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Facilitating a Capacity Building Process

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The economic downturn that occurred in the last couple of years has been unquestionably harsh on most nonprofit agencies.  The increases in service demand, coupled with the decreases in revenues have created organizational strains and fractures that will linger for years to come.  If there is any silver lining to this recent crisis, it is that has it forced many nonprofits to question their very foundations of mission, vision and operation.  In this context, the exploration of capacity and capacity building has increased in prominence and profile across many organizations. To that end, innovative and adaptable organizations are using this crisis to fundamentally rethink capacity and are linking strategy to capacity.

I recently attended a panel discussion geared towards grant makers on the topic of nonprofit capacity building.  The panel discussed capacity assessments, the role of training, coaching and consulting and evaluating capacity building efforts.  As with many lunch presentations there was much more content than time, however, it was interesting to hear the “30,000 foot view” of capacity from funding agencies’ perspectives.   As one who has worked with nonprofits in capacity building for many years, the discussion of tactics by the panel revealed little new information.  However, what was interesting in the presentation was the discussion of the “disconnect in thinking” between funding agencies and nonprofit agencies around the concept of capacity.  The disconnect in thinking can be summed up in this way:  When nonprofit agencies think about capacity building, especially in the context of seeking a capacity building grant, they really are asking for operating support for specific projects.  When grant makers talk about capacity building, they are talking about developing infrastructure.  Adapting an illustration that one participant gave, it is like a vegetable garden where the nonprofit is concerned about a particular plant in the garden and the grant makers are increasingly interested in the root system and soil that supports the entire garden.  In previous posts I have discussed the concept of initiating a capacity building conversation and also discussed capacity building in the context of resource development planning. In this post I want to discuss facilitating an organizational capacity planning process.

Before discussing the process, we first need to define what is meant when we discuss capacity and capacity building. As we are reminded in that now classic primer on nonprofit jargon “in other words,” (external link) capacity is one of those “vague, quasi-occult terms” that evokes the need for outside “expert” consultants who understand the deep mysteries of the concept.  The unfortunate byproduct of such a misunderstood word is that the ambiguity of the term makes the concept of capacity and capacity building seem daunting to an organization.  So as an opening premise, I would like to suggest a clear and concise definition of capacity as “the sum total of the  strategy, management, staffing, infrastructure, resources and operation of an organization.” The process of capacity building then becomes the deliberate assessment and improvement of those core elements of capacity.  The following is a suggested facilitated process for capacity building.

Assessment:  As with most organization development and performance improvement projects, the first step in the process is to take a systematic assessment of where you are right now.  There are several nonprofit organizational capacity assessment tools that can be found with a simple web search.  The grandfather of tools was developed for Venture Philanthropy Partners by the mega consulting firm of McKinsey & Company (external link).  This tool has been adapted by Marguerite Casey Foundation (external link) and has also been adapted by Social Venture Partners International (SVPI) and is available as an Microsoft Excel spreadsheet (external link). Taking the SVP tool as an example the rubric addresses: financial management, fund development, information technology, marketing and communications, program design and evaluation, human resources, mission, vision, strategy and planning, legal affairs, leadership development, board leadership.  Future versions of the SVP tool will address cultural competency and policy advocacy as additional areas.  My experience (and the experiences of a few colleagues) in using the SVP tool has been that the level of depth of the tool may be less relevant for smaller or grassroots organizations.  In these cases, another useful tool to consider is a “Tool for Assessing Startup Organizations” that was designed to be a due diligence supplement for grant makers (external link).  As I suggested, a web search will help identify additional approaches to capacity assessment. The point of drawing attention to several tools is less about “what  tool  to use” and is more about illustrating the need for a framework for systematically assessing your agency capacity.

Once you decide on an approach, implementing a capacity assessment ideally takes a 360 degree approach that solicits relevant input from staff, board, clients, funding agencies and other stakeholders. The wider and more inclusive the process, the wider and more inclusive will be the insights on capacity.  Note:  I would be remiss to point out that online surveys can be an effective way to conduct an assessment.

Dialogue and Planning:  The second stage of a capacity building process to create and intentional dialogue around the findings with three important goals that include: a) creating a shared understanding of where the agency is starting from and where it is going, b) deepening the spirit of community and commitment to strengthening the organization, and c) creating workplans that support capacity building.  While workplan development can be a time intensive process as I have suggested elsewhere I do want to underscore that reflecting on a capacity assessment should also be a time of building community and commitment.  The dialogue and planning process lends itself well to an “intensive” like a board and/or staff retreat, but also could be the basis for a “learning community” process that spans 4-6 months and includes spaces for homework and reflection.

Action:  The third stage of is the action stage of implementing capacity building workplans.  Recognizing that capacity building is an ongoing commitment to continuous improvement, there needs to be the intentional structures to manage and monitor progress over time. Since capacity building is really about improving an entire system is also useful to think of implementation as a series of “rapid cycle tests” using a model such as the Plan, Do, Study, Act (PSDA).  There are a number of good primers for this model online, (external link). Finally, it is important to keep in mind that the action stage will likely taking an agency into new organizational territory and will likely require some investments in the professional development of the agency’s staff and board.

Leverage:  The final step in a capacity building process is to be intentional about leveraging your efforts for capacity building.  This brings us back to my opening discussion of grant makers’ perspectives on capacity building.  The organization that invests in the systematic planning for capacity building is uniquely positioning itself to pursue a capacity development grant.  For example, I know of one agency that received a three-year capacity building grant after taking an entire year to asses and begin to implement a plan to build capacity that the entire board stood behind. Based on the demonstrated movement towards capacity, the agency was well positioned to seek a capacity building grant. A grant-writing acquaintance once stated that when it comes to capacity building grants that funding agencies “want to improve organizations –not rescue them,” and so it is imperative for organizations to start from a position of strength.  I believe that the leverage of capacity building grants is most effective when agencies are already engaged in the forward motion of capacity building.

I recently read a great article titled “On not letting a crisis go to waste: an innovation agenda for Canada’s community sector” (external link) that reinforced the concept that the nonprofit community/social sector is being tempered as we continue to struggle out of the economic recession of the last several years. Implied and stated in the article is that agencies demonstrating vision, leadership, adaptability and innovation are the ones who will not only strengthen themselves but help strengthen and reinvent the social service and community sector.  For many nonprofits this journey of innovation and opportunity begins with an intentional facilitation of a capacity building process.

Facilitating a Nonprofit Board Orientation

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I recently helped out on a board member orientation workshop  for a nonprofit agency and thought I would share some perspectives on nonprofit board development while the ideas are fairly fresh on my mind.  Over the last few months I have been occasionally posting what has become an informal series on board development (see other posts).

Volunteer-based nonprofit boards are typically comprised of diverse representatives from the community who want  to make a contribution to a cause-based organization.  In smaller to mid-sized organizations it  likely that many new board members have not served on a board previously and often have a vague idea of what being a board member means.   In this context, a board orientation is an important “educational” event. Unfortunately, in zeal to adequately train board members, board  orientation sessions can spiral downwards into a mountain of data and presentation slides.  I have personal experience in such a “missed opportunity ” when I once was captive in a board orientation where the trainer actually powered through over eighty slides in an hour.  My butt was numb and my mind even numb-er and needless to say I learned very little  from the session.  So if massive quantity of slides makes a poor board orientation,   how does one facilitate a board orientation that is not a death march through random slide transitions on an overhead screen?  Here are three fundamental principles:

Spend no more than 12-14 “pages” on Board Governance.  Oregon, like many states produces a Guide to Nonprofit Board Service with the entire document spanning only 16 pages (including covers, front matter and a huge amount of white space).  If the State Attorney General’s Office thinks that the concept of governance can be distilled down 12-14 pages of content, then that becomes a good guide for most nonprofit boards. As a general rule, new board members can get the concepts of “duty” and “control” in ten-fifteen minutes of discussion, without having to explain Federal Circulars governing contract management.  Of course, my assumption is that we are talking about a stable nonprofit with a track record of good management practice, fiscal and program controls, and supporting policies and procedures.  Boards governing an agency in transition are another story.

Foster the sense that board members are vital connectors.  A Board orientation needs to emphasize the board members role as a connector. One of the few slides that I have used in board orientation workshops, places the board in between the organization and the community.  The theoretical discussion is simple.  The board has an internal role connecting to the agency mission, vision, staff members and CEO and is responsible for stewarding those connections.  Externally, the board connects to the clients, community and contributors, outwardly representing the agency to these three groups and connecting the interests and needs of the external groups back to the organization. At the recent orientation I attended, one of the practical exercises in making internal connections paired board members in groups of 2 and 3 and had them meet in a roundtable format with staff of the agency who represented the different organizational programs and services.  In an hour’s time, board members connected with each program of the agency and, more importantly, with the agency staff members. Board members reported making vital connections and understanding and praised the short, intense dialogue approach as more meaningful than slide presentations of the same material.

Provide connection to each other.  Another facet of board orientation is to outline the concept of networked governance. I have discussed this concept in another post and increasingly I am convinced that successful boards are those that approach governance as a network.  Fundamental to a network is the concept that relationships matter.  Another node in which board members serve as a connector is in their relationships with each other.  Orientation must provide time for board members to connect less formally.

Orientation is Process. Finally remember that, as with everything based on performance, the orientation of new board members is not an event but a process.  An intentional time set aside for orientation is a way to start embedding concepts into heads (by detailing program data), engaging hearts (connecting board member with passion and mission), and putting tools in hands (reference materials, by-laws, operating procedures).  That’s orientation. The hard work of building relationships, creating meaningful impact and engaging a high performing board is the ongoing work of board development.  This development requires the ongoing facilitation process that cycles and deepens as boards govern in partnership with the CEO, staff, and community.

Anyone can download some board orientation slides off of the web and present a training workshop.  However, bringing facilitation process into a board orientation shifts the framework from training to learning and this deeper pursuit will strengthen the board. Facilitating a nonprofit board is a journey of empowerment and the first steps along the road to success can be found in the strong grounding of the board orientation.

As always, your thoughts are welcome.

References

Creating High Impact Nonprofits

Board Governance as Leadership Summary

Advancing Capacity of Organizations: A Strategic Conversation

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In one of the early posts to this blog I offered a taxonomy to help nonprofits think about organizational capacity, resource development planning and fundraising.  In that post I described capacity development as the practice of developing and maintaining staff skills, organizational systems and intellectual and physical resources required to meet your organizational mission. In short, I suggested that capacity building is thinking about what it takes to maintain and build your organization.  I have been working with several organizations on thinking about organizational capacity and thought I would revisit the concept of capacity in a little more detail.

If you do a Google Search on the term organizational capacity you will see that there is not shortage of resources to help organizations think about capacity building (I reference a couple of the most practical resources below). Unfortunately such a search will reveal a couple of things.  First it will show that successful companies invest in infrastructure and capacity as a normal part of doing business.  Second it will show that in the nonprofit world, agencies strive to under-invest in capacity as a way to demonstrate “effectiveness.”  The idea is, “our overhead is low so we must be good.” This disconnect between the “for profit” and nonprofit agency thinking about infrastructure has been described by at least one set of authors as a starvation cycle. In the long-run, it is argued, under-investing in agency capacity is detrimental to any organization, The purpose of this post is not to overview all of the elements of capacity or even discuss how to build capacity but offers a facilitation approach to a strategic conversation about capacity building. What kind of conversation will result in an agency specific plan to develop capacity? While this post is geared towards nonprofits such strategic conversations might have place in commercial ventures as well.

Organizational capacity has the domains of: a) governance, leadership and strategy, b) organizational systems and infrastructure, c) reliable and autonomous funding, d) strategic partnerships, e) evidence based programming, and f) evaluation and outcome systems.  On one level, capacity can be measured using rubrics and other metrics to identify gaps between where an organization is now and where it needs to be.  Philanthropic foundations that fund capacity building efforts often take this quantitative approach.  However, capacity building can rarely be reduced to a “present or absent” checklist. Rather, capacity is better reflected as a strategic conversation that involves, story, aspiration and strategic intention. I would suggest that there are four questions inform a strategic conversation:

Where are the Critical Weaknesses?  While I just suggested that an objective assessment of the capacity portrays an incomplete picture of agency capacity, such an assessment does need to be the starting point of a capacity exploration.  While assessment of an established nonprofit agency might involve a more substantive assessment than is required in assessing a smaller agency, an objective review of capacity domains serves as the baseline understanding that frames the conversation.  In this assessment, agency staff, board and possibly other stakeholders need to engage in frank discussion about critical weaknesses requiring immediate attention.  One can think of any number of critical weaknesses such as a lack of adequate fiscal controls or a lack of HR policies and procedures that could trigger immediate action.

What are the Leverage Points?  A second question reflects on agency capacity and explores what is the leverage effect of focusing capacity building on one single element.  Is there one part of capacity building that can be leveraged to advance the agency’s larger goals?  For example, one agency that I worked with was planning to launch a fundraising campaign targeting small donors.  Prior to implementing the campaign the agency invested in capacity by redesigning its website to make online donations easier.  When the small donations campaign was launched, online donations represented the primary donation method and the revenues exceeded the investment in the website redesign by a large percent.

Where are the Opportunities?   Another component of the critical conversation is to discuss the opportunities that present themselves.  In this challenging economic environment, a discussion of capacity might be a good time to explore concepts of reducing overhead to increase capacity.  Discussions of co-housing agencies or even the big “M word” (merger) might be fair game in the discussion of opportunity. In this case, sharing overhead might actually free up resources to invest in other facets of capacity. For some agencies strategic conversations about capacity resulted from opportunities presented by prospective Federal stimulus dollars.

Where is the Energy and Passion?  A final question that can inform capacity discussions is one that is best answered when the process is opened to the broader community of volunteers and other stakeholders.  By opening the scope of perspectives, the conversation can increase vision, energy and passion.  For example, younger volunteers might use their instinctive technology skills and take the lead on developing a new social media outreach campaign for the agency.  In another example, an executive director told me the story of hosting a capacity building conversation including the agencies that funded them.  The conversation surfaced the fact that one of the funding agencies was going through a department-wide upgrade of computers and because of the conversation the agency decided to donate their older machines to the nonprofit. For a couple hundred dollars to install, configure and network the computers the executive director said it resulted in a significant technology upgrade and standardization of computers for his agency.

With these four framing questions the next step to consider how you structure a strategic conversation about agency capacity.  Hosting a strategic conversation about capacity could neatly fit into a board/staff retreat or a similar block of at least 2-4 hours.  As suggested earlier, while not an end to itself, a capacity needs assessment should be conducted prior to the strategic conversation.  With a block of time dedicated to the task and assessment data complied, a strategic conversation might include the following format.

 

  1. Presentation of the Assessment Data:  Whether you use traditional presentation slides, story telling or other visual representation, it is important that everyone in the team is oriented to where the agency stands now.  The second part of the assessment presentation is to frame the vision of where the agency could or should be.  By presenting where you “are” and “where you want to be” you identify the gap that needs to be filled.

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  2. Reflection and Movement Building:  The second step of the strategic conversation is to create the opportunity for the group to reflect and engage.  While movement building is perhaps an ambitious word to describe this stage, the idea is to not just talk but to create energy and excitement around the potential. This stage might be achieved by a modified scenario planning exercise, appreciative inquiry process, or by using more traditional prioritization exercises.

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  3. Create Strategic Intentions: The third step is to create strategic intentions around capacity. Strategic intentions in this instance ate narrow and focused around the capacity needs and, while in sync with the agency strategic plan, are more likened to key implementation objectives.  The task for this phase of the conversation is to break capacity building into components that can be managed as a whole.  For example, moving from annual fiscal reviews to a formal audit might be one intention and a separate intention might be the development of a donor relationship database. Both together, however, are about improving fiscal management.

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  4. Develop an Implementation Plan: The final stage of the conversation is to develop broad implementation strategies. In this stage, there should be a range of creative strategies developed to achieve the strategic intents.  In some ways the strategies might look more like a brainstorm list than a step-by-step workplan. By having broader implementation plans allows for adaptive management of an array of opportunities.

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  5. Document the Agreements and Plans: As in all group process there needs to be some documentation of the strategic intents and implementation plan. Communication and feedback loops also need to be built into ensure accountability to the plan..

Agency capacity is intimately tied to the long-term growth and success of any venture.  Unfortunately, in the nonprofit world, many organizations have been acculturated to under-invest in capacity.  This cycle needs to be broken.  Capacity building needs to be acknowledged as a core responsibility of nonprofit agency management and all strategy must include the development of strong systems and infrastructure that support the missions of the organization.  Hosting a strategic conversation that results in concrete yet flexible action plan is a major first step to raising awareness of capacity needs.  Such awareness has never been more needed than in these challenging social and economic times. An agency willing to have a strategic conversation about capacity will find that such an investment results in the rewards of a clearer focus and greater infrastucture to carry out one’s organizational mission.

 

In Depth Capacity Assessment tool:  Venture Philanthropy Partners Capacity Assessment Grid

Great qualitative tool for smaller agencies: Tool for Assessing Startup Organizations


Planning Effective Board Retreats

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I once was talking with an executive director of a nonprofit agency that hosted an annual board retreat. She sounded exasperated as she described the situation this way, “Every fall the board has the same discussion, asking –so what do we do at our board retreat this year?” As we spoke I asked her what an ideal staff retreat would look like from her perspective. “Well,” she said, “we ultimately do make pretty good use of our time but it never seems intentional. More than anything else I wish the board was intentional about the annual retreat. I mean, after all, aren’t board retreats supposed to be big and strategic?” I proceeded to share with this director that retreats should be functional, intentional and big in relationship to the value of the desired outcome. In short, I suggested, there are likely four main frameworks for board retreats.
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Continuing Education: Throughout the year, boards often get bogged down with the multiple roles of governance and agency support. Board retreats can be great opportunities for continuing education. Education may relate specifically to board-related duties and may be driven by pressing or current needs, such as risk management, fiscal accountability or training related to the agency’s mission and goals. Short of a pressing educational need for the board, a continuing education retreat might be developed around expanding the general capacity of the board. Continuing education that focuses on marketing, communication, or conflict resolution could help expand the knowledge of members both in their board roles and in their broader professional roles.
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Connection and Community: A second framework for a board retreat is to use the time to focus on connection and community. With a connection and community focus, this type of retreat may be a joint event involving both board and agency staff. I have seen such retreats effectively used when an agency has navigated a major transition such as rapid growth or a significant crisis. Alternatively, a connection and community retreat may also be useful when a significant number of new board members are assimilating to the organization. Goals for such retreats may center on cultivating mutual understanding of agency’s programs, or to cultivate a shared passion for the mission, or can focus on creating connections between people. The process for such retreats may use team-building exercises, listening circles, story-telling or other interpersonal group processes to structure the time accordingly. Increasing community and connectivity can strengthen relationships for the year ahead.
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Celebration and Reflection: The third framework for a retreat is to celebrate and reflect. Different that a volunteer recognition party or a social gathering, retreats that focus on celebration and recognition are designed as catalyst events rather than motivational events. Retreats of this nature may be associated with a milestone like a 20th anniversary, the completion of a capital campaign, the successful merger of two agencies, or may precede a milestone event. This type of retreat differs from a motivational recognition program in the retreat serves as a catalyst for the planning and implementation of the next chapter. For example the frame of a recognition event is, “we have paid off our building thank you everyone for your dedication and hard work,” but the message for a celebration and reflection retreat would be, “we have paid off our building now it is time to develop a satellite office across town to expand out services.”
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Strategic Planning: A fourth framework is the traditional strategic planning retreat. The challenge of a strategic planning retreat is that it can’t be designed as an event but must be designed as one stage in the sequence of a strategic planning process. Single event-based strategic planning may produce a document but because the event has a beginning and an end, the plan often lacks the energy and movement of a staged strategic planning process. Strategic planning is not an annual event but is an ongoing iterative process. Having said this, however, making strategic planning a focus of a retreat can be a powerful focusing stage in a strategic planning if it is part of a larger momentum building process.
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The important consideration in designing an effective board retreat is to build the agenda around a single framework as the focus of the group’s activity. This is not to say that a retreat won’t have activities drawn from more than one framework (i.e., a strategic retreat with a team building exercise) but the key is to purposefully design the agenda to achieve a single goal. It is simply not realistic to spend five or six hours together and educate and celebrate and connect and develop a strategic plan. Effective retreats focus on one theme with the purpose of using the theme to move the organization forward over the next year. Common to all of these frameworks is movement. Capacity building is about moving your board forward. Connection and community establishes working relationships. Celebration and connection lay the foundation for new achievements. Strategic planning is about working towards the future.
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As is common to many of the posts on this blog is my foundational belief that an agency that breaks out of the routine and rethinks fundamental group processes will prosper and grow. Investing in strategic process design and strategic facilitation across all business practices will yield significant dividends and that includes investing the annual board retreat process. Focus and movement are for times when there is more at stake than running a good meeting.
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Four Board Membership Conversations

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I have outlined board frameworks elsewhere and this blog is a more practical companion.

While there are literally dozens of books, websites and blogs devoted solely to the topic of nonprofit boards it is still a common phenomenon for nonprofits to struggle to identify the strategic composition and functioning of their board of directors. What kind of people should be included on the board? What business sectors should the board represent? What skills should be expectations related to fundraising and other contributions to the functioning of the organization? I would suggest that there are four critical conversations that are helpful to creating a strategic nonprofit board.

The first critical conversation is about the foundation of a nonprofit board is a discussion of the board’s role in governance. Governance has several dimensions the first of which is to provide strategic direction to assist the nonprofit fulfill its mission. Board members should bring, first and foremost, the ability to think strategically, systemically and systematically. The second most important function of board members is the ability to provide oversight. Inherent in oversight is the spirit of inquiry and active participation. Governance means that board members ask reasonable questions to ensure that the agency programs and operational practices are compliant with legal requirements, the agency’s mission, agency policies, and any restrictions placed on contributions by donors and other funding sources. Ensuring adequate fiscal control and appropriate use of funds is another governance function of a board. A final governance function is to ensure oversight of the executive director of the agency. The conversation about governance is to assess the strength of your board in ensuring these functions. Are the skills and knowledge of board members adequate to provide governance? How do you measure it? How do to re-measure it as the board membership changes?

The second conversation relates to the board’s ability to provide strategic guidance to the agency operations. Board members are not expected to serve as “quasi-staff” working for the agency as HR consultant, accountant, etc., however, as you consider the operational functions of the agency such as human resources, accounting, marketing/public relations, program planning and evaluation, and risk management, there is a legitimate question of does your board posses the skills and knowledge to help guide the agency to build a strong organizational capacity? The distinction between providing strategic guidance and serving as “quasi-staff” is important. It is temping for smaller nonprofits to try and identify board members who can provide pro-bono human resource or marketing experience but such a strategy can cause potential conflict of interest between the governance of the operations and the actual operations. Boards members can’t effectively govern and provide direct operational support. Board guidance questions, observes and reflects on organizational operations but rarely, if ever should the board get operational. Guiding the development of organizational capacity becomes more important during times of organizational growth or down-sizing and is also important during times of crisis or transition, such as when the executive director leaves the agency. The strategic board conversation then becomes about the adequacy of the board to provide guidance related to organizational development. Does the board collectively possess the skills (or have access to folks who do), when the board is needed to support organizational capcity development?

The third strategic board conversation relates to the board’s understanding and more importantly, content expertise related to the mission of the non-profit. If the organization mission is related to positive youth development or housing services, what level of expertise in those issues do board members have? Again the conversation is not about board members providing operational support to the agency but strategic support. Do board members understand the current and emerging trends related to positive youth development or affordable housing issues? Do board members have expertise to develop informed program directions or positive strategies that will support the growth and development of the agency as it seeks to meet the mission-driven needs in the community?

The fourth strategic board development conversation is about the board and fundraising goals and strategies of the agency. Conventional wisdom drives many nonprofits to seek, as the Holy Grail, influential board members connected to potential donors or at the least, board members willing to make an “ask” for money. Unfortunately this framework truncates the strategic discussion. In reality boards should seeks members who can provide strategic support to the fundraising mix unique to the agency. So, for example, if a nonprofit is heavily dependent upon government contracts the agency would benefit by board members who can help the agency provide maintain strong relations with the government agencies. Conversely a board that seeks to develop a strong community of small donors, a tactical approach for the board would be to seek board members with experience in grassroots community organizing, the use of technology-based social media tools, or small event planning.

Taken together, developing a strategic board requires several strategic conversations about governance, organizational capacity, content expertise and fundraising. These conversations should be supported by honest assessments of skills that comprise the current board. Out of such conversations comes a clearer strategic intent that informs board recruitment and can subsequently organize and focus board training and board operations.

Here is a link to a self assessment spreadsheet that I developed to support the start of conversations.

 

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