Where is your strategy?

Twelve per cent of not-for-profit, for-purpose, community sector boards do not do strategy, according to my unscientific, non-representative LinkedIn poll. A further 17 per cent reported they only have strategic discussions on an ad hoc basis. 

Unfortunately, the finding that nearly one-third of not-for-profit boards from the 42 responses do little or no strategy is backed up by New Zealand and international research (including by Sport New Zealand). They are instead focused on operations.

Scrolling news websites, we see constant evidence we have not made enough progress on key issues such as health, inequality, poverty, crime and education. Some social statistics are even trending backwards.

Yet the sector that has the 100-year track record of tackling these issues has many of its boards bogged down in operational detail.

A recent Harvard Business School working paper – titled ‘Nonprofit Boards: It is Time to Lift Your Gaze and See the System’ – found not-for-profit boards focus on two sets of responsibilities: their fiduciary and legal compliance (Level 1 Governance: Duty and Fiduciary Responsibilities), and monitoring their organisation’s performance (Level 2 Governance: Organisational Mission Performance). Boards operating at Level 1 and 2 ask questions such as ‘how well are we achieving our goals?’

Given not-for-profits’ critical role in serving communities and affecting social change, the authors argue that boards should be aiming for Level 3 Governance: System Performance by asking ‘what should our contribution to the well-being of our communities be?’ and ‘how can we influence the systems that create barriers for our communities?’

Many community organisations are small, and board members often wear governance, management and all other hats. The call for not-for-profit boards to drive systems change seems aspirational when making sure there are referees for next week’s matches, as well as enough money in the kitty, consumes valuable volunteer board members’ time.

For not-for-profit boards, the key to being more strategic is about creating the space to be so. Board members need to first understand their governance role and how it differs from day-to-day management and technical roles, especially the role boards should play in holding a long-term vision.

Many directors serving on boards are passionate about the cause, but that does not make them competent governors.

Thinking three to five years ahead is a specific skill that we need to recruit for and learn to do. So boards need to invest in individual and whole-of-board learning on the essentials of governance and strategy.

For-purpose boards can, however, be reluctant to invest in their own development. In a paper presented as part of a Winston Churchill Fellowship last year, I found boards are driven to keep overheads down and spending focused on the front line (both critical) so are unlikely to prioritise investing in their ability to create a compelling vision and strategy to achieve it.

For 55 per cent of boards that responded to my LinkedIn survey, strategy was a one-day session once a year. But how many plans created on one-day strategy sessions are implemented, budgets aligned to priorities, and KPIs developed for management to monitor delivery?

Strategy should be built into every board meeting. For some boards, the first agenda item is a deep dive into one aspect of their strategy. Doing this at each meeting puts the board in a strong position to understand the delivery and effectiveness of its strategy.

Putting strategy first means board meetings start in a strategic space, not diving straight into the weeds, hopefully setting a strategic tone for the rest of the meeting. Board papers should then clearly link to the strategy. Board strategy becomes the guard rails and framework for decision- making. 

Some not-for-profit strategies are pages long, like a shopping list of the organisation’s hopes and dreams. Others are succinct one pagers, clear and targeted (often with lovely techno- colour images). Few, however, come with any metrics. Few provide the board with tangible ways of judging how much impact their organisation is making.

Quantifying social impact is complex; causal relationships are rare. But by creating a set of measurements – data and narrative – boards put themselves in the best position to do their job. Metrics also help the organisation demonstrate its impact to those it serves and funds, and many of us are required to do it anyway as part of our Statement of Service Performance (SSP) reporting.

Not-for-profit boards interact with a range of advisors and agencies: auditors, philanthropic funders, government procurement teams, Charities Services, the Registrar of Incorporated Societies, and industry, peak and umbrella bodies.

All have a role to play in supporting boards to be more strategic and impactful, whether this is making compliance transactions easier or expecting good governance as part of funding or registration applications.

The strategic impact of not-for-profit, for-purpose community organisations needs to be unleashed. We need many more boards operating at Level 3, creating systems change, removing barriers and finding solutions so all communities thrive, and those social stats start trending in the way we all want them to. 

Jo Cribb is an experienced governor with more recent roles including the Royal New Zealand Navy, New Zealand Winegrowers and Tātai Aho Core Education.