Dave Cain: Welcome to unsuitable on Rea Radio, the award-winning financial services and business advisory podcast that challenges your old school business practices and the traditional business suit culture. Our guests are industry professionals and experts who will challenge you to think beyond the suit and tie, while offering you meaningful modern solutions to help you enhance your company’s growth. I’m your host, Dave Cain.
As a business leader, you’re already expected to wear many hats, and for many professionals, sooner or later, one of your hats will likely say volunteer across the brim. You already know that volunteering can be a great way to give back to your community and the causes you care deeply about, but it can also be a really big responsibility, especially if you’re asked to sit on the board.
As the principal and founder of the Benefactor Group, Laura McDonald is here with us today, and is committed to working with nonprofits, donors, and civic leaders of all sizes. She knows all about the challenges these organizations face when trying to find an ideal candidate to join their boards, which is why she encourages all volunteers to take the time to consider what exactly is being asked of them before committing to such a major responsibility. To help you reach a well informed decision that will result in years of fulfilling a need in your community, Laura is going to explain what you should do when you’re asked to join a a board. Welcome back to unsuitable, Laura.
Laura McDonald: Thank you.
Dave: Great. I want to start out with a little overview. You’re the principal and founder of the Benefactor Group. Can you share a little bit about what your organization does and all about?
Laura: Sure. Our motto, if you will, is that we serve those who serve the common good. We work with nonprofits of all sizes and kinds, from coast to coast, often in major fundraising endeavors, but also in advising boards. Sometimes about fundraising, sometimes about other governance matters. In talent management, so helping nonprofit organizations find the people that they need at leadership levels, including board members, CEOs and development officers. Then also as a strategic planning, nonprofit technology, all of those factors that help a nonprofit organization at different points in its life cycle.
Dave: So you’re a heavy, heavy duty consultant in the nonprofit space across the United States?
Laura: Well, I am and I have the good fortune of being part of a team of 15 individuals with various skill sets, and so it’s a great work environment and team atmosphere as well.
Dave: How about a website?
Laura: www.benefactorgroup.com.
Dave: Now our listeners can take a look at that while they’re listening to the podcast, but some great resources on there. They can get you connected.
Laura: There’s a tab under resources that has, we hope, helpful information for people who are serving on boards. Some information about strategic planning, for example, which is a common responsibility of a nonprofit board member. Lots of information about capital campaigns and other kinds of fundraising.
Dave: Sure. Sure. Well, today’s topic is what to do when joining a nonprofit board, and again, I think you do a lot of advising in that area and training. I want to talk about that, and let’s start about, okay, let’s say I’m asked to be on a board. What questions should I ask before I say yes?
Laura: Well, I think the first questions you should ask are of yourself. Why am I interested in serving on this board? Do I care about the mission of the organization? That’s certainly important. Do I like or admire the other board members? You’re going to spend time rubbing elbows with these folks and rolling up your sleeves and really digging into some work. There will be moments of tension, so you need to make sure that these are people that you’re prepared to take this journey with. Then there are other kinds of fringe benefits. Things like professional networking or professional development. Those may come along, but those shouldn’t be your primary reasons for serving. Do I care about the cause, and am I interested in working with the people who are already serving on the board?
Dave: It’s that passion that’s the driver.
Laura: It’s the passion. Although I recently talked to a colleague who’s done some research and she said that while interest in the cause is certainly prerequisite, equally important is interest in working with the other board members. That these are people who I like and admire and want to be around. I think both of those things have to be there. Then you start looking at the organization itself. I think you’ll want to ask, for example, about the operations. Can I take a tour of the facility? Can I see how the operations work? Can I review recent P&L and balance sheets to see what the financial health of the organization is? A good organization will have a document that has explicitly listed the roles and responsibilities of board members, what they’re expecting of you. You should identify how much time am I going to give?
Dave: Sure.
Laura: Certainly board meetings, but coming to board meetings prepared. There’s nothing more disheartening than seeing a board member walk into the room, opening the envelope with the board minutes and reports and the things that they were supposed to read beforehand.
Dave: That doesn’t happen, does it?
Laura: Only occasionally.
Dave: Only occasionally. Sure.
Laura: What’s my time commitment and preparing for and attending meetings and being present at events because we know that a big part of life is just showing up, and also serving on a committee. What am I going to be asked to do in that regard? Then also financially, what is expected of me as a donor? I think that if you’re going to serve on a nonprofit board, especially one of an organization that’s fueled by philanthropy, you need to expect to be a donor and to give as generously from your resources as you hope others will give for them. It needs to be amongst your top two or three charitable commitments every year.
Dave: I want to go to the time commitment. Again, there’s nothing more disheartening when you show to a board meeting, and the same people are absent meeting after meeting after meeting. I guess one question I might have would be, is there an attendance requirement? I want to make sure there’s a full board there to get the full benefit of all the resources in the room.
Laura: I would say that sometimes there’s an explicit expectation that board members are required to attend 80% of all meetings. Sometimes it’s more implicit that there’s just a culture on the board that you show up. But yes, I have seen boards where attendance is a chronic issue, and I think there are a couple of things that can lead to that. First of all, if the board meetings aren’t engaging, it’s not surprising that they don’t show up. If the board meetings simply consist of board members sitting around a table and hearing reports from staff members, then I can understand why a professional doesn’t feel that that’s a very good use of their time.
Part of it is incumbent upon the organization and its leadership to make sure that the board meetings really do take advantage of all the brainpower in the room. But there are also times when life gets in the way and somebody who made a commitment with good intentions has a new job, has a new baby, has a sick parent, and all of a sudden can’t honor it. I think that’s the time for the board chair or the chair of the governance committee to sit down and have a quiet conversation with that individual.
You never want somebody to go away mad, but sometimes you say, “It looks like you’re having trouble fulfilling your commitment at this time. Would you like to step aside and let somebody else fill the role?”
I will say, and there’s data to support this, that the smaller the board, the better the attendance. It’s easy to get lost in a crowd of 40 or 50 people.
Dave: Right.
Laura: Your absent stands out when the board has only 12 or 16.
Dave: That’s an interesting comment, and I was going to ask you about the size of the board. We’ve all been in situations where the board is just mammoth and it’s just more of a report, and I’m thinking, “Boy, I don’t know about this.” But like you said, when it’s a smaller group, you can roll your sleeves up and get after it a little bit.
Laura: There was a movement starting a couple of decades ago called the Carver Model of Policy Governance, and a lot of board behavior today is really been shaped by that model of policy governance. Now, one thing it does is clearly differentiates the role of the board, which is policy, from the role of the staff, which is management. The board’s role is not to manage, it’s to govern. The other thing that it did was really slim down the size of boards. So the average size of a nonprofit board has been diminishing for the last several years.
There’s a study out now called Leading with Intent, and I think that that’s a great report of anybody who’s really interested in nonprofit governance. It’s from BoardSource, which is a great resource. It says that the average board size is now diminished to 15 individuals. The giant boards that we see, I think those frankly are more about engaging individuals because we want them to be donors or advocates-
Dave: Right.
Laura: … and less about-
Dave: Good point.
Laura: … really asking them to help shape the future of the organization.
Dave: Now, you help, in your practice, help a non profit look at their board and find the right mix of talent to go on the board. You certainly don’t want all CPAs on the board, you don’t want all attorneys on the board, you don’t want all salespeople on the board. It’s a mixture.
Laura: I once worked with the National Culinary Organization where every board member was a very talented celebrity chef. It was perhaps the most fun and most dysfunctional board I’ve ever worked with. You’re right.
Dave: Oh yeah.
Laura: It takes a mix and delicious. We always ate well on that board. It takes a mix. Oftentimes we’ll lead an organization through an exercise because there’s no one size fits all solution of thinking about, what are some of the demographics that we want represented?
Is it important to have gender, generational diversity, racial diversity, sometimes geographic diversity? Then, what are some of the traits that we need? Do we need people who are introverts and extroverts, relationship builders and decisive decision makers? Then perhaps we’ll take a look then at some of the skillsets that they bring.
Dave: Right.
Laura: Is it law? Is it talent management? Is it accounting and financial management? Is it fundraising and development? We’ll help a board establish what are some of the traits and demographics and skillsets and networks that are important to them, and then what we’ll do is we’ll ask the current board members. Oftentimes we’ll do this on a giant visual, to go up and put a big old check mark in the boxes where they feel they fit. It creates a really clear optical direction saying, “Gosh, we’ve got a lot of celebrity chefs, but nobody knows how to balance books.” If you’ve ever met a restaurateur you know that’s true. Or we’ve got a lot of CPAs or a lot of attorneys but not very many people who think entrepreneurial perhaps. That’s an exercise that we lead boards through frequently.
Dave: Right. Good. How would you bill for those services? Is it an hourly thing or event or?
Laura: Like accountants, we basically live on the billable hour.
Dave: Okay, okay.
Laura: But when we take a look at something like a governance assessment or leading a board through a retreat, something like that, which is a fairly clearly defined project, we’ll usually sit down with the client and develop a scope of work and do something like that for a fixed fee for that project, when it’s got a clear scope of work and clear deliverables.
Sometimes then we’re retained to stay on to provide coaching, to provide learning opportunities. Oh by the way, I don’t know of any board that wants to be trained. Board members, these are all highly successful, high achieving individuals. The last thing they think they need is training, but they are lifelong learners, and they will accept coaching. Semantics matter
Dave: I was just thinking, if I’m going on a board, I want to go to a retreat environment to learn about the board and what my expectations are. Lifetime learning. I think that would be important to a board; to have members that, “Hey, look, I’m ready to do something. Just because I run a manufacturing firm or a CPA firm that doesn’t necessarily translate to the nonprofit.”
Laura: A couple of things. We worked with a private college in New England, and they were going into a major campaign and they needed a fully engaged board at that time. We found that the board members weren’t really engaged. There was a lot of digital distraction at the meetings, there was a pretty mediocre attendance. We sat in a couple of the meetings and I understood why, and they did a lot of things right and it was a great time in the trajectory of that institution. But one of the things that we advise them to do is that every board meeting needed to include hands on engagement with the mission.
Laura: That meant walking across campus to the brand new lab where the biomechanical engineering folks were doing something really cool and having the board members roll up their sleeves and do it. That meant walking down to the other end of campus where the new recreational facility was being built and talking with students about their lifelong fitness needs. I think that’s a part of it. But coming onto a board, the other question you should ask is what kind of orientation will I be given? Sometimes you’re given a notebook and told to read it, and then you show up at your first meeting and you feel like they forgot to give you your secret decoder ring. What’s going-
Dave: Sure.
Laura: … on here. Hopefully, they’re going to spend at least a half a day with you and anybody else who’s joining the board at the same time, spending time with the executive director or CEO, the senior leadership team, exposure to the programs as they’re happening, meeting with other board members.
Then the other thing that I would say is important for all board members at any stage of their service, is social capital. Do you know the people who are sitting across the board table from you, and do you care about them? At a board table you’ll often make commitments. I’ll chair that special event. I’ll work on the revision of the bylaws. You’re more likely to honor that commitment if there’s some social capital-
Dave: Sure, yeah.
Laura: … that’s been built up. Don’t underestimate the power of the cocktail reception that happens after the board meeting. That’s important too, to give board members an opportunity to have some time together just to bond and to get to know-
Dave: Build the team.
Laura: … one another.
Dave: I suspect another question that you could ask, or our listeners could ask is, will my employer, if needed, allow me time away from work to help on a nonprofit event or a meeting? I know at Rea & Associates, we encourage our team members to get involved and certainly give them a time away from the office during business hours to do that.
Laura: I think, yes, I would advise anybody to have a conversation with their employer about their desire to serve on this board. In my experience, most employers are eager to have their team members serving on a nonprofit board. It has all sorts of fringe benefits. It provides some professional development and networking opportunities. It glues them to the community so they’re less susceptible to being lured away by an employer in another city or another state. I think the other thing that’s important about it is that it really helps to develop some leadership skills that go beyond the technical competencies of a job.
So Donna James, who was at one point the … I believe she was the first woman and the first African American on the C-suite at Nationwide Insurance, and she defined leadership for me in two ways. She said, “Laura, it’s the ability to navigate ambiguity successfully, and the ability to influence an outcome without resorting to authority.” Those are two things that you really have to have if you’re going to be successful in serving on a nonprofit board.
Dave: Interesting. You know what? To pick your brain a little bit, we just went through a major tax overhaul, tax law change, and certainly a concern from our profession is there may be a drop in charitable contributions because of the tax law change. I don’t know that we saw it this past year, but we may see it in upcoming years. What’s your feel in that area? Any concerns?
Laura: Yeah. Yeah. The Tax Cuts and Jobs Act of 2017, we believe, will have a significant impact on the charitable giving landscape. We’re just not exactly sure what it’s going to be yet. We do know that at the end of 2017 there was a run up of giving, that people wanted to give in the last couple of weeks of 2017 while they knew what the rules were and knew what was going to be deductible. That may have taken some away from 2018, they may have accelerated some of their giving. We’re about to get the data for what 2018 giving was, and I’d be happy to come back and share it with you when it’s publicly available.
Laura: But we think … We do know that in the past about 30 to 35% of American households itemize their charitable deductions. With the new tax environment, only about 5% of Americans will itemize their charitable deductions because they’ll be better off taking the standardized deduction. I’m sure you’ve talked with your audience about that a fair bit. Does that reduce the inclination to give? We’ve always, in every study, we believe that the tax incentives come in sixth or seventh or eighth in the motivations to give, but they do affect the magnitude of a gift and the timing of a gift.
I think the other thing that we will begin to see, amongst sophisticated donor, is what we’re calling bundling. They’ll choose to give every other year. I’m going to make all my charitable gifts in even numbered years and itemize, and then I’m going to take the standardized deduction on odd numbered years. We’ll be okay if half of the population chooses odd and half the population chooses even. It’ll all work out.
Dave: Good luck with that.
Laura: Yeah, exactly. I think that it will also increase the popularity of donor advised funds, because people will use it for essentially that purpose-
Dave: Sure.
Dave: To do the bunching.
Laura: Exactly, exactly. So that I can give, still do my giving each year, but I can have the tax benefits on an every other year basis. Keeping in mind that if you’re on a board and one of the expectations is that you buy a table for the gala, you cannot use your donor advised fund to buy a table for the gala. It will have some limitations.
Dave: Yeah, the landscape has changed, and I was concerned. We felt that. Again, we’d been talking the same thing you mentioned, the bunching. Another strategy that we’ve talked to some of our clients and it doesn’t work with everyone is making the contributions out of their IRAs or their individual retirement accounts may have some benefit. But I think it goes along also with what you said is the bundling or the bunching. There are some creative ways, and again, I think board members on boards need to understand that because that could have a significant impact as-
Laura: Absolutely.
Dave: … they talk.
Laura: Of course to do a IRA charitable rollover, you have to have attained age 70 and a half. That limits the audience considerably. Many boards that we’re talking to are very interested in building endowment, and so regardless of whatever the tax environment is today for current gifts, I think that it’s still possible to have some advantages through giving of, especially, beneficiary designations of retirement assets or other kinds of vehicles, and then simple bequests, as well.
Dave: Great. Great. I wrap up today on the things we talked about. We touched on a lot of areas on joining a not-for-profit board. One is, certainly talked about the questions you should ask when you’re asked to join a board, set expectations, time, talent, treasure, testimonies. Do all of that. Find out about policy governance, and how that works, and certainly how to get the most from the experience of giving back. The other thing needed that you mentioned was also interaction with other board members. Get to know them, work with them as a team and that will strengthen the board and the nonprofit organization.
Fantastic. Our guest today has been Laura McDonald, principal and founder of the Benefactor Group located in Columbus, Ohio. Thanks again for joining us today, Laura. You’ve offered some great insight here today.
Listeners, thank you for taking the time to learn more about what to do when you’re asked to join a nonprofit board. Your service to the community is so important to so many people, particularly those in need of the vital services these nonprofits provide. If you’re asked to join a board, I hope you will think very seriously about the commitment and make the choice to give back in a way that makes the most sense to you.
If you like today’s episode, please share it with your professional network on LinkedIn, and don’t forget to check out unsuitable on YouTube.
You have Laura’s website. Feel free to reach out to her. She has some great resources for boards and not-for-profit organizations. So take a look at her website. I think you’ll find some tremendous information there.
Until next time, I’m Dave Cain, encouraging you to loosen up your tie and think outside the box.
Disclaimer: Views expressed on unsuitable on Rea Radio are our own and do not necessarily reflect the views of Rea & Associates. The podcast is for informational and educational purposes only, and is not intended to replace the professional advice you would receive elsewhere. Consult with a trusted advisor about your unique situation so they can expertly guide you to the best solution for your specific circumstance.