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From an Expert: How to Build Your Board

With 30 years of experience managing and reporting to boards, Carlyle Singer walks us through what you need to build a strong nonprofit or social enterprise board.

October 18, 2020

Many organizations face a crucial question of how they will build a board of directors that are genuine champions of their work and committed to their cause. Whether they’re just beginning to think about this next step, already have an informal board in place, or are trying to learn how to better manage an existing board, this insight will help tackle questions at any stage of board construction and management. Sourcing questions from our global community, we sat down with Carlyle Singer, the President of Acumen, who holds over 30 years of experience managing and reporting to several boards from corporate fiduciary boards to institutional investor boards, and most recently, the board of Acumen.

How to Construct your Board 

What is the difference between an advisory board and a board of directors, and what is the right time to transition from advisory to a formal board?
Abu Musuuza, Co-Founder & CEO, FLIP Africa

This is a question of size and accountability. Advisors are great, but they are an informal group. The management team and the CEO reach out to Advisors when they need their help or their Advice, usually on a one on one basis and rarely as a group. When you create a board, you start a formal reporting relationship between either an Executive Director (if you're in the non-profit world) or a CEO with the board. The board has the responsibility to guide the organization, monitor the management of the financial resources, and manage the leader — either the Executive Director or the CEO — which means they actually can remove the leader if they're not doing their job. So think carefully about where you are in the equation and when it is appropriate to begin reporting to and being held accountable to a board. As you move towards raising capital and bringing in investors, you will want to have an established board.

When constructing the board, you want to think about the profile that would be valuable. What are the qualities and skills that you need? For example, board members spread the word about the organization, and become ambassadors for you as you raise funds. They can also provide strategic guidance and develop metrics to help you stay accountable to your goals.

The timing of transitioning an advisory board to a board of directors should be dictated by when you’re hoping to raise capital. If you’re a growing for-profit company that is raising money in the 12-18-month future, I would quickly move from an advisory to a formal board. If you’re a small organization, I would keep the board small: three people with the CEO and CFO reporting to them. And be sure to track the board minutes and develop board metrics that are reported so that future investors can see a progression.

When you are composing an informal board, should it mirror what the formal board will look like in the future?
Abu Musuuza, Co-Founder & CEO, FLIP Africa

Yes — you should have people on your informal board or advisory that are potential board members. You should use your informal advisory to experiment with the profiles that you want on the board.

Remember that these members need to be ambassadors for your organization. Ask yourself: Do you need fundraisers with access to capital? Do you need a really strong finance person who understands where capital comes from? Or do you need a veteran and thought leader from your industry?

In an example for a technology company, it might be critical for you to have technical knowledge on your board, so that there is someone that understands there are multiple trials and errors required to get to the right solution. You can go across sectors, i.e. have generalists on your board as well, but in most cases it is helpful to have sector or product-specific experience in one member of your board.

For small organizations that have an established board but are growing, how do we recruit the right people and the right amount of board members?
Daisy Rosales, Co-Founder & Executive Director, Brio

Recruiting for board members is like recruiting for senior managers. You want diversity: diversity in skill sets, diversity in networks, and diversity in profiles, because who's on your board reflects a lot about your company. Outsiders looking in, like funders, make judgements about your organization based on who's on the board. So make sure you plan for the skills and profiles that you need.

Next, write up job descriptions about what you're looking for, including commitment expectations. You’ll need to consider time, number of meetings per year, and how you expect them to prepare for these meetings. You’ll also need to outline how long you want them on the board. Is the term three years, three years with one renewal, or five years with no renewals? If you're a young organization, shorter is better with renewals, so you can try people out and create windows to invite them off. This helps with the difficult conversations for those board members that you don’t feel are contributing. It is much easier not to renew a board term than having a conversation that essentially removes them from the board.

Board size depends on the size of the organization. A smaller organization usually needs a smaller board. The more members you have, the more time it takes, as you not only have to manage each board member individually, you also have to create a sense of team. The strongest boards have a sense of team as well as a sense of individual contribution.

How to Manage Your Board  

What strategies or processes should we use when transitioning board members on or off the board, and how frequently should we consider doing this?
Caren Wakoli , Founder & Executive Director, Emerging Leaders Foundation

It's really important to set up your board with terms. Creating windows where you can have transition conversations is very important. Some people join boards just to put it on their resume and make themselves look good, but they're not really contributing. We have terms that provide us a window every three years to have a conversation; one that acknowledges what a board member has contributed, and where there are opportunities for greater contribution. It can also acknowledge if the board membership is no longer a good fit —  those conversations aren’t easy.

There is a whole management piece of the board that's actually very important and requires time and effort, relationship building, and having honest conversation about what's going well and what isn't. Inviting members off, if done correctly, should prompt them to say, 'I wonder whether, I should step down.' If you’ve been managing them correctly and sharing your concerns, they’ll likely give you that opening. So it’s a two way street, they want to help you, but you also have to help them.

How might we think about forming board committees while maintaining a sense of team?

The bigger the board, the more important it is to have subcommittees. There are three subcommittees even on a small board that are absolutely critical to formalize. First, you should have a compensation committee that reviews compensation structures and benchmarks. You should also create a financial audit committee. Whether or not you have a formal or non-formal audit once a year, you should go through your numbers with a subcommittee or a specialist. Lastly is the development committee or strategy committee. If you're non-profit, the development committee is hugely important because it's the fundraising arm as well as the committee that will help recruit new board members. If you're in a for-profit, the strategic committee can help think through your strategy, product and market fit, pricing, and more.

Committees are for technical governance issues that need focus, and you can mix people into multiple committees depending on size. The larger board is the decision making body, and listens carefully to committee recommendations where appropriate. For example, the Finance and Audit committee might be presented with the budget to review in detail. They then make a recommendation to the larger board who can formally approve it. Committees give the board a sense of security that issues have been reviewed in detail, but they don't divide your sense of group.

At what point should I evaluate my board, and how do I conduct effective board meetings?
Victor Odhiambo, Founder, Garden of Hope

I would evaluate your board once every two years and include surveys — examples are easy to find online. If you have a small board with a Board Chair, the Board Chair can have a discussion with each board member. The questions revolve around: ‘How well is the organization doing in keeping you up to date and having effective board meetings?’ and, ‘Do you feel valued? Are you listened to, and do you feel you're making a contribution to this organization in the way that you want to make a contribution?'

In terms of board agenda, I prefer to divide the board meeting into two sections. The first section is about performance and includes metrics, initiatives, and a discussion on how well you're doing against goals and objectives. Consider these questions: How are we doing? What are our short term concerns? And then lay out the strategic question that is on your mind today.

I feel strongly that board members have a board package with at least three business days (not including the weekend) to review. You should give your board members time to read material and potentially do some research, so they come to the meeting prepared. Then, you can shorten the performance presentation by saying, 'We sent you a presentation on our performance metrics, here are the highlights. Does anybody have any questions?' And then spend the rest of the meeting on strategy. There is nothing worse for me than a board meeting where they tediously go through every metric and describe them all. Focus on key metrics and the two things everyone should take away from any given chart.

Additionally, you have to be intentional about how you lay out strategic questions. They need to be open-ended and there needs to be enough background that a board member can opine. Give them an update about what's happening in the short term, then move to a broader discussion. For example, you can frame out a question, provide the background, and then say, 'My recommendation for something is this, here are the pros, here are the cons. If this were your organization, I’m interested to know where you would end up in that question.' Sometimes they want you to make a recommendation, and sometimes they don't. You just have to feel your way there.

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