Balancing Act

Almost inevitably, every community-minded leader in Door County will be asked at one time or another to serve on the board of directors of one of our local charities. It’s volunteer work, so it sounds simple enough; but, what does it actually mean to serve on the board of directors of a non-profit organization?

To find the answer, I spoke with the chief executives of 10 significant charities in Door County along with several of our community’s most experienced board members. When combining their ideas along with my own perspective as President & CEO of the Door County Community Foundation, a series of themes emerged which offer unique insight into the critically important role of a charity’s board of directors.

For purposes of this article, “chief executive” will refer to the highest-ranking paid staff person of a charity. This person normally has the title of “executive director,” “president,” or “president and chief executive officer.” The “chairperson of the board” refers to the chair of the organization’s volunteer board of directors, who also may be called the “board president.”

Define, Plan and Monitor

Every organization needs a purpose and a goal – and a road map of how to get there. It’s the responsibility of a charity’s board of directors to work with the professional staff and clearly define their fundamental purpose, set long-term goals, then articulate the best approach for achieving them.

Having facilitated the strategic planning process for numerous charities over the years, I have found that the most successful efforts involve a true partnership between the board of directors and the organization’s staff. The professional staff, by definition, are the “professionals” and they bring an expertise on the work of the charity that is invaluable to the planning process.

But the members of the board bring an equally important perspective by serving as a proxy for the community, giving voice to the charity’s different constituencies during the planning process. As Brian Kelsey, Executive Director of the Peninsula Players put it, the “board of directors helps our organization thrive through their ability to effectively look to the future through long-range planning.”

Kelsey believes that “an organization can truly thrive when they have a solid management team coupled with a dedicated and involved board of directors.”

However, once the planning process is complete, the responsibilities of the professional staff and board quickly diverge. The organization’s chief executive must define the operational steps – the actual daily work – that are necessary to implement the strategic plan. Alternately, the board’s role becomes one of monitoring the organization’s progress toward meeting the goals articulated in the strategic plan.

Bob Ross is a local attorney and veteran of many charitable boards including the Door County YMCA and The Clearing. He believes strongly that there needs to be a clear line separating these differing responsibilities.

“The board sets the policy and manages the CEO,” says Ross. “The CEO carries out the day-to-day management. The board is not to be involved in day-to-day operations unless asked by the CEO for a specific task or function.”

While there was not a single chief executive or board member with whom I spoke that disagreed, many of the non-profit chief executives shared examples of board members who tended toward that undesirable practice known as “micromanagement.” However, none of those non-profit chief executives was willing to go on the record out of concern over souring a relationship with their board.

Dick Egan, a former CEO of a paper mill, has broad experience serving on the boards of many charities of vastly different sizes. As a former board member of organizations like St. Norbert College and HELP of Door County, and the current board chair of the Door County Community Foundation, he says that “the board’s loyalty has to be to the CEO. If you start dealing in the backroom with the staff, you’re undermining the leader you’ve hired to run the organization.”

“The board hired the CEO because it believed that he or she was the best qualified person available,” says Egan. “Presumably they bring a different set of skills and perspective to the job that the board members don’t have. You need to respect that and let them run the organization.”

Lend Their Credibility

While a board is essential when lending their wisdom to a planning process, equally important is the personal credibility they lend to a charity through their service on its board of directors.

Virtually all charities covet board members who command significant respect in the community. These organizations are trying to borrow the credibility of community leaders to highlight the importance of their charitable work. The charity wants everyone to know that this highly respected individual has chosen to volunteer their limited time and energy to serving on their board of directors.

Dan Powell, Executive Director of the Door County YMCA, couldn’t agree more. “It used to be that boards were primarily necessary to establish and administer policy and keep track of the organization’s finances. But in this era, non-profits need broader board engagement. Board members have to have a passion for the YMCA’s mission and be willing to share the Y story – the difference the Y is making in the lives of people.”

And frankly, as a board member, why wouldn’t you want to lend your credibility to a charity in whose mission you so strongly believe?

But it’s more than just lending your name to a charity. Community leaders earned respect through good judgment and wise decisions in their personal or professional life. That wisdom carries over to the governance role they play when serving on a non-profit’s board of directors. As a result, the community becomes more confident that the actions of that charity are thoughtful and wise because people of great wisdom are making the strategic decisions.

“Board  members are often influential and recognizable members of the community,” says Bob Desh, Executive Director of the Door County Maritime Museum. “All are very successful individuals in their own right. Having them tout the museum and its accomplishments to friends and colleagues in both social and professional settings is invaluable.”

Ensure Adequate Financial Resources

While volunteer labor and in-kind donations can help defray expenses, virtually every non-profit requires cash donations to enable it to  fulfill its charitable mission. The chief executive of every charity  with  which I spoke essentially said the same thing when it came to an organization’s finances:  Ensuring that the charity has adequate financial resources is a primary responsibility of the board of directors.

The first half of this board responsibility is to challenge the chief executive to operate the organization as cost-efficiently as possible without compromising its ability to achieve its charitable mission.

Kelsey, from the Peninsula Players, notes that the members of their board accept this “responsibility very seriously and are not afraid of disturbing the apple cart by asking the tough questions” of him as chief executive. Charities enjoy a privileged tax status in our community and their boards of directors are the rightful stewards of their assets. A primary responsibility of every board member is to oversee the chief executive and insist that he or she runs a tight ship.

But the unavoidable second part of this responsibility is that every board of directors must also assume a leadership role in fundraising to support the charitable work of the organization.

Jane Stevenson has perhaps the most experienced perspective when it comes to charities in Door County. She has served as both a board member and chief executive of the same charity – twice. Stevenson was first a member of the board of directors of United Way of Door County before becoming its Executive Director. She then went on to be the chief executive of the Door County Community Foundation before retiring and joining its board last year. As such, she is singularly well qualified to speak on the balance between board and professional staff responsibilities.

“The board is responsible to make sure the organization is financially viable,” says Stevenson. She comments that the CEO “is responsible to the board and can work with the board to go out into the community to ask for support – but it can’t be done without the board.”

Sharon Grutzmacher, Executive Director of the Peninsula Music Festival, describes the board’s process in her organization. “Once they pass and commit to the annual budget for the festival, they move forward in meeting the fundraising goals. They are all active in making calls, following up with their assigned donors, and writing thank you notes.”

With some charities, the board members are expected to go forth and personally ask donors for a specific donation. In other cases, the board assumes the responsibility of strategically introducing the organization’s chief executive or fundraising staff to potential donors. In the latter case, the board member uses their personal and professional connections to schedule the appointment and also attends, but the specific ask for a donation is done by the professional staff.

Given that most charities in Door County tend to have few, if any, dedicated fundraising staff, board members in our community are often expected to solicit contributions directly.

Stevenson suggests that boards should develop a fundraising plan built around the skills of the chief executive and other staff. “Use the creativity and experience of the person you hired to lead the charity who understands what a non-profit is supposed to do. Trust in their experience, passion and dedication – they want to make the organization successful.”

But ultimately, all fundraising activities must begin with donations from the board itself.

The board must “lead by example when it comes to financial and volunteer support,” says Desh of the Maritime Museum. After all, if the members of the board who govern the charity and know it the best aren’t willing to give, how can we expect anyone else in the community to do so?

Protect Assets

Of all of the responsibilities of a board of directors, the one least often noted by chief executives is this – to protect the assets of the charity. Perhaps their failure to mention it only underlines the importance of a board attending to its role of protecting the organization’s assets.

The most obvious assets are financial. The charity has money in the bank. Perhaps it has an endowment comprised of a sizeable portfolio. The organization owns office equipment, may have vehicles, and even have its own building. All these assets must be protected so that they can be put to use for the benefit of Door County.

But like any person or organization, its most valuable asset might be its good name. A charity that spent years engaging a highly-respected board and earning the trust of donors can see it all collapse overnight with a scandal or egregious decision.

“The charity is here in our community for good. The CEO is not,” says Egan. “I’m here representing the community that wants and expects that the charity be here forever. I can’t defer too much to the CEO, but on the other hand you have to have confidence in the CEO.”

Every board of directors should insist that their organization implement strong internal controls to avoid even a whiff of financial mismanagement. A charity should have a personnel policy to govern employee conduct and a conflict of interest policy to avoid inappropriate behavior by members of its board of directors. Precautions should be taken to protect client confidentiality (as appropriate) and protect any vulnerable populations that the charity may serve.

But after giving all those words of caution, the real challenge is not to overreact.

“As a board member, you have to protect the institution,” says Egan, “But you don’t want to stifle initiative or micromanage the staff. Ultimately, it’s about integrity.”

Select, Support & Evaluate the Chief Executive

Without question, the most significant responsibility of any board of directors is to select, support and regularly evaluate their chief executive. No actions that a board will ever take will have as meaningful and pervasive an impact on the charity as these.

Stevenson echoes the comments of many about the chief executive-board relationship when she says, “I think you need to give them a lot of latitude. You hired this person because they have the passion for the charity and understand how to run it. They can bring a lot of creativity when searching for solutions to a problem.”

But Egan voices an equally common concern that sometimes “the CEO sees the board as a necessary evil.” He says, “That can create problems because if the board isn’t strong enough, the board may not want to exercise its oversight responsibility. The CEO has to respect the authority of the board.”

Good chief executives understand and respect the oversight role of the board of directors. “Holding me accountable for successful management of the museum is an important part of the board’s job,” says Desh of the Maritime Museum.

But confusion sometimes arises in chief executive-board relationships because the chief executive does not work for the chairperson of the board of directors. The chief executive works for, and reports to, the board of directors as a whole. The board chair’s responsibility is to lead the process of governance, not supervise the chief executive.

The board chair is the quintessential “first among equals.” The chair’s focus is on the board’s internal decision-making process so that the board of directors can collectively fulfill its governance responsibilities.

Almost universally, the most effective chief executive-board chairperson relationships are characterized as a partnership based in mutual respect and trust. Not an employer-employee relationship.

“Open communication between the CEO and the board chair is essential,” says Powell from the YMCA. “It is a partnership, and no role is less or more important than the other.”

Kaye Wagner, Executive Director of the Birch Creek Music Performance Center, values the partnership she formed with all of her board chairs over the years. “They have all been great listeners, great ‘sounding boards,’ great problem solvers, and all have worked with me to unify the board itself.”

But perhaps Dan Burke, Executive Director of the Door County Land Trust, explains it best. “The board has come to represent this security blanket that is draped around the organization. It is there for advice when it is needed, to serve as a sounding board of sorts for new ideas and strategies, and for a shot of confidence when needed. It provides the comfort in knowing that there is a strong group of united folks who are there for you and is a partner with you in looking out for the health and well-being of the organization.”

Bret Bicoy is President & CEO of the Door County Community Foundation. During his 15 years in philanthropy, Bret previously served as the chief executive of both the Nevada Community Foundation and the Marietta Community Foundation. He also was the Senior Foundation Officer of the Green Bay Community Foundation during which time he helped launch the Door County Community Foundation a decade ago. Bret has dealt with donations of virtually every kind of asset, totaling more than $50 million in direct charitable gifts and over $70 million in contributions in estate plans. Bret and his wife Cari returned home to Wisconsin in 2008 so that they could raise their six children among family in the community they love. Contact Bret at [email protected].