2.1) is normally made up of its most senior trustees. It has six critical roles:
1 Selecting, evaluating, and coaching of the CEO. It often does the selection by commissioning a special search committee of the board for the task.Figure 2.1 Partial Organization Chart
2 Recruiting new members of the board, making sure the skills are on the board for future leadership, and ensuring the various tasks that need to be done can be staffed.
3 Having a deep understanding of the strategy of the organization and what it needs to do for the future.
4 Recruiting the necessary people onto the board who can mobilize appropriate development. This is normally done by adding potential major donors and connectors on the board. This group must be composed of individuals who will not disrupt the other governance activities of the board but who can energize the organization's development activities.
5 Selecting and appointing board officers and committee chairs. In particular, they need to have a multiyear view of potential succession.
6 Determining and enforcing length of board and officer term limits.
A Case Study
A recent case study described here illustrates how governance committee organization played out in one organization. The organization was an over 500 student K - 12 independent school. As the story begins, it had a highly experienced board (averaging over 20 years of service) including a board chair with over 10 years of service. The school in the past decade had added some very capital-intensive program expansions for which the funding had been done through debt, not philanthropy. The organization had a very modest endowment. Its facilities were old. Fundraising had not been a board priority for at least the past decade. For the past decade, most trustee gifts each year had been in the $1,000 range or less. They were not a major source of funds for the school. Neither was the success of the annual fund a priority for them.
The case starts with a new head being picked after the retirement of his predecessor. The new head, after surveying the landscape and his competitive positioning, launched multiple initiatives. The first was rebuilding a development department to energize its annual fund and create an alumni and friends database. School publications were modernized. New parent trustees were brought onto a board that simultaneously installed term limits for both the trustees and officers. A careful study was launched of the state of the physical facilities. Major inadequacies were identified, which appeared to significantly impact the quality of the programs and their marketing appeal.
The previous board was composed of people of stature, but with both relatively limited giving capacity (or at least giving habits) and interest in that domain. In going through its once in every decade external accreditation, the board's and head's attention were drawn by the evaluator’s focus on the school's high debt in relation to its competitors, as well as the absence of a significant annual fund, combined with no plans for a capital campaign.
As part of addressing these issues, the board (at the urging of the head) recruited onto it a new trustee, who was very familiar with the need for a school to have access to both capital campaign dollars and annual fund dollars. The new board member was asked to head a newly formed governance committee. Almost immediately identifying capital shortage and aging facilities as key issues, the governance committee then stimulated the recruitment of four new development-oriented trustees to the board, who had a deep commitment to the school because their children were enrolled. They had both significant personal resources, as well as strong links to other individuals in the community who had substantial resources. A building project of great strategic programmatic relevance to the school was brought forward. Almost immediately, funding inside the board jumped to 50% of the project's costs, all fueled by the new and relatively new trustees.
At the same time, an experienced new development director was recruited from outside to energize the development infrastructure both to support fundraising in general and for this project in particular. The new director and the board rapidly mobilized nonboard parents to contribute the other 50% of the project over six months, and a transforming project was launched. Five years down the road, millions had been raised from all sources around this project and two subsequent equally transformative projects.
To make this happen, the governance committee nearly doubled the board size with 80% being significant donors and all being donors sparked by the dynamism of the projects, and the transformation that they promised in the school's programs. Importantly, enrollment in the school jumped by 150 new full-paying students who were attracted to the new proposition. The trustees, who sparked the initial effort, rolled off the board (courtesy of term limits) and were replaced by like-minded individuals (mostly parents and grandparents) with similar resources and passion. Structures to attempt to keep former trustees engaged were put in place. Board rebuilding has become a never-ending project (courtesy again of term limits). The key points from this case are:
1 Building a development-oriented culture in an institution takes time. The preceding story took over five years to play out. As noted, attention must continue to be paid to the board's regeneration as each generation of development-oriented trustees reaches the end of their term limits. The new set of trustees must also have the right combination of vision and personal financial resources to continue the transformation.
2 Development-oriented leadership was key to this transformation. In this example, it was a CEO who had no deep development experience but an appetite for growth, who was supported by a total reconstituted board that contained deep development capabilities. The spark for creating this was the member who had both development and governance experience. First came the board reconstitution, along with new development staff leadership, and then a series of transforming projects in rapid succession.
3 The assembly of a much larger board of donors and connectors made a huge difference. At its height, the board grew from 16 to 34. This allowed the mobilization of many donors.
Over the next two years, the board then went back to 24 in the absence of major new projects.
Board Recruiting and Structure
The most important point of this case is that the board itself took responsibility for raising the overall fundraising capabilities of the organization initially prodded by the CEO and the external accrediting organization. It began by reconstructing itself to have dramatically expanded development capabilities. If governance was the only role of a social enterprise board, it would contain six to eight members in total (much like a typical for-profit board). The development focus, however, drives a social enterprise board to be much larger (4–20 additional trustees are the norm for midsize and larger organizations). Supported by a paid development staff, a board often has two development committees; one is a development committee that worries about annual fundraising, donor relations, research, and so on. The second is a capital campaign committee, which may operate as an ad hoc committee over a 5- to 10-year horizon. The development committee normally has overall responsibility for all development activities except for the capital campaign with which it has a tight liaison. The development department includes activities such as the annual fund, planned giving, alumni clubs, stewardship, research, and major gift officers. The development-oriented trustees are normally divided between the development committee and the capital campaign committees as their primary board work. Special events (fundraisers) are also part of this cluster of activities (discussed in Chapter 7). Often younger trustees gravitate to the annual fund activities, whereas the older ones wind up on the capital campaign committee because of their often higher giving potential and deeper links to potential donors.
Term Limits
The governance committee plays a critical role in the selection of potential trustees, their assignments, and their ultimate rotation off the board. It is also responsible for recruiting overseers/corporators