Barbara Passy, '07, shares her reflections on the "Untangling the Purse Strings: How board governance impacts funder decisions" panel at the 2015 On Board conference on nonprofit board service.

At the On Board conference on nonprofit board service hosted by Chicago Booth’s Social Enterprise Initiative on February 27, 2015, professor Linda Ginzel led a panel on the topic of good board governance. The panel included Denise McGregor Armbrister, ’77, who is the executive director of the Wells Fargo Regional Foundation and the Wells Fargo Regional Community Development Corporation, which are two separate private foundations with an affiliation to the Wells Fargo Company. Francee Harrington, another panelist, called herself “ambidextrous” as a speaker because she worked for JP Morgan Chase Foundation for much of the past 10 years and recently moved over to the Ann & Robert H. Lurie Children’s Hospital of Chicago Foundation. Ben Kovler, ’11, another Booth alumnus on the panel, runs an investment portfolio called Kovpak and started a nonprofit called Invest For Kids, which raises money and gives it away to smaller non-profits in Chicago. Unmi Song, AB '82, MBA '86, who is president of the Lloyd A. Fry Foundation, rounded out this discussion group.

Armbrister addressed the topics of how much board governance affected her decision to fund or not to fund an organization and what red flags would inform her not to fund an organization. She explained that in her view good board governance is significant in her decision to fund. She wants to see a deep management bench as well. “In my view, the board is responsible for sustaining and growing the organization,” she explained. For red flags, Armbrister cited when board members don’t reflect or connect with the mission of the nonprofit and circumstances of mission drift, where the board is not on the same page regarding where the nonprofit is going. Armbrister explained that during site visits for requests, she asks for board members to join her and expects them to be knowledgeable about the projects.

Harrington provided tips to board members to make their organization more attractive to funders. She noted, “beyond passion, qualifiers that help to differentiate include plenty of homework that needs to be done on both sides. Diversity on the board and on the staff is both important.” She continued, “an impact report is very important. It should be on time or early. Editing out the descriptive piece and looking at the numbers piece is very important.” She said that turnover of staff and turnover of the board are also very important. She doesn’t necessarily agree with term limits and feels that they depend on the goals and specific situations.

Kovler explained that an organization can make itself more attractive to funders by demonstrating impact. He wants to see a quantified returned on his investment. He noted, “if it’s a reading program, and test scores went up as a result of the program, that’s a quantified result.” He says to boards, “How can we measure this?” He looked for creativity in measuring impact. In terms of engaging current board members, he explained that it’s important to include them in meetings and keep them up to date with “cheat sheets.”

Song said, “I’m going to talk about the dark side.” She said the relationship between staff and boards is key. “When a weak board thinks that it has a funding problem, it ignores the fact that it has a much bigger governance problem and financial oversight problem. Those are things that stem from budgeting problems.” She cited the closure of an historic Chicago organization as an example of board failure to fulfill its responsibilities. She believes that the true test of a board is in leadership transition issues.

Professor Ginzel summarized the discussion and guided a question and answer session that included tips to nonprofits on how to present their case to funders. - Barbara Passy, '07