Effective board governance in the voluntary sector continues to be a hot topic across the country. Many organizations and foundations struggle mightily with governance issues, decisions, and best practices. Thankfully, that struggle may soon become more manageable. On April 26th, 2006, in what many are calling a watershed moment for the nonprofit sector, the First National Study of Board Practices in the Non-Profit and Voluntary Sector was unveiled.

The survey, a joint project between the Centre for Voluntary Sector Research and Development (CVSRD) and Strategic Leverage Partners (SLP), was conducted via e-mail throughout 2005. Authored by Sue Dallhoff, president of SLP, Grace Bugg, SLP’s COO, and Paula Speevak-Sladowski, managing director of the CVSRD, the report collects a wealth of responses from the online survey as well as information gathered through key informant interviews from various governance experts. The authors introduce the reasoning for the survey as follows: “[The] goal was to produce a study that would represent a unique database of Canadian non-profit board governance practices that could be shared by non-profit and voluntary organizations across sub-sectors throughout the country.” It does that and hopefully much more.

Know who you’re dealing with

At 129 pages long, board members and CEOs will have much to read through, absorb, and then apply to their organizations. But at least a foundation of information has finally been laid out. However, the authors note that while they sent out 15,000 questionnaires to nonprofits across the country, only slightly more than 1,300 responses were actually used, with the vast majority of those coming from organizations with budgets of $1 million or more. Responses from organizations operating with budgets of less than $100,000 were culled from the survey. This begs the question of whether another survey of smaller nonprofits should be conducted for a fuller picture of the sector’s governance needs. Still, by any standard, the survey is a momentous achievement.

There are, of course, many numbers, percentages and sections to dig through, and sector analysts will undoubtedly rejoice at the wealth of knowledge that lies therein. There isn’t enough time or space to deal with the minutiae here, but according to the authors, some major issues come to the forefront immediately.

The more than 161,000 nonprofit organizations in Canada represent 10% of the country’s GDP. In Dallhoff’s opinion, the sustainability of the sector will be determined by the skills of board members. Central themes in the study included such subjects as leadership, succession planning, role clarity, culture, accountability, and stewardship. “When I look at the major themes and a section like ‘role clarity’, ensuring that board members understand their fiduciary duties and responsibilities…for smaller organizations this is clearly an issue,” she says. Another major theme is the fostering of proper board culture.

The right mix of passion and persuasion

In the report the authors write that, “a board’s culture is difficult to measure. It depends on factors such as trust and an environment that is conducive to constructive debate. One indication of a healthy board culture is the extent to which board members are engaged in the work of the board.” And in order to engage the board, chairs need to assert themselves by conducting effective board meetings, retaining qualified board members, and encouraging lively debate. The authors quote Dr. Jim Fleck, a governance expert and chair of the Council for Business and the Arts in Canada, as saying, “Sometimes it’s like ‘pushing a string’; you have to be persuasive, you have to have a passion for what’s going on, and you have to try and transmit that to other people so that they’re willing to do their best.”

But when pressed, experts like Dr. Fleck agree that it is sometimes hard to find chairs who have enough energy and commitment to push so hard, as many of these positions are staffed by volunteers who receive little or no compensation.

A warning to profit from

The authors also sound a note of caution in the final report, warning nonprofit boards not to get fixated on applying board practices that may be detrimental to their own organizations. “[They] should exercise caution when applying for-profit board governance practices such as performance measurements to the nonprofit sector,” they report. “Nonprofits are…more complex because they have a larger variety of stakeholders and their missions…involve outcomes that are difficult to measure. Many study participants were reluctant to suggest adopting for-profit financial metrics.” That said, this report goes a long way toward rectifying what has been sorely lacking in the voluntary sector’s governance realm: self-evaluation.

“That is one of the ultimate values of this study,” says Dallhoff. “There are a number of organizations that have done studies about problems facing nonprofit boards. But this is the first one that goes across all sectors. In our focus groups we had large and small organizations and the problems were very much the same. To me, that was so interesting to hear.” The report is clearly driving up interest in the sector as well.

The official launch of the findings was hosted by the Institute of Corporate Directors (ICD). In attendance were approximately 150 corporate directors and board members from multiple organizations and foundations. Dallhoff recalls that a presentation on governance made by SLP at an ICD breakfast only two years ago drew less than half that amount and she is encouraged by the upswing in attendance.

Skill-sets and team mentality required

For its part, the ICD is happy to be a partner in the study and is optimistic that the results will help out its sister, non-corporate sector. “The success of this important sector depends on board members who have the skills to properly govern their organizations and who are fully engaged in their leadership roles,” said Bernie Wilson, chair of the ICD. According to some, this success will only come about when board chairs get perspective on their roles.

“It’s much more than setting up committees and calling and chairing meetings. It’s like building a hockey team where you can’t put in all the fancy scorers without having a good defense or without having a tough guy go into the corners and dig the puck out,” Dr. David Leighton, chair of the National Arts Centre‘s board of trustees, is quoted as saying in one of the report’s more colourful commentary boxes.

Surveying a path for the future

There is hope that subsequent surveys will build upon this one and that board governance metrics will continue to be refined. “There is a lot of interest and good intention out there,” suggests Dallhoff. “Board members want tools to help them out. To be an engaged director takes a lot of time and commitment. So we want to make sure we’re giving them the proper tools to be successful at it.”

With this study, the voluntary sector can rest assured that a well-stocked toolbox is now within reach.

Boards by numbers

• 60% of respondents reported their organizations don’t have a formal risk management policy and 65% do not have a formal crisis management plan in place.
• 74% of respondents reported they have some form of orientation for new board members; 44% of these reported that it takes six months for a new member to get up to speed.
• 84% of respondents reported that they use informal succession plans to replace committee chairs.
• 50% of respondents reported that no revenue was allocated to their governance expenditures; another 40% reported between only 1% and 2% of revenue was allocated for this purpose.
• 52% of respondents reported that they did not conduct formal board evaluations in their organizations.

To download the full report, visit: www.strategicleveragepartners.com/download.html.

Andy Levy-Ajzenkopf is president of WordLaunch professional writing services in Toronto. He can be reached at andy@wordlaunch.com.