2012

Issue 11

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BoardWorks International
Issue 11, 2012

Which Comes First – Fundraising or Good Governance?

Fund raising for charitable organisations in the current domestic and global world economic climate is difficult. The financial well being of organisations is consuming an even greater proportion of boards’ time and attention than usual. For some this may reflect increasing demands from the communities they serve.  For others it may simply be a matter of their usual funding sources becoming less reliable. Is it time, therefore, to look more closely at whether board members should contribute directly – as individuals – to financial viability?

In the US it is a widespread assumption that a primary duty of board service is to contribute directly to organisational fundraising. The dimensions of this are often expressed in the mantra ‘give, get or get off’. This translates into ‘giving’ a regular personal financial contribution, and/or ‘getting’ additional funding from other sources. The message to a board member unable to make either of these contributions is to ‘get off’ the board and make way for someone who can.

Advocates for this ‘duty’ expressed the rationale in different ways. For example, the organisation simply needs the money – your personal contribution (and those of your friends and others you can influence to contribute) is needed if the organisation is to thrive. A second reason is that funders and donors cannot be expected to provide support unless board members, personally, are already contributing materially to the organisation. A third reason given is that it is an obvious way of demonstrating support and commitment for the mission of the organisation.

Board members of charitable organisations in Australia and New Zealand are, by contrast, much more likely to think of their personal contribution as donation of their time and talent (rather than their ‘treasure’). This has been beneficial in several ways. For example, boards have not been pressured to recruit board members whose principal qualification is the size of their bank balance. Neither has this pressure resulted in oversized boards containing 20, 30 or even more people who are primarily financial benefactors. Consequently nor has the effective governance of the organisation been yielded to a small inside group, often a board committee, thus marginalising remaining board members.

Smarter boards in Australasia, while remaining small, have still been successful in obtaining support from financially well-heeled and well connected people. They have tended to do so through directly associated fundraising ‘foundations’ and ‘friends’ groups.

We would be short-sighted, however, not to acknowledge the real funding pressures in the current environment. Much as we might hope that this is just another passing economic trough perhaps we should assume the current difficult circumstances are the new ‘normal’. Have organisational circumstances changed so much that it is now time to adopt the American model? Should significant personal financial contributions and active engagement in fundraising become an explicit expectation of board service in the not-for-profit sector?  

The irony of these questions is that an increasing number of on-line commentators in predominantly US based governance discussion groups are warning about fundraising being put ahead of good governance as a central board duty.

That is a timely warning. A significant personal financial contribution is not a governance function. Indeed, the need to make such contributions may reflect the failure of the board to ensure that the organisation is sustainable through other means.  The combined impact of boards that are too large and populated largely by people whose primary role (and orientation) is to support the organisation financially has often been passive and poor governance. Are we in danger of letting the financial pressures our organisations face compromise good principle (and good governance)?

It is timely, therefore, to remind ourselves just what a board’s core governance responsibilities are.

Core governance responsibilities

There are three responsibilities that every governing board has and can never delegate. These constitute the core elements of any board’s governance role. (1)

  1. Providing a direct linkage between the ownership and the organisation. The board represents those that ‘own’ the organisation. Ownership can take the form of a direct, proprietary relationship (e.g. company shareholders, incorporated society members) or it may exist in a more abstract, ‘moral’ sense.

  2. The articulation and implementation of explicit governing policies. The board must define what satisfactory performance looks like. Through its policy making process the board must create and apply a framework that will direct all the work of the organisation no matter who does that work.

  3. Assurance of organisational performance. The board is accountable on behalf of ‘owners’ to ensure there is satisfactory organisational performance. Put another way, the board’s job is to make sure that the organisation is worth raising money for.

Beyond these three responsibilities everything else that a governing board might do can be delegated. As a governance function, therefore, fundraising is by definition optional. It is simply ‘a means to an end’ and, therefore, most likely to be of an ‘operational’ nature. To be involved– or not - in fundraising is a choice for the board to make. However, its three core responsibilities are demanding enough if done properly. A board would be wise to delegate as far as possible any other tasks it might take on.

In carrying out its core responsibilities possibly the most important task a board has is to identify and articulate a worthwhile purpose and outcomes that are consistent with that purpose. Each board then has to consider the extent to which it will be able to fulfill its aspirations given its financial and other resources.  This analysis will often suggest the board has a difficult but unavoidable choice: to modify (probably ‘reduce’) its ambitions or to find the resources needed. This may well motivate some board members to make significant personal financial contributions and commit to bringing in additional sums from personal contacts. These actions, however, should be their choice rather than the price of board membership.

Notes

(1) See John Carver (1997). Board Members as Fund-raisers, Advisers and Lobbyists. San Francisco, Jossey-Bass (CarverGuide 11).

 

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