Of Management and Governance
In my years as an executive coach, and before that as a not-for-profit CEO, I have come to recognize that understanding the differences between management and governance is the key to long-term organizational success and to the overall health of the philanthropic sector. Conversely, the absence of such an understanding is responsible for a massive communal brain drain in which we lose our most talented individuals – volunteers and professionals – who drop out of the ranks of nonprofit organizational life owing to the lack of clarity around roles and responsibilities.
The basic principles of who does what in a “501(c)(3)” are not hard to understand; indeed veteran social sector executives and board members can attest to their longevity and usefulness. Successful execution of these precepts, however, requires seasoned and thoughtful application, tenacity, a good deal of trial and error, a mutual commitment to partnership and sometimes, outside help.
While effective nonprofit groups learn to master the technical aspects that distinguish management from governance, this issue is about more than technique. It begins with a willingness to embrace the fundamental tenet of nonprofit work: none of us is as smart (talented, creative, or incisive) as all of us.
Healthy organizations require the expertise and perspectives of both the volunteers who serve as board members and those women and men who do the day-to-day work of the enterprise as executives, fundraisers, content specialists, and business professionals. When board members look upon their organization’s staff as the “hired help,” doing the grunt work necessary to make them look good or when organizational employees view their board and donor-base as ATMs to be manipulated at will, the likelihood of realizing your organization’s goals and achieving your stated impact is minimal.
Management, traditionally the realm of the organization’s professionals, and governance, the purview of the board, bring different things to the table of organizational discourse. Conventionally, the board functions as the organization’s owners – they are the fiduciaries, tasked with hiring, firing and evaluating the CEO, setting long-term priorities and protecting the interests of the organization. Governance is also responsible for constituting itself, electing or appointing new directors, ratifying bylaws and related issues.
It is the task of management to carry out the means by which the organization executes its mission, without micromanagement from the board. This includes supervision of every member of the staff (save the CEO), oversight of ongoing programming and revenue development, and the administration of policies and procedures.
Because nothing is ever so pristine or rigid in the real world, there are several gray areas that in healthy NPOs may be shared by both management and governance as part of their ongoing partnership. These might include public representation of the institution, recruiting and onboarding new trustees and stewarding major donors.
The goal for volunteers and professionals is not to create systems of unyielding and inflexible parameters that constrain healthy working relationships. Rather, by incorporating generally accepted best practices into your organization’s culture such that the relationship between governance and management does not change at the caprice of every new president, chairperson, or executive, not-for-profit organizations can maximize their impact and play to the strengths of both their volunteer and professional leaders.
When the relationship between staff and volunteers is unambiguous and functional, chances are that the entirety of the operation will succeed. This is true for everything from fundraising to programming and marketing. Sadly, the opposite is true as well. If we cannot get this right, the long-term likelihood of success is diminished materially.
The task, of course, is not simply to understand the theory separating management and governance. The challenge is to apply those principles in a reasoned fashion among well-intentioned, impassioned (though sometimes overreaching) individuals for the benefit of the greater good. In many cases, those in the trenches of organizational life are simply too close to the fray and require the steady hand of an outside coach or consultant able to offer the necessary distance and perspective.
Because none of us is as smart as all of us we need to create healthy systems in which volunteers and professionals are able to maximize their respective talents for the betterment of the organization and those it serves. Doing so begins with a mutual embrace, by both management and governance, of their respective roles and responsibilities.
Let me know what your experiences have been with these matters, and how I might be able to help.