By Gordon J. Campbell
President & CEO, United Way of New York City
According to data reported by the Foundation Center, the nation’s more than 75,000 grantmaking foundations distributed nearly $43 billion in grants last year. In 2007, foundations in the New York metro area distributed nearly $8.4 billion in grants worldwide. Government, of course, is an even larger source of funds for nonprofits in our area. The City of New York, according to The New York Times, annually awards nonprofits $4 billion in competitive contracts.
Given the magnitude of these investments, I think it’s fair to say that funders, whether they’re foundations, government agencies, corporations, or individual donors, have a vested interest in the governance of the nonprofits they support.
After all, a nonprofit board of directors’ composition, structure, practices, and institutional culture can make or break an organization, particularly in times of economic stress, or at organizational transition points. Even during “normal” times, the board is ultimately responsible for a grantee’s financial stewardship, its level of transparency, accountability and risk management, and the nonprofit’s overall mission, strategic direction, and performance, including the performance of the executive director.
Despite the billions of dollars distributed to nonprofits in our region each year, and the tremendous influence, for good or ill, that a board can exert over an organization, many funders are not certain about how to address the topic of governance with their grantees.
Many grantmakers, aside from reviewing an organization’s list of board members and their affiliations, decide not to devote attention to how the board is actually functioning or to the evolution of its membership over time. Such grantmakers may see themselves as outside investors in the nonprofit’s mission, electing to defer to the board regarding internal governance matters. Other funders take a more active role, offering, for example, technical assistance designed to evaluate and improve board performance. A smaller number of grantmakers may take a more “hands on” approach, working directly with the grantee on developing its board, or even recommending specific individuals as possible new board members.
Each of these approaches is understandable, and there is no “right” way for a grantmaker to deal with the governance of its grantees. The grantor-grantee relationship, and the power dynamic it implies, can be a delicate one, and most grantmakers make efforts not to be perceived as heavy-handed, especially when it comes to “control” issues such as governance.
As a result, most nonprofit boards are left to their own devices. To a large degree, this is how it should be, and how the legal framework envisions nonprofit governance: the board of directors is provided broad parameters and granted much discretion. This degree of latitude, this ability to make independent decisions that will contribute to an enterprise’s success or failure, closely resembles the authority given to directors of business corporations.
Decisions made by the directors of public corporations, however, are largely issued within a system of checks and balances: rating agencies, the financial press, shareholders and their advocates (including lawyers), and the private sector analogue of the grantmaker, the institutional investor. Admittedly, portions of this system failed to provide adequate protection, as evidenced by the current economic crisis—the worst recession since the Great Depression. But the fact remains that it generally succeeds in informing and sharpening corporate decision-making in the private sector. No comparable system of checks and balances exists for exempt organizations. It should come as no surprise, therefore, that certain venture philanthropists, for example, go so far as to place foundation representatives on grantee boards in an attempt to impose certain checks on nonprofit decision-making. This tactic, however, is not acceptable to the vast majority of grantmakers.
In an attempt to provide grantmakers and grantees with a solution to improving nonprofit governance in a manner that respects both the nonprofit’s autonomy and the grantmaker’s legitimate interest in good governance, United Way of New York City developed BoardServeNYC.
Launched last October after extensive consultation with grantmakers, nonprofits, and governance experts, this initiative provides an intermediary service, to which a grantmaker can refer its grantees without directly inserting itself into the grantee’s governance issues.
Here’s how it works: any nonprofit located anywhere in New York City visits www.BoardServeNYC.org and applies. (Foundations seeking new trustees are also welcome to apply). If accepted, the nonprofit is invited to a three-hour training session that addresses board development and provides performance improvement tools. Once the nonprofit completes the training, it becomes eligible to recruit new board members from the BoardServeNYC pool. These candidates, numbering over 300 (and growing), are a diverse group of professionals who wish to join and help strengthen local nonprofit boards. Each candidate must apply to BoardServeNYC, undergo a screening process, and, if admitted, participate in a comprehensive training in preparation for effective governance.
Once the nonprofits and board candidates have finished their respective trainings, they are only then eligible to interact with one another. To facilitate this, BoardServeNYC organizes large-scale in-person board recruitment events every other month, and provides a password-protected online registry, where both nonprofits and candidates can quickly and conveniently search for suitable matches and initiate contact.
By December, BoardServeNYC will have prepared over 500 individuals for board membership at hundreds of nonprofits pursuing a wide variety of missions. The initiative is a partnership with NYC Service, and is funded by American Express, The Mayor’s Fund to Advance New York City, and other institutional funders. There is no fee for nonprofits, and only a modest application fee for individuals.
Closing the gap between what grantmakers would like their grantees’ governance to be, and what that governance actually is, is not an easy task, but we believe that BoardServeNYC is a big step in the right direction. Please feel free to visit www.BoardServeNYC.org and to comment on this blog. I’d welcome your thoughts and suggestions.
Gordon J. Campbell joined United Way of New York City as President and Chief Executive Officer on September 24, 2007. Mr. Campbell was Chief Executive Officer of Safe Horizon, the nation’s leading victim assistance organization, from 1998-2007. Prior to joining Safe Horizon, he served as the Commissioner of the New York City Department of Homeless Services. Mr. Campbell also served as the Chief of Staff to New York City’s First Deputy Mayor. In over ten years in New York City government, Mr. Campbell was the Deputy Director of the Mayor’s Office of Operations, the Director of the Human Resources Administration’s (HRA) Medicaid Transportation Office, and the Director of HRA’s Division of AIDS Services, as well as one of three Mayoral appointees to the City’s Procurement Policy Board. Previously, he served as a prosecutor, labor attorney, and Chief Administrator for the Seattle City Attorney’s Office. Mr. Campbell received his JD from the University of Washington Law School and his MPA from the John F. Kennedy School of Government at Harvard University. He formerly served for seven years as an adjunct Assistant Professor at NYU’s Robert F. Wagner Graduate School of Public Service. Mr. Campbell was the Chair of the Human Services Council, and serves on the boards of numerous community and civic organizations.