Should a CEO sit on the board of his/her own directors' companies?

Monday, July 26, 2010

Should Board Members’ Contributions Be Designated To Pay For Their Education?

I was speaking with a couple of colleagues the other day and the subject of board contributions came up. Later in the conversation we transitioned into the importance of ongoing board education and organizations building a sufficiently-large line item into their budgets for this. And then the idea bubbled up: What if one of the expectations of board service was that a portion of each board member’s personal contribution to the organization went to pay specifically for board education?

Such an expectation would do several things. It would communicate to the world that the organization believes an educated board is important. It would provide necessary dollars for such board education, without cutting into dollars dedicated to programming. And, it would help board members value the education the organization provides, because research affirms that people ascribe more value to something for which they pay rather than get for free.

There are some issues to consider. When my colleagues and I were talking, someone arbitrarily threw out $500 as the portion of each board member’s contribution that would go into this board education fund. While a substantial amount, with an average-sized board of 16, that only puts $8000 into the education coffer. True, $8000 is more than most boards currently devote to board education. But, $8000 won’t go far if the money is to be used for a true retreat, conference expenses or coaching, for instance. Asking for a number larger than $500 might be a non-starter for most boards – at least at this stage in the game. And, what happens in those organizations that ask for a personally meaningful gift from each board member instead of a contribution of a specific dollar amount? Yes, the leadership could opt to allot the entire board member contribution to its education fund, or designate a percentage, but how can any organization create an education budget if the ultimate total is an unknown? Perhaps the answer is that the board would still have to assign to the board education line a dollar amount from its general operating funds and use the contributions just to enhance its educational opportunities.

The biggest issue may be that some people will resent this set-aside, either out of principle or the belief that they do not need education – perhaps they’ve sat on many boards over the years and believe they have the job down pat. My guess is, though, this reality may be off-set by those that clamor to join a board that devotes so much attention to its board members and provides leadership training that they can then take back to their jobs or on to other organizations.

As someone who firmly believes in ongoing board education at every meeting, I love what this concept could “buy.” But I recognize it would require a major culture shift in most organizations. What do you see as the pros and cons? Is this an idea with sufficient value to push?

Thursday, July 15, 2010

Should US Nonprofits Adopt a Patron System?

I worked recently in Singapore. While I found many similarities in the ways nonprofits do business both there and here in the United States, I found differences as well. One of the biggest was their use of a patron system. Besides having what we would consider the familiar board structure with a chairman or president at the helm, a large number of organizations there also have a patron. Some even have a patron and a patron in chief. These are powerful individuals who wield tremendous influence. For instance, the patron in chief of Singapore’s Lyric Opera is the President of the Republic of Singapore. Its patron is the Minister for Education and Second Minister for Defense. The intent is that these individuals will provide support – including, in many cases, political clout – and encourage others to support the organization as well.

In the United States, our honorary boards could be considered the closest equivalent to the patron system of Singapore. Some organizations here are able to engage major players, such as the Gerald R. Ford Presidential Foundation which counts among its trustees James Baker, Dick Cheney, Alan Greenspan, Henry Kissinger and Donald Rumsfeld. But the number of organizations with the capability of attracting names of this caliber are far and few between. Would it be easier for nonprofits to attract a single patron? Would a patron help nonprofits that feel they lack sufficient access to affluence and influence?

I do believe that it would be easier to find a single patron than an honorary board. However, I do not believe that it would necessarily be easy. Think of all the nonprofits that have tried unsuccessfully to find a celebrity spokesperson. And, we certainly know how quickly a good name can become a liability. Tiger Woods, anyone? Singapore has experienced this with the patron system as well. The patron of their National Kidney Foundation, the wife of Goh Chok Tong, former Prime Minister of Singapore and current Chairman of the Central Bank, was forced to step down after defending the pay of the CEO, saying that his $600,000 (S) salary was “peanuts.” At least with an honorary board, one would hope there will be others whose reputations remain sterling, even if one of the names on that board turns bad.

As to whether having a patron would be helpful to organizations lacking affluence and influence...I'm not so sure. Singapore is a very small country. People tend to know one another and a patron's name alone carries clout. Here, the individual would have to be willing to actively use his/her influence on behalf of the organization to bring others along. Research done by Herman and Renz suggests that this does not happen as often as nonprofits hope. Besides, the reach of a single individual versus a larger group is necessarily limited, especially in a country the size of the United States.

So, even though I believe nonprofits in the United States can learn much from their counterparts in other countries, I'm not so sure I'd suggest our turning to a patron system here. But, I’m curious as to what others think. Is such a system an answer for us, especially in these difficult times?

Friday, July 2, 2010

So You Think Your Communications Officer Isn't Important . . .

Just this year an illustrious professional career ends abruptly; a world-wide brand that spent millions of dollars over the years to build a sterling reputation, out in front of every one of its competitors, watches its status unravel; and an international conglomerate faces an industrial disaster and its iconic acronym stands to represent its biggest nightmare.

General Mc Crystal within a week – retired; Toyota within a month massively discounting cars and invigorating the US auto industry; and BP within a few days becoming the company formerly known as British Petroleum now known as BP -- Biggest Polluter.

Companies that have allocated enormous dollars to building a public face . . . the military and multinationals. And yet with their considerable resources, both financial and professional, they did not understand how quickly their reputation could unravel. How quickly their public profile could be tarnished and how extensive the damage could be.

Are you ready for this? Do you have the resilience to survive? It begs the question that as nonprofits perhaps we need to reconsider how we court the press. How important we think it is to be on TV or in print. Can we control our message more effectively using social media and web based outreach.

So you’re thinking of promoting your organization in the press anyway. Then be prepared. When you’re pitching a story, an interview or sending out a release do you know enough about the background of the reporter and the media outlet. Have you read enough of their prior stories or seen enough of their broadcast reporting to have an understanding of the nature and tone of their coverage? What is their writing style, do they have a personal agenda and does your message fit into that agenda. If not, beware – their agenda may take precedence over yours!

Are you prepared for a crisis? Do you have a communication’s plan that specifically addresses the conversation that you must have with your constituents the moment something considerable happens that impacts the community you serve.

Have you designated a spokesperson and is that person media trained. As a nonprofit whose financial health depends on donor participation public relations must be moved to the top of your agenda. Today, let’s ask ourselves could our organization survive a media hit. Then take a critical scan of your communications efforts and the persons responsible for this most important yet very delicate task.

Robyn Fern Perlman
Founding Principal
CoreStrategies For Nonprofits, Inc.