Governing NGOs: A Challenge in Four Acts

NGOs are changing—and so must the dynamics of the board room. (Photo courtesy of the Frank Batten School of Leadership and Public Policy)

Act I: The board meeting is not going well. The members of the board—all unpaid volunteers—consist of philanthropists, lawyers, business professionals, and retired workers in the non-governmental organization (NGO) and nonprofit field. The board is a mix of young and old, united only by their passion for the mission. The focus of the meeting is the annual review of strategy and budget for the next year, and as always, there is not enough money. To the consternation of some board members, the executive director suggests that increasing staff diversity is a top priority. One exasperated member says to the executive director, “You want to spend your time on that? We have so many more-pressing problems!” The executive director replies, voice rising, that staffing is the prerogative of the executive director, not the board. The board member retorts, “And how you spend your time—a scarce resource of our NGO—is subject to board review.” With that, the executive director loses control of the meeting, and the conversation spirals into a series of accusations and recriminations.

This vignette may seem all-too-familiar to some NGO leaders and board members. It frames three endemic sources of tension in NGO governance:

1. Who rules: How should decision-making be apportioned between the board and NGO leaders?
2. Toward what healthy vision of board-management relations should NGO leaders and their boards aspire?
3. How can the leaders and the board best manage—and serve—each other?

These questions about organizational governance are almost universally relevant to organizations in the for-profit, government, and NGO spheres. Friction between a board and the leaders it oversees wastes time and energy, distracts an organization from its mission, and prompts high leadership turnover—an enduring problem in the NGO world.

NGOs in America

The role of NGOs in civic life has grown substantially since the 1960s. To advance the agenda of diverse interest groups, they have expanded their ranks and reach. As just one example, in the early 1970s, Ralph Nader-inspired public interest groups expanded their focus from auto safety issues to consumer and environmental advocacy.

NGOs can shape public policies and provide targeted social services, but their success depends on effective leadership and governance. Failure to meet rising expectations of constituents and other stakeholders undercuts support and endangers their long-term sustainability.

Our definition of NGOs embraces a wide range of organizations, but focuses on the public advocacy efforts of local, state, and national interest groups engaged in shaping public policy. The National Rifle Association is a trade association and service organization, but it relies heavily on grassroots member support and lobbies effectively for public policy changes through membership engagement. Therefore, we believe it should also be evaluated as an NGO. So should groups as diverse as the American Civil Liberties Union and the Sierra Club. Each exists for the express purpose of shaping public policy and representing the public policy interests of supporters.

But while NGOs today are increasingly viewed as representing the vox populi—the voice of the people—they are subject to caricature. Many are portrayed as poorly managed, inadequately financed groups of passionate cause activists—litigious critics of government policy working on the political fringes. These portrayals are misleading. They obscure the important role both conservative and liberal NGOs play in US policymaking, as well as the growing sophistication of NGOs as they gain resources and micro-targeting capabilities.

The changing form and governance of NGOs

It’s certain that the role NGOs play in the future will be vigorously contested. Citizen movements in America have proved powerful forces for change during the first two decades of the 21st century. The Tea Party; citizen groups, such as Moveon.org, that oppose expansion of US military missions in the Middle East and Southwest Asia; and NGOs addressing challenges related to pay equity, minimum wage, abortion, gay marriage, gun policy, climate change, immigration, and marijuana law reforms have all altered the national policy agenda. Citizens in other countries have also challenged government policies using NGOs. The impact of efforts such as the Brexit campaign in the United Kingdom and the rise of environmental activism in China suggest that going forward, NGOs may exercise greater power in some nations, even as they face government repression or manipulation by security services. Their changing role requires that public interest boards and management adapt as well.

Act II: The meeting breaks up unexpectedly when the executive director and some of the younger board members leave the room. Back at her hotel room, the board chair phones the executive director to meet for drinks and dinner. Still feeling the heat of the meeting, the executive director reluctantly agrees. They meet at an Italian restaurant in a working-class neighborhood. The board chair, a veteran philanthropist and former NGO field worker pours an inexpensive chianti into two tumblers and asks the executive director, “What were you thinking? And what would it take to mend things and move forward?” The executive director speaks at some length to explain how staff diversity is vital to the advancement of the NGO. Without better race and gender representation, and without better language skills and cultural familiarity, the NGO won’t acquire the talent it needs to fulfill existing commitments, improve its services, and present a more compelling pitch to donors. Diversity isn’t merely peripheral, she argues; it is central to the ambitious strategy she hoped the board would endorse. Above all, staff culture needs to change. Yet it seems that some of the board members are clinging to an older vision of NGO service that anyone (mostly English-speaking, majority Americans) could fulfill.

The executive director feels relieved when the board chair nods sympathetically. But the relief dissipates when the board chair says, “Tell us who you want to hire, how much you will pay them, what you will assign them to do, who will supervise them—then the board will talk and vote.” The executive director takes a big swallow of chianti and stands up to leave, saying, “You hired me to do a job, but I can’t do it if you micromanage me!”

This conversation reveals some potentially fatal—and unfortunately common—contradictions in the relations between the board and management:

• The almost-gravitational pull of attention away from strategy, vision, and mission, toward micromanagement. The executive director made a plausible argument for her diversity initiative based on strategy and mission. But the board chair took the conversation down into the weeds.
• Trust must be the cement that binds together a manager and a board. The conversation above suggests that the board’s culture may be rather transactional, turning decisions into negotiations, frequently with win-lose outcomes. An alternative approach would be relational, where the board sets broad expectations and mandates, and periodically assesses the executive director against them.

Fortunately, there is quite a lot that an effective board can do to avert a deteriorating situation like this one and boost its impact. Based on our field experience as NGO leaders and board members, and a broad review of published research, we offer this list of 10 board management best practices:

1. Focus on core competencies to avoid mission creep.

The most successful NGOs are disciplined about resisting mission creep. They focus on core competencies that anchor their contributions within a specific niche of policy debate and service delivery. They work with employees and donors to build and renew support for their missions.

2. Plan strategically, informed by research.

The best NGOs have the institutional capacity to look both backward and into the future. They adopt lessons learned from previous campaigns and adapt them to changed circumstances, conduct targeted research on the organization’s role in the policy advocacy process, and cement relations with board leaders. They engage members and staff in a thorough and transparent strategic planning process.

3. Invest in internal, external, and crisis communications.

New media platforms have had a profound impact on both recent American elections and the legislative process. But while the ability of NGOs to mobilize voters and impact even opaque elements of the legislative process has improved, many NGOs suffer from weak internal communications. They are ill-prepared for press scrutiny. Effective advance crisis planning, as well as the ability to engage both internal and external audiences in a timely fashion, can prove essential elements for success.

4. Manage board relations and succession planning.

NGOs benefit from agile leaders who also plan ahead. Leaders who have freedom of action, yet who are fully accountable to an engaged board of directors, improve their organizations’ prospects for sustainable success. Leaders with good intelligence on board factions and their concerns are less likely to be blindsided by internal disputes. The best leaders also avoid the dangers of “founder’s syndrome”—the debilitating notion that one individual alone is essential to the past, present and future of the enterprise.

5. Set development benchmarks and hold onto membership ties.

Ideological passion is no substitute for professional development programs. Establish clear measures for fundraising progress. Sustainable organizations also renew ties to members even as their advocacy efforts and service delivery evolve.

6. Establish accountable, adaptable leadership.

NGO staff often include activists who are not enamored of hierarchical management structures. Flat organizations emphasize the value of individual contributions. Volunteers and grassroots members can be force multipliers. However, no amount of cause-driven passion can long overcome management that lacks accountability (including performance metrics), or fails to adapt to changed circumstances.

7. Shore up human resources and legal guidance.

NGO leaders—especially at immature, start-up organizations—can be afflicted by the illusion that unity in pursuing a cause can overcome a failure to adopt sound legal compliance practices. Organizations that succeed over the long term combine the passion of issue-driven policy advocates with professional employee management. Lobbying laws are complex and change often. Protection of the NGO enterprise requires solid human resources, tax, and accounting professionals. These can prove especially important when niche organizations branch out to develop new revenue models as social entrepreneurs.

8. Build a strong coalition of stakeholders and gain their input.

Civic activists are often driven by righteousness and moral clarity. However, the most effective NGOs demonstrate the value of knowing their stakeholders and developing new allies. Creative bridge-building is sometimes the key to developing a sustainable model.

9. Be sensitive to organizational culture.

Effective NGO leaders are sensitive to the particular bureaucratic culture under which their organization thrives. Even closely linked advocacy groups and service organizations can have remarkably different ways of engaging external audiences and internal teams. Leaders of effective NGOs tend to be keenly aware of the structural weaknesses that can inhibit performance.

10. Recruit talented team members.

NGOs leverage the passion of citizen activists and association members to advance public policy goals—goals the government often neglects. However, no amount of issue-driven advocacy can ensure success if an organization overlooks its most important element: the people who work there. Effective NGOs resemble a sound baseball team roster; the best deploy different players for roles where management believes they can excel. Recruitment and retention of skilled individuals in NGOs mirrors the MBA mantra for corporate enterprises: the notion that “talent is destiny.”

Ultimately, these best practices require a fair degree of self-reflection on the part of the board. Boards must develop along with their organizations. This may require new skills, perspectives, and board culture.

Act III: When the board reconvenes the next day, the chair tells the other members, “I didn’t sleep last night, reflecting on our how our meeting ended yesterday. Let’s defer the formal agenda until we have resolved the bigger questions before us: Has our NGO outgrown the ‘hands on’ culture of our board? Is it time for us to let the executive director and her team actually direct? If so, what’s our role as a board?”

Better board governance drives bigger impact

The role the board plays in higher NGO performance is often overlooked. Our melodrama highlights the friction that many boards endure as the organization they govern matures from a little team associated with passionate founders and funders to a professional group powered by best practices. Such episodes remind us that boards must evolve alongside their NGOs.

Research on NGO board best practices remains a fertile area for development. How do boards drive NGO success? Why do some NGOs develop sustainable models while others have a half-life measured in months not decades? What is the “secret sauce” of strong NGO managers? How do mature organizations avoid the perils of mission creep or founder’s syndrome? Can NGOs develop profit-generating revenue streams without compromising their goals?

Act IV: The board’s debate over its roles and management responsibilities proves tumultuous. By the end of the day, two of the old-model directors resign. But the rest of the directors agree to the outlines of a new model, one that the chair calls “noses in, fingers out.” In its most simplistic form, the model entails careful review of management’s strategic plan and budget each year, as well as reaffirmation of the executive director’s appointment. The board will also review progress against that plan, and offer questions and unsolicited advice that might come to the board’s mind. And the board will give the executive director a formal annual performance review. But gone are the month-to-month approvals of individual expenses, the unexpected drop-ins by board members that absorb staff time and attention, and gossiping of board members with rank-and-file staff behind the executive director’s back.

NGO boards can stray too easily from the path of effective governance. And when they do, the impact on the NGO’s performance can be devastating. Fortunately, it is possible for boards to recover their effectiveness. The 10 practices outlined here can help illuminate a more-effective path.

Read more stories by Robert F. Bruner & Gerald F. Warburg.