Thursday, November 03, 2011

The Art and Science of Building a Board

Yesterday, our GSSE MBA students were fortunate to have Anne Marie Burgoyne do a guest workshop on governance and capacity building. I had some lame title for her talk, but what I should have called it (and what this post is about) is: "What Boards Do and Why it's Important." The subtitle might be, as Anne Marie put it, "The Art and Science of Building a Board."It is one of those under-taught and under-thought areas of new ventures.


First, a bit more about Anne Marie. She works for the Draper Richards Kaplan Foundation in San Francisco. Basically, she helped Bill Draper*, Robin Richards and Jenny Shilling set up a foundation that took the disciplined approach they had used in the venture capital business over to the social sector. As with traditional investors, they sought to "Find, Fund & Support" social enterprises. Their portfolio is impressive, a who's who of changemakers: Kiva, Living Goods, Room to Read, Vision Spring and The Mission Continues. When you talk to DRKF entrepreneurs, they will tell you the foundation provides much more value than the money. And it is in these conversations that Anne Marie's name often comes up. She is, to put it bluntly, a world class non-profit board member.

As with any venture investor, Anne Marie can only be on a few boards (eight these days). And to get her on your board, you need to win a fellowship from DRKF, which is no easy feat. Fortunately, she is willing to share how DRKF works with portfolio companies. And I am going to try to share what she shared with us yesterday.

She started with a story of how Andrew Youn, founder of One Acre Fund, began with a board that came from a sign up sheet he had posted. Over just a few years, just as he went from 30 to 30,000 farmers served, he also built a strong board. There were some gaps in his early board (no one else had been to Africa), but they all were very passionate, and a number were hands on, willing to help do what was needed. She compared boards to chapters in a book, with different boards performing different functions as a start up grows up.

Anne Marie also told a few cautionary tales. The general theme was that social entrepreneurs often wish to exercise strong control over the organization's mission, and are often afraid to give over this control to a board. This behavior may end up reducing the organization's impact in the long run. Cautionary tale #1 involved an entrepreneur that decided a board wasn't needed. Over time, funding dried up, because funders perceived that no one had a fiduciary duty toward their donations. Cautionary tale #2 was of a talented board member who resigned because the board didn't grow with the organization. The board member grew tired of being the lead on everything, and wanted other talented people to join and share the load. But the founder wouldn't support growing the board.

Anne Marie discussed that there is often an explicit "Give or Get" role for non-profit board members. You either need to personally donate $X or be able to go get it from your network. Her advice is that if this is expected, it needs to be explicit, and is best led by the board chair.

She went on to discuss that successful organizations can have different types of boards, such as "kitchen cabinet" boards that were brought together for their perspective and ideas, but not funding (here the founder was very good at fundraising) to "fundraising boards" where board members are expected to bring $25k/year to the organization.

Most of the workshop was breaking down what boards do into 4 core functions:
1) Composition (Members and Logistics). Key takeaways: explicit job descriptions for board members, true north alignment with mission, regular meetings, set board meeting calendar.
2) Governance (Policies and Financials). Key takeaways: maintain 501c3 status, identify key policies and risks, quarterly financial reports (if you don't get these, points to a systemic problem); calendared budget planning process.
3) Planning (Strategy Development). This is the function most people think boards do. She is a fan of dashboards for financial issues and impact.
4) Execution (Staff Support and Fundraising). Key takeaways: Executive Director reviews key, support (not do) top management searches, help executive set compensation philosophy, set fundraising targets (and board members should be willing to support these by opening their personal network).

She also suggested that once boards start functioning well with the basics they begin to set their agenda based on Bill Ryan's 3 areas of governance: 1) fiduciary- do these in committees and have these on a "consent agenda" where they get approved rapidly without much discussion at the beginning of the meeting, 2) strategic- these are the dashboard items, and if information is distributed prior to meetings, less information sharing is required, and focus can be on discussion and decisions, 3) generative- these are items are for the "big questions" facing the organization, and where broader longer discussions can occur.  As Anne Marie said, "you may only get your board to have 10 hours of discussion a year- it is your job as a leader to make sure you prioritize these hours. If a topic gets an hour, then it should be a 'top 10' issue."

I know Anne Marie helped our students think differently about building a board. And I hope this post helps you to creatively think about how to begin to build (or rebuild) your board. If you have more questions about this topic, post a comment, and I will see if I can get Anne Marie to provide some answers. 
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*It is hard to briefly label someone like Bill Draper... how's this for a bio: "In 1965, Mr. Draper founded Sutter Hill Ventures. From 1981 to 1986, he was President and Chairman of the Export-Import Bank of the United States. Thereafter, Mr. Draper was the head of the United Nations Development Program from 1986 to 1993...." Brief. Modest. Weighty.  If you want to read more about the how and why of DRKF, I'd encourage you to read Mr. Draper's book "The Start Up Game"- Chapter 8 is about the foundation's founding and work, as well as case studies of some of the organizations mentioned above. 

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