board performance. (2) Driving new director governance training and shaping supplemental training and education over time. (3) Monitoring external governance-related developments pertaining to the law, regulations, and social expectations on behalf of the board. (4) Engaging with the CEO on how staff can best support high quality governance. The best suited candidate for CGO role should have a certain set of skills that should include - an independent, objective, organization-first mindset and willingness to ask hard, sometimes uncomfortable questions is essential to this role; legal skills; communication and persuasion skills; trained in board governance. Organizations should find their own way of implementing the CGO role. Some suggestions are - Recruit the skill set; Make CGO an officer of the board; Have the CGO report to the board; Sponsor the CGO to receive governance training and certification; Support the CGO's membership in good governance forums; Arrange for access to outside counsel; Consider adopting the role on a temporary basis. Read on...

Stanford Social Innovation Review: Does Your Nonprofit Board Need a CGO?
Authors: Paul Jansen, Helen Hatch

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