The headline is not intended to scare you off. Admittedly, governance is a notoriously dull topic, made worse by the enthusiasm of governance wonks. Charity governance is rarely a matter considered, at least overtly, by an estate donor when planning a gift by will. But strong governance is essential to good charities.
Governance helps determine the current and future health of a charity. Will a charity survive the next 20 years? Will it be effective? A lot depends on good governance, but good governance is hard to spot. Wise donors, however, investigate the charities they plan to name in their estate plans. Basic interrogation helps.
Five Board Types
There are five common “types” of boards that can lead to charity governance fails. Some types are difficult to identify. Others – due to the behavioural ticks – may self identify if you know the tell-tale signs.
-
Operational boards
About two-thirds of Canada’s 86,000 registered charities are volunteer run and have few if any employees. The directors on the board are hands on. They are involved with both oversight and daily operations. Sometimes it works very well – which is a feat of dedication and civic engagement – but charities with operational boards are inherently unstable. It depends on who is running the show. Capacity isn’t built in; it changes with each wave of volunteers.
-
Dominated boards
Some boards are subservient to a charismatic founder or Trumpian chairman. These figures have strong personalities and big visions, and, frankly, they often have great short-term results and reputation. The dominant figure is often a doer that holds too much power and sucks the oxygen out of the room. The board, as a result, lacks a culture of debate, resolve and independent thinking. Checks and balances are weak. You may recall a noted founder-led Canadian charity with this profile that imploded during the pandemic. When a founder leaves, collapse or doldrums are common.
-
Divided boards
Some organizations and boards are perennially beset with divisions. That may be due to social or political issues, personalities, or lack of basic good governance. Or all the above. These are boards that often lose focus on the charitable purposes and day-to-day operations and furiously bump heads and spar over hot topics. Divided boards are often large boards with more than 12 members. They often have one-issue directors and high director turnover. If the charity is prominent, sometimes the internal clashes even make headlines, but usually conflict and dysfunction happen out of sight. Until exhaustion sets in.
-
Grey boards
As someone with his fair share of grey hair, I want to clarify that this category is about director diversity, especially age diversity. The label is not intended to disparage the contributions that individual older directors make. One sign of an organization running of fumes, however, is a uniformly grey board. Renewal and succession are that much more challenging. Fresh ideas and mission-driving energy may be less abundant than in times past. Boards of future-oriented charities have diversity of views, life experience, professions, sex, ethnicity, and age.
-
Perfunctory boards
A perfunctory board is efficient. It is compliant, legalistic, rule driven, and sees its purpose as being about making decisions. Approvals, oversight, box checking. It is often not strategic – and doesn’t spend enough times considering big questions about impact and long-term relevance. This may be the toughest board to identify from the outside. Everything is orderly, professional, and compliant. But is it enough? Evidence of a perfunctory board is an organization that is not continuously improving and lacks strategic clarity.
Advice for estate donors
My advice for the prudent estate donor – or at least those that care about the future of their chosen charities – is to engage with the organizations that interest you. Read websites, annual reports, and audited financial statements. Understand strategic directions, mission, and impact. Review director profiles. Talk to leadership. And then ask yourself if the charity will be thriving when your estate donation arrives in 15 or 30 years. Governance is an imperfect, evolving process, not a static state, but stable and impactful charities are always well governed.
0 Comments