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Boards of Directors, Strategy and Funding

I am not sure how many really good boards of directors exist in the social sector here, never mind exceptional boards. There may be differences between the voluntary, community and charity parts of the sector in this regard, but overall experience has taught me that governance is a major issue. 

Some of this is not the fault of the sector, as in so many cases board membership is imposed by funding streams, in particular government departments or government agencies. Now many non-government funders such as the new breed of social philanthropy funds are also seeking board membership.

Representative boards, often loaded with stakeholders, might seem like a good idea.  Yet without training or even a basic understanding of their role of directors, such positions often lead to disaster. I have advised social enterprises and have been asked to attend board meetings over the years and have often seen such issues first hand. Talking to colleagues in a class I was teaching on Friday morning it seems that I am not the only one. 

Another colleague of mine pointed out last week that it is too often the case that funders, offering an amount of money for a particular tactical direction, can lead organisations astray – mission drift. The temptation to take funding, particularly in these recessionary times, is often overwhelming.

So organisations adjust their objectives and the drift begins. But what happens when the funding runs out, the funding organisation (including governmental entities) disappear into the sunset and the social enterprise is often left with a high risk strategy not of their making? 

A strong board needs to be in place to ensure that these events don’t happen. We have seen more attempts to match mature, wise potential directors with social sector organisations in recent years. But the gene pool we seem to be using is very small and more needs to be done to entice potential directors from the commercial sector. I am not saying that we ‘load’ the boards with commercial people, but a few carefully chosen directors can make a huge difference.

Strategic direction and adherence to the mission needs to be as important in board meetings as the oversight objectives. It is all a matter of balance.

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