The business models of nonprofit organizations are changing fast, but boards of directors are far behind the curve in making governance changes to keep up with the shifting landscape.
We are seeing massive disruption in every nonprofit sector due to technology, regulations, and many other factors. Donors and foundations have been trying to encourage nonprofits to prepare for this disruption for the last 5-10 years. Unfortunately, the pace of change in all nonprofit sectors is very slow. Donors and foundations have been trying to influence change through their grant-making strategy, but that too has been slow to evolve. The trend is moving away from small ($2,500-$5,000) grants to larger, more impactful gifts. With the increasing average grant size comes a decrease in the total number of grants available, making competition for grants tougher than ever.
Funders are also looking to ensure that nonprofit organizations will remain viable in the years to come. As a result, many of them are focusing more heavily on the following four areas as part of their giving strategies:
1. Mergers, collaborations, and shared services: Large numbers of nonprofits are fighting for the same philanthropy. These organizations must find ways to work together with other like-minded nonprofits to leverage talent, share resources, and improve cost-effectiveness.
2. Business model changes that integrate technology: Greater capacity, better resource management, and improved service can come from technology solutions, which must be adopted at a quicker pace.
3. Ability to measure impact and capture data: Nonprofits must be able to clearly quantify how their programs are moving the needle and fulfilling their mission. They must establish credible metrics and capture reliable data to support higher-quality decision making.
4. Building capacity to ensure a strong and capable workforce: Funders recognize that nonprofits need to attract talent to achieve their mission. Most organizations are stretched very thin with staffing resources to tackle new initiatives.
These shifts in funding strategy are not enough to fully drive change. Nonprofit organizations must take on the challenge of becoming more dynamic in the rapidly changing marketplace. This journey begins by building a breakthrough board of directors capable of aligning their organization with future realities.
Great nonprofit organizations build great boards. Boards can either maintain the status quo or lead their organization to new levels of governance, management, and achievement. It is more important now than ever for nonprofit organizations and their boards to be dynamic and adaptable. The boards of the future will need to be more capable, savvy decision makers and stronger players in driving change and adaptation. Boards must be able to think beyond traditional governance to ensure the viability of their organization.
In the coming five blog posts (August–December), we will deliver insight into our 5 Steps for Building Breakthrough Boards, starting with step 1 in August. The 5 steps are as follows:
- Explore: Finding the right board candidates
- Enroll: Ensuring a good match
- Orient: Harnessing passion and commitment
- Engage: Leading fun and exciting meetings
- Evaluate: Understanding how to succeed and produce