4 ms·
I have served on a lot of private company boards (VC-backed companies) as well as a mnumber of non-profit boards. I agree with the sentiment that non-profit boa
by pge 4y ago
I have served on a lot of private company boards (VC-backed companies) as well as a mnumber of non-profit boards. I agree with the sentiment that non-profit boards are weird, and I have found them significantly less productive than for-profit boards. Comparing for-profit and non-profit boards, I see several key drivers of non-profit weirdness:
* Definition of success: With for-profit boards, there is a clear shared view of what the long-term goal is: value creation for shareholders. While there are lots of healthy debates about how that is accomplished, they are all in the context of the same goal. With a non-profit, each board member may have their own view of what the org is ultimately trying to accomplish. Further, these differing views may never be surfaced in open conversation, leading to people talking past each other a lot.
* Incentives: Related to a shared view of success is the issue of incentive. Many private company board members are shareholders and have a clear financial incentive to make the company successful. I won't go so far as to say this creates accountability, but it does serve as a clear motivator to be engaged. Non-profit directors have nothing at stake that creates an incentive for engagement. If anything the incentive may be a friendship with other directors or the ED, in which case, the incentive is to maintain the relationship with that person rather than do what is best for the org (a common cause of dysfunction). This is a particularly acute problem when it comes to the most important issue a board can face: when and whether to replace a CEO. Most non-profit board members have no incentive, or a negative incentive, to engage in such a difficult conversation.
* Size: Non-profit boards are often very large (10+ people), while private company boards are usually 5-7 people. Size makes everything harder, and leads to fewer meetings, less discussion, and less engagement.
* Skill sets: Non-profit directors are often recruited with the primary goal of fundraising. They often have little to no board experience and may not have any experience with governance of an organization of any size in either a director or executive capacity. In my experience, even the ability to read simple financial statements is rare, much less the ability to think strategically about where to take an organization or how to scale it.