2009 Nonprofit Board Governance Trends - Highlights of Grant Thornton Survey and My Commentary

One of my most popular posts has been a summary report of the 2007 Boardsource Governance Index, but 2007 is a long time ago and a lot has changed since then. I haven’t seen a Boardsource update, but Grant Thornton has been publishing an annual Nonprofit Board Governance Report and this post provides a summary of the highlights along with my own commentary. (You knew you had to get that too.)
There are two big items that have influenced and put a spotlight on governance findings in this year’s report: The revised IRS 990 and the bad economy. I have written about their impact on nonprofits many times on this blog and I don’t plan to expound on either in this post.


This survey of 459 top level nonprofit executives and board members was taken in October – November 2009. 71% of respondent organizations had annual revenues less than $50 million. There was no lower breakdown. This blog usually tends to focus on smaller organizations and sometimes the statistics are different for smaller organizations so keep that in mind as you review the results. Also I am not reporting on data in the report that tends not to be a major issue for smaller organizations such as scrutiny of executive compensation and investment trends.


Respondents answers to the issues they addressed because of the recession were not different than several major studies conducted earlier in the year. This is a no brainer. Respondents essentially said, “We had less income so we made tough choices and reduced, staff, programs and other expenses.”  It is sobering though that 51% reduced staff even as demand was rising.

          Issues Addressed in 2009 due to the Recession
          Reduce Expenses                                          87%
          Reduce Staff                                                   51%
          Reduce or Eliminate Noncore Programs    40%
          Other                                                                28%

Role and Structure of the Board
78% of the Boards have between six and thirty members. There does not seem to be much change in board size from year to year. There is, however, a change in the percent of boards with term limits - increasing from 74% last year to 78% this year. Clearly this issue is being looked at because the new 990 asks about it even though there is no right or wrong answer.


Of particular interest to me, is this breakdown of committees versus what respondents said was the primary focus for their Board today. 30% said that strategic planning was their primary focus followed by Fundraising at 21% and ensuring effective programs at 19%.  Even though strategic planning was listed as the top area of focus for the board, substantially more boards have a fundraising and program committee than a strategic planning committee.

          Types of Committees Board Have         
          Executive                 88%
          Finance                    83%
          Audit                         65%
          Nominating               58%
          Fundraising              55%
          Program                   39%
          Strategic Planning   32%
          Governance              30%


One startling change over the last 3 years is the composition of the audit committee. In 2006 only 24% of respondents said there was a CPA on the audit committee and today 74% do. There is also a substantial increase in interaction between the audit committee and auditor as clearly Board members are taking this responsibility more seriously. I have also seen in my work with small organizations more interest in having a CPA on the Board. Everyone used to want lawyers and people with experience in fundraising, but having a CPA on the Board is the new must have.

Training
In contrast to actual committees respondents reporting board training was quite impressive.  I was surprised at how far down the list fundraising was.  And just to give a little self plug - I do Governance and Strategic Planning training.
          Areas of Board Training
          Governance              72%
          Financial                   70%
          Strategic Planning   60%
          Programatic              56%
          Fundraising               51%

Evaluation, Evaluation, EvaluationThe numbers are up in every form of governance evaluation you can think of – board assessment, CEO/CFO/Development Officer evaluation, compensation and other policy reviews and of course review and sometimes change for everything asked about on the 990. 78% of respondents said that their Board or audit committee have reviewed their 990. As little as three years ago when I mentioned a 990 to a Board, most people had no idea what I was talking about and someone usually said, “I thought as a nonprofit we did not have to pay taxes.” Well, even if you don’t pay taxes you do report to the IRS. In 2009 most Board members have heard of the 990 and see it as an important document they need to know about. Although every accountant I have heard talk about the new 990 sees it as evil, I think it is driving an incredible improvement in governance by Boards. There is definitely a new sense of responsibility among Board members.

The percentage of Boards with a Whistleblower’s policy has increased dramatically from 60% in 2007 to 84 percent in 2009 but I am surprised it isn’t even higher and concerned that smaller nonprofits are lagging far behind in adopting this important policy. It is one of the few provisions of the Sarbanes Oxley Act that nonprofits are not exempt from.

This is an excellent report by Grant Thornton and you can download it for free from their website.
Grant Thornton 2009 National Board Governance Survey for Not-for-Profit Organizations

Social Media for Nonprofits Workshops in March

In March I will be presenting two workshops on Social Media and Nonprofits sponsored by the Partnership in Philanthropy. I am designing these workshops to be informative, helpful and fun. They are low cost at $30 each or $50 for both. You get a three hour long workshop with me in person. Most one hour webinairs cost more for goodness sake. Register today - I'd love to meet you in person.

Part 1: Social Media for Nonprofit and Civic Organizations 101
This workshop provides an overview of how nonprofits can use online social networking including Facebook, LinkedIn, Twitter, Flickr and YouTube. Learn how to “listen online” and use what you learn to become more effective in your online strategies. Learn how to increase traffic to you website and get more mileage out of your website. What tools are right for you? What are reasonable goals for your online presence? How do you measure success?

Wednesday, March 3, 2010
5-8 P
$30
HSBC- 407 Main Street
Chatham, NJ
Series Cost: $50

Who should attend:
Anyone interested in learning about the new technology and how to set it up. This is open to nonprofits, civic organizations or anyone who volunteers and would like to jump on board!
Light refreshments will be provided courtesy of HSBC.

Part 2: Marketing with Social Media for Nonprofit and Civic Organizations
Social Media is an exciting platform that presents new marketing opportunities for nonprofits. Social media and online marketing offer a wealth of low-cost opportunities using tools such as Facebook, LinkedIn, Twitter, Flickr and YouTube. Whether you are an arts or social services nonprofit, marketing your services is essential for success. What are the trends? What works best for small nonprofits on a small budget? How to get started, develop a strategy, measure success and more.

Wednesday, March 24, 2010
5-8 PM
$30
HSBC- 407 Main Street
Chatham, NJ


Who should attend:
Anyone interested in or responsible for creating public awareness of an organization; Board, staff, volunteers. This is open to nonprofits, civic organizations or anyone who volunteers and would like to jump on board!

Sign up for both and get a $10 discount.
Series Cost: $50

Contact: Joyce Wackenhut
973-701-9810
jwackenhut@pipnj.org
Partnership in Philanthropy website: pipnj.org

Idealist.org Needs Your Help

If you are reading this blog you must be interested in the nonprofit – or if you prefer – community benefit sector. And then you MUST have heard about and probably have visited Idealist.org. In my work I sometimes help nonprofits with an executive search including developing a job description, advertising the job and working through the selection/hiring process. It has been the case 100% of the time that well qualified and the most candidates respond through Idealist.org.

For anyone who has looked for a job or needed to fill a job in this sector Idealist is the go to website. Idealist also runs nonprofit job and volunteer fairs in cities throughout the country and provides a huge nonprofit resource database. I was proud to contribute two of my blog articles to Idealist’s project in October - a daily blog for Nonprofit Career Month.

Well it turns out that 70% of the funding for Idealist came from charging a mere $60 to post a job ad on their site. And as we all know there was a lot less of that in 2009. Idealist has done the kind of cost cutting which has become commonplace for all of us but still was running about $100K in the hole every month in 2009.

They were about to hit the wall, when Ami Dar, founder and Executive Director, decided to bring his cause directly to us – the people who benefit from Idealist. Idealist has 70,000 visits a day just to put it in perspective. It is a 501c(3) but they have not really reached out for individual donations before this. Now they need our help.

The goal is to raise $500K so that they will have some breathing room as they rework their earned income model. If you have ever used Idealist, you know how valuable it is to the nonprofit community. I encourage you to contribute now to keep this nonprofit resource jewel alive and well. None of us want to see it disappear. You can read more about the appeal and Donate Now here:

Visit the Idealist website to see the appeal update and to Donate Now

Lessons to Learn
There are a couple of lessons to be learned by this real life example.

Lesson #1: Even a big organization can get in trouble by putting too many eggs in one basket. 70% from job ads? None from individual donors? Ami – What were you thinking – You probably have personally advised nonprofits against such a model.

Lesson #2: Idealist had a deep email list, a strong social networking presence and outstanding website development skills. They launched their first ever individual giving campaign using all of these in concert with each other and within a week 4383 people have donated over $146,000. Can social networking work for nonprofits? You bet it can but you have to have your ducks in a row and be prepared before you make a serious launch. And, oh, please note they are NOT using Causes on Facebook.

I KNOW that Idealist will survive and recover but lets all do our part to make it happen.

Marion