Decision Vision Episode 78: Should I Join a Non-Profit Board? – An Interview with Cindy Cheatham, Good Advisors
Cindy Cheatham of Good Advisors joins host Mike Blake to explore the issues to consider as one decides whether to join a non-profit board. “Decision Vision” is presented by Brady Ware & Company.
Cindy Cheatham, President, Good Advisors
Good Advisors LLC, is an independent management consulting organization led by Cindy Cheatham focused on strategic and business planning, board development, and organizational development for a diverse range of national, regional and local nonprofits and social-impact minded businesses.
Ms. Cheatham is very passionate about her work, always seeking to advance the impact of the clients she serves both during and after her engagements.
Prior to Good Advisors, Ms. Cheatham served as the VP of Consulting for the Georgia Center for Nonprofits where she led and oversaw work with foundations and hundreds of nonprofits. She also served as Venture Catalyst at Georgia Tech’s ATDC where she advised entrepreneurs and worked to build the entrepreneurial ecosystem. Ms. Cheatham began her consulting career with leading management consultancy Bain & Company
Ms. Cheatham is a frequent speaker on topics including leadership and succession, strategic and business planning, governance, collaborations and partnerships, nonprofit business models , social enterprise and entrepreneurship. She has developed and facilitated award-winning leadership programs.
Ms. Cheatham is active in the community where she serves as an elder of North Avenue Presbyterian Church. She has been a leader in a variety of Dekalb County Schools . Ms. Cheatham is a 2010 fellow of the Georgia Partnership for Excellence in Education (GPEE) Policy Fellowship Program.
She is a University of North Carolina at Chapel Hill Tarheel Honors Graduate and an MBA with distinction from Harvard Business School.
Michael Blake, Brady Ware & Company
Michael Blake is Host of the “Decision Vision” podcast series and a Director of Brady Ware & Company. Mike specializes in the valuation of intellectual property-driven firms, such as software firms, aerospace firms and professional services firms, most frequently in the capacity as a transaction advisor, helping clients obtain great outcomes from complex transaction opportunities. He is also a specialist in the appraisal of intellectual properties as stand-alone assets, such as software, trade secrets, and patents.
Mike has been a full-time business appraiser for 13 years with public accounting firms, boutique business appraisal firms, and an owner of his own firm. Prior to that, he spent 8 years in venture capital and investment banking, including transactions in the U.S., Israel, Russia, Ukraine, and Belarus.
Brady Ware & Company
Brady Ware & Company is a regional full-service accounting and advisory firm which helps businesses and entrepreneurs make visions a reality. Brady Ware services clients nationally from its offices in Alpharetta, GA; Columbus and Dayton, OH; and Richmond, IN. The firm is growth minded, committed to the regions in which they operate, and most importantly, they make significant investments in their people and service offerings to meet the changing financial needs of those they are privileged to serve. The firm is dedicated to providing results that make a difference for its clients.
Decision Vision Podcast Series
“Decision Vision” is a podcast covering topics and issues facing small business owners and connecting them with solutions from leading experts. This series is presented by Brady Ware & Company. If you are a decision maker for a small business, we’d love to hear from you. Contact us at firstname.lastname@example.org and make sure to listen to every Thursday to the “Decision Vision” podcast.
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Intro: [00:00:01] Welcome to Decision Vision, a podcast series focusing on critical business decisions. Brought to you by Brady Ware & Company. Brady Ware is a regional full service accounting and advisory firm that helps businesses and entrepreneurs make visions a reality.
Mike Blake: [00:00:21] And welcome to Decision Vision, a podcast giving you, the listener, clear vision to make great decisions. In each episode, we discuss the process of decision making on a different topic from the business owner’s or executive’s perspective. We aren’t necessarily telling you what to do, but we can put you in a position to make an informed decision on your own and understand when you might need help along the way.
Mike Blake: [00:00:40] My name is Mike Blake and I’m your host for today’s program. I’m a director at Brady Ware & Company, a full service accounting firm based in Dayton, Ohio. With offices in Dayton, Columbus, Ohio, Richmond, Indiana, and Alpharetta, Georgia. Brady Ware is sponsoring this podcast, which is being recorded in Atlanta for social distancing protocols. If you like this podcast, please subscribe on your favorite podcast aggregator and please consider leaving a review of the podcast as well.
Mike Blake: [00:01:07] Today’s topic is, should I accept a nonprofit board position? And, you know, this is a trickier topic than, I think, maybe some people appreciate. And a lot of it, I think, depends on kind of what stage of life, what stage of career you’re on. When I was 20 years younger and I did not yet have two arthritic ankles and gray hair, you know, I’d be inclined to accept almost any kind of board position because, one, I was stunned that anybody wanted me. And number two, that I would want to – that’s a great way to build professional experience, to build a network, to build certain skills. We’re going to talk about that later today.
Mike Blake: [00:01:58] But as one kind of advances in life and in one’s career and has, frankly, more choices and more demands on their time, the discussion of deciding whether or not to join a nonprofit board, I think, becomes a lot more complex. And, you know, some people may find out that they’re not particularly good board members. One of the things I’ve figured out over my career, I’m really not a great board member. I do my share for nonprofits, but I’m a better kind of rank and file person than I am a board member. I’m more effective when I get out there doing stuff rather than planning the stuff. But that’s not me. As we’re going to find out, the doing and the planning are equally valuable, but they’re different skill sets.
Mike Blake: [00:02:50] And joining a nonprofit board should be a very seriously taken decision. And the decision may not simply be to join a board, but which board do you join? Chances are you will have multiple opportunities at once that come up. And being able to sift through kind of whether or not to take on multiple opportunities, or how one opportunity is a better fit than another, or whether to do it at all is an important decision.
Mike Blake: [00:03:23] And we have a terrific guest to come on to talk exactly about that. And it’s my friend, Cindy Cheatham, who is president of Good Advisors. And I’ll get to her formal introduction in just a second. But Cindy and I have known each other for more years than we probably cared to admit to one another. But we both kind of grew up a little bit in the Atlanta startup community. And that’s where we both met. And then, several years ago she kind of branched off into nonprofit support and consulting work. And I’ve done my thing in corporate finance and now decision science. But that’s kind of where we both kind of intersect. And I don’t think that’s by accident.
Mike Blake: [00:04:11] I think in Atlanta – I think in any thriving startup ecosystem, you almost have to have a nonprofit mentality to be successful, especially in Atlanta ten, fifteen years ago, where we did not have any kind of thriving venture capital ecosystem. It was very much a work in progress. And it wasn’t progressing very far or very fast at the time. And Cindy may disagree, but from my perspective, you know, serving the startup ecosystem was almost like serving on a nonprofit board or serving in a nonprofit capacity. I think it draws that kind of mentality. And I think it’s interesting now how that kind of comes full circle, at least, in terms of our relationship and where we’ve bumped into each other over the years.
Mike Blake: [00:05:04] Good Advisors is an independent management consulting organization focused on serving diverse organizations, including nonprofits, social enterprises, and entrepreneurial businesses. And we recently recorded a podcast on benefit corporation. So, in fact, that was published last week as I record this episode on July 31st, so check that out. They provide strategic consulting in areas of planning, organizational development and effectiveness, governance collaborations and partnerships, and leadership coaching. They also provide customer retreat, facilitation, training, and workshops using experience as a certified facilitator and development of award winning practical adult education programs. Their particular strengths include ability to bring strength and analytics with excellence in working with people and organizations to accomplish goals and to undertake successful change initiatives.
Mike Blake: [00:05:56] Cindy helps motivate, lead, and equip mission minded leaders and organizations to achieve their full potential by developing and sharpening their strategy, strengthening their leaders, launching new products or services, growing revenue, and forming strategic partnerships. Cindy is particularly skilled at working with people in organizations who conceptualize a future and lead them through a process of planning and change. She’s a very quick learner and is able to quickly assess an organization while also bringing objectivity to the work to design a practical yet innovative plan or solution for a diverse range of clients.
Mike Blake: [00:06:31] Cindy takes a value-added approach, always seeking to use her network of business associates and leaders to facilitate valuable connections on behalf of her clients. Cindy is passionate about helping her clients to get great results for themselves and their organizations. Oh, and by the way, she has an undergraduate degree from the University of North Carolina and a Harvard MBA. So, definitely on the far right of the bell curve in terms of IQ. Cindy, welcome to the program.
Cindy Cheatham: [00:06:58] Thank you. It’s a pleasure to be here. And yeah, I resonate very much. I always tell people that I used to work with cash-strapped change the world startups. And now, I’m working with change the world cash-strapped nonprofits. So, you and I are on the same page there.
Mike Blake: [00:07:14] It’s like slipping from one old pair of shoes into another, right? So, as we always do or we typically do on the show, let’s set a baseline here. What is a nonprofit board and why do nonprofit boards exist?
Cindy Cheatham: [00:07:32] Yes. Well, there are different types of organizations as we know, private businesses, government, public organizations. And nonprofit is one of the types that the government has created a tax status for and has a regulatory framework for. What we particularly, probably, think about when we think about nonprofit boards is the 501(c)(3), which is the charitable model where the IRS is giving those nonprofits the benefit of not paying taxes as well as securing and taking donations. And the donors get a tax deduction in return.
Cindy Cheatham: [00:08:08] There are also 501(c)(6) that most of us, as business leaders and professionals, we are part of associations. So, those are different. 501(c)(6) nonetheless are a type of nonprofit. But the ones I think we’re mostly talking about today are the charitable 501(c)(3).
Cindy Cheatham: [00:08:26] And it’s a legal responsibility. I like the fact that you said that this is a serious decision because I think a lot of people don’t take it as seriously as they should. You are legally responsible for being the fiduciary of the nonprofit’s mission success. That’s why the government has created that. It’s a public good and you have the duty of care, loyalty, and obligation as a board member.
Mike Blake: [00:08:50] And you mentioned something about a 501(c)(6) and not as many people, I think, are familiar with it because it’s really not the big name. But as you know and some of our listeners know, I started or co-founded and then ran a nonprofit called Startup Lounge, which helps entrepreneurs go from idea to venture to business. And we had a pretty good ten year run. And as we were forming that, the best advice we ever received was not to do a (C)(3) but instead to do a (C)(6). Because, you know, we were doing it, as Scott Burkett, our guest in Episode 2, he would readily admit we were a couple of knuckleheads who didn’t know what we were doing. All we wanted to do was to execute a mission. And the oversight for a (C)(3) is so much greater than that for a (C)(6), which is almost non-existent. It was the perfect fit for us. But until we got that advice, we hadn’t even heard of it. And, really, it was great advice that we got.
Cindy Cheatham: [00:09:50] Yeah. Good. Good choice.
Mike Blake: [00:09:54] So, when we think or we bring up the term nonprofit board, I think if you’re not familiar with it, one’s mind can then think to something with which you are familiar with, which is a corporate board. Are they very similar things or are they very different kind of animals?
Cindy Cheatham: [00:10:12] Well, they’re both similar in that they have governance responsibilities. Legally, they both can be sued. Ideally, they both are adding value to the entity through their strategic partnering with, typically, the executive. A good executive board relationship is key to a successful board. There’s similar attributes of the most effective corporate boards to nonprofit boards asking tough questions, not just being consensus driven. But a lot of the practices of the culture of boards that make for effective boards are similar.
Cindy Cheatham: [00:10:51] But they’re quite different in that nonprofit board members are supposed to go in there and they’re legally responsible for not having self-interest. They have to sign conflicts of interest. And nonprofit boards tend to operate more from consensus. For-profit boards can sometimes operate that way, but a lot of times for-profit board – sorry – for-profit boards can have investors who have a stake directly. They can have majority control. Both of them can have issues between executive and CEO. But don’t get me wrong, there’s challenges of managing that relationship among both. But for-profit boards, also, frankly, I think in many ways have an easier job of measuring success.
Cindy Cheatham: [00:11:37] Bottom line, financial success metrics are easier for the nonprofit board who’s trying to understand how do we measure success in a mission that’s very difficult. We all know there’s a lot of difficult problems out there. How do we take somebody who’s abused and turn their lives around? How do we get more equity in America? These are difficult problems and these nonprofit boards have a more difficult lens in terms of being responsible for understanding how to achieve a mission goal and having the right measurement tools to do so. No easier bottom line in the nonprofit world.
Mike Blake: [00:12:19] So, you brought up something that I want to follow up on. So, we’re right on schedule. I’m going to rip up the script already. If somebody is going to join a nonprofit board for the first time and they have experience interacting with or maybe sitting on a corporate or company board, do board members behave similarly or do they behave differently? And you kind of inferred this, but I really like to hit this directly because I suspect that if you’re not used to a nonprofit and you’ve only dealt with a for-profit, can there be a little bit of culture shock there?
Cindy Cheatham: [00:12:56] Yeah. I mean, I know some corporate boards are very high performing, some are more casual, some are more formal. But I would say as a general rule, probably, the corporate board is probably more formal because just the nature of corporate beans. Kind of nonprofit boards can really vary. They can be extremely corporate in their practices and buttoned up, you know, with their agenda and closely following it depending on the chair. But they can be very casual in nature and very informal in nature, everything in between.
Cindy Cheatham: [00:13:34] So, If a corporate board member is used to everything being buttoned up, you know, all the material sent out weeks and weeks in advance, all well done, very well organized agenda, and everybody having done their homework. Of course, corporate board members in many cases are getting paid to do that work, so that helps. Or they have a personal incentive to do that work. They can go on to a nonprofit board and have a bit of culture shock for a variety of reasons.
Cindy Cheatham: [00:14:04] One is because it doesn’t sometimes always operate as formally and professionally. And that is not always as clear and available too. Frankly, a lot of times they don’t do their homework. You know, they go in with more casualness to the prep and the commitment that they make. Which frustrates the heck out of me when I see these great corporate people just come and show up to a board meeting and not taking it seriously. So, there’s different reasons for that.
Mike Blake: [00:14:32] Now, I’ve encountered a term and I suspect you’re familiar with it, too, that talks about three different kinds of roles that individual board members often serve. And it’s referred to and, at least, I’ve heard it as sort of the three W’s, which is wisdom, work, and wealth. Have you heard of something like that as well? And if so, can you talk about what those things mean?
Cindy Cheatham: [00:14:58] Yeah. Absolutely. Whether you call it wisdom, work, and wealth or time, talent, wealth, absolutely. Yeah, I try to break it down into the three hats. One is on the wisdom side, it’s the strategy lens. You know, you’re responsible for helping to shape a strategy of a nonprofit along with the executive to shape the funding strategy, to shape the mission strategy, and bring your wisdom of your field or your professionalism to that role.
Cindy Cheatham: [00:15:30] On the talent side, again, a nonprofit board should ideally have a mix of the different talent, whether it be the marketing talent, the legal talent, the business development. We always need salespeople that are willing to knock down doors and open up doors for recruiting board members, for opening up doors to donors. So, that’s on the talent side. And that ideally gets deployed by your committee work or taking on a pro bono. Sometimes, you know, nonprofits are run by board members who literally are the marketing. Small nonprofits have their boards running the operations. That’s not the ideal. You know, you have to be careful in a larger board that the board member keeps their lane and doesn’t get into the daily operations of the nonprofit. But they usually do their talent through the committee.
Cindy Cheatham: [00:16:24] And then, the time. Time is rolling up your sleeves and literally going and showing up. When we’re not in a pandemic and we actually get together for fundraising events, or tours, or events, program events, board members should show up to some of those events and have a presence. They should be a spokesperson and they should be out there opening up doors with their time.
Mike Blake: [00:16:51] So, what I take from that is a lot of times when we think about who serves on a board, we think that, “Oh, wow. You have to be a big time donor or a big time influencer, corporate giant, something like that, to serve in a nonprofit board.” It doesn’t sound like that’s necessarily the case, is it?
Cindy Cheatham: [00:17:11] No. It really, really varies. There’s a lot of different types of boards. The high museum board, you know, is certainly a board that does tend to be seeking the C levels, CEOs and people with a lot of wealth. But even there, they have their executive board and then they have, you know, the larger, larger board. But the vast, vast majority of nonprofits, they need some wealth, ideally. And they need a handful of people that are willing to at least help organize the board’s role in fundraising. But what they mostly need are people willing to not just show up to meetings, but to actually help be a team leader, whether it be an officer or a committee chair.
Cindy Cheatham: [00:17:59] And so, I worked with the Federal Reserve in placing people on boards. And one of my favorite board members that’s become the chair of two different boards that I placed him on, he always says, “You know, the Federal Reserve doesn’t have a big corporate foundation behind us. So, I know that I have to give leadership. That on my role, I can write my small check or my modest check, but what I know I can bring is leadership to a board.” And sure enough, he’s risen to chair because he’s demonstrated and been willing to go in as an officer and provide that critical leadership.
Mike Blake: [00:18:37] Now, is it a prerequisite that if you’re recruited for a nonprofit board or maybe you, yourself, want to approach and join or see if there’s an opportunity to join, is it a prerequisite that you have to already be a subject matter expert? Let’s just take for example, the ALS Association, which is a charity near and dear to my heart. Would I have to be an expert in Lou Gehrig’s disease to be considered for a board? Or is that not necessarily either a qualifying or disqualifying criteria?
Cindy Cheatham: [00:19:18] It’s definitely not a criteria. What is important, I think – one of the number one things that I think is important is that the individual joining does have a passion and/or at least a strong interest. If they’re doing it in part because the networking opportunity or in part because their corporation says, “Hey, this is a cause we support and we need somebody to represent,” which frequently happens. You know, Cox or others say we support environmental causes. We support these education causes. We need somebody to serve on the JA board, you know, Junior Achievement. So, it can be a combination. But passion and interest is important. So, if you really can’t get excited about the mission of the organization, either because you don’t have personal experience or expertise, I would think twice.
Cindy Cheatham: [00:20:05] But no, you don’t need to be an expert. It is helpful for every board to have one or two people that can relate to the mission, either because their family member has Lou Gehrig’s, their child has it. That really does fuel a lot of passion and commitment. And some of our best nonprofits were founded because of the personal experience of Mothers Against Drunk Driving. You know, that’s how a lot of these things get started. But it’s not essential. And frankly, you need diverse thinking on a board. You don’t want everybody to come from the same experience and have the same perspective. You need different thinkers.
Mike Blake: [00:20:47] Corporate board members are often compensated. What about nonprofit board members, are nonprofit board members typically compensated in any way?
Cindy Cheatham: [00:20:55] No. You know, they can sometimes get their expenses reimbursed for travel and so forth. I rarely ever see that. Maybe some of the larger nonprofits that have people gathering, national ones that have people having to travel all across the country occasionally. But for the most part, people just pay for that themselves. Their compensation is in the goodwill of doing good and in the relationships. One of the reasons people most join a board is also the opportunity for the relationships that they form with fellow board members and colleagues, the collegiality, the sense of doing good, the learning that they have that may be different from the way that things work in their organization. Having a different perspective of decision making, collaboration, working in a more diverse environment than where they may come from. So, it’s really all those learnings and the relationships and then the sense of doing good, that’s their compensation.
Mike Blake: [00:21:55] Now, other than doing good and serving a cause that I believe in, for example, are there other benefits to joining a nonprofit board?
Cindy Cheatham: [00:22:06] I mean, absolutely. You know, like I said, relationships and networking, not everybody values the network as much as I do. But I know it’s kind of a pay it forward when you have a network of people that you’ve worked with well in your life. Frankly, with my business, I barely even got a website. It’s kind of embarrassing, I think, I got one up about a year or so ago. But it’s all based on my network and referrals from all the various places I’ve worked over the years and people I’ve worked with that have led to the opportunities that I have. And so, you know, people have a life ahead of them, whether it be a new career, a business opportunity, a referral, even getting people to help your kids get internships and so forth.
Cindy Cheatham: [00:22:54] I have a lot of people on boards that are always calling me and saying, “Hey, there’s this young person from UGA who wants to get into nonprofits. Will you help me?” And then, if you want to get into leadership programs like LEAD Atlanta as a young person or Leadership Atlanta, you have to have a track record of community leadership. So, for example, with the Federal Reserve, some of their young high potentials, they come to me and say, “Hey, can you help this person find a good board where they can find a passion and a fit and gain community leadership experience?”
Cindy Cheatham: [00:23:25] Because, one, we believe in doing that because we need to get outside of our four walls and see how the community is doing and to see the economic health. And two, we want our leaders to be in a position to further lead and to be candidates for LEAD Atlanta and Leadership Atlanta, for example.
Mike Blake: [00:23:47] Now, what about building new skills? Can you learn skills from a nonprofit that you can then take back to your life in the for-profit world?
Cindy Cheatham: [00:23:57] Absolutely. Not everybody has, for example, been part of strategic planning or had the chance to be part of a strategic planning committee. Because they might be a bean counter or an accountant. Or even if you’re an accountant, you may not have done fund accounting before. There’s the learning around just – there’s just different types of problems and problem solving. If you’re used to a very corporate decision making environment and the nonprofit you’re in is more of a shared – you know, there’s not as much – it depends on the nonprofit but a lot of nonprofits are less hierarchical in nature. And so, the world is moving to be less hierarchical. So, even just the way that you collaborate to get things done and make decisions together can be a learning exercise from your work in nonprofit.
Mike Blake: [00:24:58] Now, a question, I think, that follows from that is, if I’m considering joining a nonprofit board, is it okay for me to consider kind of what’s in it for me? Not from a rich man standpoint financially, but at least from a perspective of how it might help my career, how it might help develop my skill set. Is it okay to consider that in evaluating the opportunity? Or is that considered being opportunistic or too self-centered? Is that a legitimate way to or, at least, a legitimate consideration?
Cindy Cheatham: [00:25:39] Absolutely. And as long as it can be managed so it’s not a conflict of interest, you know, where you’re pushing your own priority and interest within the board operations. I mean, there are even bankers, for example, that do business as a bank, that sit on nonprofit boards. You just have to have practices to make sure you make non-conflicted, that you have competitive processes.
Cindy Cheatham: [00:26:03] But to the extent that there’s learning that you want to do, you know, “Hey, I do this for a day job. I’m in finance, but I really want to have a chance. I’ve never sat on the strategy team of a for-profit before of my business. I really am looking forward to being part of the executive leadership.” That’s a learning. Yeah, absolutely. It makes you more motivated.
Cindy Cheatham: [00:26:31] You know, I’m interviewing somebody for a board right now and this person is a PhD and engineering graduate from Georgia Tech. She has a lot to bring to this particular STEM oriented nonprofit board, but she told me one of her reasons is that she wants to learn. And she just started her own nonprofit and she’s trying to get her feet and her learning undertaken and I think that’s fine. And I appreciate her sharing that that was one of three reasons that she’s interested in this nonprofit board. I think she’ll be more motivated as a result as long as she’s not conflicted and I don’t think there is a conflict there.
Mike Blake: [00:27:14] Now, we touched upon this a little bit earlier, but I do want to hit it directly. And that is that, I think when a lot of people think about joining a nonprofit board, that means they’re automatically going to be on the hook for raising a certain amount of money or sponsoring one or multiple tables at their annual fundraising event or gala. Is that necessarily true? I mean, do you have to kind of come to the table with some significant financial resources to be a viable board member?
Cindy Cheatham: [00:27:47] You know, I highly recommend that the best boards do expect a give and/or get from all their board members. There are some that don’t. And they particularly are ones that maybe have their predominant funding coming from the government, for example. Not all nonprofit funding comes from philanthropy. The predominant income stream, if you add it all up in nonprofit, comes from, one, a lot of fee for services. All the schools in the world that are nonprofits, they charge tuition. Two, government money.
Cindy Cheatham: [00:28:21] But the ones that rely heavily on philanthropy, I always recommend that the nonprofits do ask their board members to be the role models, to be the first to give their time and their talent. But that doesn’t mean it’s a lot. I mean, it can be – but I do recommend it’s a meaningful amount for that particular board member. So, it should be one of your top three to five checks that you stroke, you know, if you’re religious, to your synagogue or your church, to your kid’s school, your university, and then the one or two boards. It should be a meaningful check that then can allow you to then better represent when you’re out there as a spokesperson to help get money to help be able to speak to the reason.
Cindy Cheatham: [00:29:13] I always ask board members, why is this board worth your time and your money? You have to be able to speak to that and be able to give your time and give your money. Otherwise, you could just be a pro bono expert. Sit outside the board, give your expertise as a marketing person, give your expertise as a pro bono accountant.
Cindy Cheatham: [00:29:34] Does that answer your question? But it doesn’t mean that – you know, boards can range from having no dollar amount to as many as – Big Brothers Big Sisters asks for a $10,000 check. So, yes. There are some boards that ask for a lot. I always try to work with board members providing what is your comfort zone, what is something meaningful that you can give, and then match that up to the nonprofit.
Mike Blake: [00:29:59] And my understanding, a big portion, a big piece of that, too, is that potential donors almost always ask, what is your percentage of board participation? Meaning, what percentage of your board members have made themselves a financial contribution? How much financial skin in the game do they have? And it really got to be 100 percent. Anything less than 100 percent does tend to raise a red flag, doesn’t it?
Cindy Cheatham: [00:30:27] Yeah. Not only that, but some of the institutions will ask for the total dollars raised. And they look at that and they’ll then look at the composition of your board. And they don’t expect a lot. If your board is composed – if it’s a grassroots organization in a disadvantaged community with community leaders and pastors and ministers and just community people, they don’t expect necessarily the same dollars as if you were a CEO board.
Cindy Cheatham: [00:30:58] The other thing that people need to realize about nonprofit donations that come from the board, so many dollars out there that come from large institutions, like foundations, are what they call restricted. Restricted means they’re giving you a grant to accomplish a certain program or with certain expectations. Thankfully, not all institutions do that. The community foundation has been a big proponent of non-restricted grants that basically are saying, “Tell us what your overall strategy is and we’re going to trust it. We’re not going to micromanage where you spend.”
Cindy Cheatham: [00:31:37] But a lot of the large grants do have – you know, they’re either funding a particular program or they’re funding like, “Hey, we’re going to help you hire your first fundraiser.” So, the dollars that come from board members are what I consider gold money because it’s unrestricted. It allows the nonprofit to have some of their own control of their own money for their own priorities. Including, “Hey, we actually need to invest in something. Like, we need to hire a fundraising person. We think it can pay off. We don’t have the dollars for that. Otherwise, we think that we can do this.” And sometimes you can even use that to go out and do a challenge grant. You know, a board can say, “Hey, we’re going to raise 30,000. We’re going to go and challenge the community to get another 30,000.”
Mike Blake: [00:32:28] And that brings up a point I want to drill down because it brings up a question that, actually, I never thought of. And that is, because you mentioned that donors not just look at amount of board participation, but actually the dollar amount contributed. And it brings to mind, at least my understanding that, you know, no foundation wants to be overly responsible for the survival of one organization. They don’t want one organization to be so dependent upon them that if they change mission, don’t have as much money themselves to give that year. That all of a sudden, that particular organization is imperiled. So, I like to see diversity of financing sources. Is there a percentage of, sort of a target percentage, if you will, of overall operating budgets they like to see coming from the board in terms of – so, is there a percentage they like to see?
Cindy Cheatham: [00:33:29] You know, again, like I said, if it’s a grassroots organization, that would maybe be – well, it would probably tend to be a smaller budgeted organization. I don’t see that. I’ve never seen that target set. But I do see sometimes boards say, shouldn’t it be closer to ten percent that in total, in aggregate, which usually is driven.
Cindy Cheatham: [00:33:51] It’s good if a board has a couple, what I call, major givers on it. You know, there can be a board that has a bunch of people giving $500 or $1,000. But then, it’s helpful if there’s a handful that are able to get five or ten. And most major givers are then able – they tend to have peers that can give five or ten, right? Their peer network. So, you know, I’ve seen ten percent thrown out there, sometimes five percent. But I think it’s just a point of leverage too. When a board is saying, “Hey, we need to do these things,” and they’re setting strategy and they’re not sure how they’re going to fund it. And sort of you add it up and say, “Well, we think we can get 80 percent of the way there.” That’s a good time to say, “Board, can we step our game up?” I think board members, just like donors, want to see what’s the case for support.
Cindy Cheatham: [00:34:48] And nonprofits need to not just expect board members to give. They need to also be able to communicate why do we need your money even for a board. It shouldn’t just be an expectation. There should still be a process of that board being able to ask questions and feel good about how the nonprofit is using the money and to make a case for why do we need more money. You know, how are our dollars going to help achieve results? And of course, they’re part of shaping that as part of strategy development with the executive director. But if they don’t feel like there’s a reason to write more checks then they need to also self-evaluate. “Well, then why don’t we believe in the mission? Do we not have a future that we’re excited to help make us realize?” If that makes sense? There still need to be a case for support made even with board members, especially if you’re asking them for something more or substantial.
Mike Blake: [00:35:50] Sure. I mean, you can’t go out and advocate for the organization if you, yourself, don’t believe in it and don’t understand it, right? And that’s a reasonable expectation of a board member. Now, let’s say that now a listener has been hanging out with us for, you know, the 35 minutes or so we’ve been on and they’re now seriously considering joining a nonprofit board, maybe accepting an invitation or proactively pursuing one. What is kind of a personal inventory that I might take for myself to determine if I have the right tools or personal characteristics to be a good board member or even if I would find it rewarding?
Cindy Cheatham: [00:36:38] Yeah. Well, I think, you know, have I met one or more of the people in the organization or are there people that I would enjoy working with? Do I have a passion for the cause or an interest? Do I see that there may be a seat or a place for me that I might feel like I could contribute? There’s either – of course, it’s obvious if they need a treasurer and I’m willing to be treasurer. You know, an immediate match in terms of a need that they’re trying to fill. Are the expectations give, get, and/or time? Even the meeting frequency and time, you know, the time of day, are they a morning board or are they an evening board? I mean, I know somebody who was meeting on Friday nights. That have to work in your life.
Cindy Cheatham: [00:37:27] And then, you know, at the end of the day, am I excited? Do I feel like this is going to – you know, it’s a commitment. Am I excited to take on this new challenge and this commitment and feel like it’s – you know, and they have been thoughtful about it, too, and not just, “Hey, somebody grabbed me and said come join this board.” The process of joining the board ideally should be not just, “Hey, Mike asked me to join Board X.” There’s very little exchange of information, very little thoughtfulness.
Cindy Cheatham: [00:38:04] So, I would encourage and urge people to not jump right away, to do some of their homework. Including, like, is there any major crisis going on with this organization? I mean, very few nonprofits are really super, super stable in this pandemic. You know, just like small businesses, nonprofits are particularly vulnerable and that’s always the case. But of course, pandemic makes it worse.
Cindy Cheatham: [00:38:29] But, you know, is the organization – this is not a reason not to join, but at least having clarity. Is there any reserve? What’s the balance sheet look like? Has there been any – you know, have we been operating in the black or the red? How does the board feel about where the board is right now? Or is there some kind of board crisis going on? Is our long time 20 year founder going to all of a sudden retire on day one when I join the board and we’re going to have to do one of the hardest things the board has to do, find a new CEO? Just sort of be eyes wide open to what the current situation is, too, because that can really influence your experience as a board member.
Mike Blake: [00:39:15] We’re talking with Cindy Cheatham of Good Advisors. And we’re discussing the decision point of should I join a nonprofit board. We’ve only got time for a couple more questions, so I want to make sure I get them in because I know we have a little bit of a hard stop here. But one question I do want to make sure we get to is – and we just touched upon it with that last responses – you know, typically with a nonprofit board, what kind of time commitment is the board member typically looking at?
Cindy Cheatham: [00:39:45] Well, it can really vary, but the BoardSource, which is a national consultancy focused on governance does this yearly, would say that an officer can spend as many as six, eight, ten hours a month, a chair especially. But I think on average, four to six hours per month for the board, you know, for a board that’s doing its job, that is kind of doing the wisdom, talent, and wealth. So, you know, it’s not giant, but it’s not unsubstantial as you think about the amount of free time we have relative to exercise, family, and other other commitments that we may have.
Mike Blake: [00:40:26] Now, one thing you touched upon earlier and I want to make sure we get to is, you know, joining a nonprofit board is not like going to community college. It’s a serious commitment. You don’t just sort of sign up and walk in. And one of the things that makes it a serious commitment is that there is real liability if things go south and it’s kind of on your watch. How do do board members manage that liability? Or does the nonprofit help manage that liability? What is the strategy for doing that?
Cindy Cheatham: [00:41:01] Well, the board is responsible for its duty of care, obligation, and so forth to follow the law. And should be responsible to make sure the nonprofit does have policies in place for things like finances, financial controls to prevent fraud, HR policies in terms of whistleblower, nondiscriminatory policies, and so forth. So one, their job is to make sure those policies and practices are in place and to do that audit. But they should also have nonprofit board insurance. There is insurance just like there is for corporate boards. You know, that is an insurance policy.
Cindy Cheatham: [00:41:44] But what I see a lot of times is board members who are particularly sensitive to risk. And a lot of the people that I place at the Federal Reserve are very much risk – you know, they manage risk and they come from finance. And so, they’ll go into a board and ask a lot of questions around the audit and see practices or lack of practices and take leadership in putting those in place. That’s one of the roles of a board is to bring those practices to reduce the liabilities and the risk. So, it’s their job to do it. And then, on the protection side, it’s fair to ask do you have directors and officers insurance? And the vast majority do. And you can go to Georgia Center for Nonprofits and others to secure that relatively inexpensively.
Mike Blake: [00:42:38] Now, let’s go to kind of the other end of the spectrum, let’s say that I really get a lot out of serving on a nonprofit board. And maybe I’m at a point in my life in my career where, you know, I can make a substantial commitment to nonprofit support. Is it possible, or ill advised, or somewhere in between to serve on multiple boards?
Cindy Cheatham: [00:43:03] Oh, absolutely. I would say a good number of community minded leaders that do like that work do find a lot of fulfillment from it and are frankly good at leadership sit on multiple boards. You know, and especially ones that just – yeah. But it’s a big commitment. I always encourage people to think twice, and three, and four times before they do that, especially joining at the same time because there’s always a learning curve of going onto boards.
Cindy Cheatham: [00:43:40] And I had one individual that went on two different boards. One was really very much aligned with the corporate center interest. “This is going to be very good for my career and very much appreciated me serving on this board, because this is right up the alley of my – this is really the business that my bank is in.” So, I’m going to see that board service is really kind of more professional. And the other one was the Ronald McDonald House, which was very, very personal. And so, that’s also common, too, because there are professional boards that you can serve on for some professional purposes. And then, there’s another one that really is just totally kind of melt your heart. “This cause is near and dear to me.” So, he did both of those well, because I think he had strong motivations. And he’s one of those just very organized giving people that can get a lot done in a little bit of time.
Mike Blake: [00:44:36] So, actually that brings up another question I want to touch upon, because I think we can squeeze this in. And that is, if I’m thinking of joining a nonprofit board, what kind of support should I reasonably expect from my employer to allocate the time or allow me the time to just sit on a nonprofit? Or do companies make allowances for that? Do companies recognize that it’s in their best interest to have their employees and their leaders out there serving the community? Or do businesses and employers tend to think of it as the same thing as going fishing that if you want to do this, that’s fine, but it’s a hobby and it’s separate from work
Cindy Cheatham: [00:45:20] Well, I think it varies. I haven’t seen enough of how small more entrepreneurial businesses do this. But I would think that they should – you know, that if they don’t have an established policy or practice for encouraging service or these practices, a lot of corporations, large established corporations, they have policies on amount of service time you can take during the workday. And they have those policies all in practice. They communicate them. They encourage them. They even organize their team based events to help people utilize those community service hours. They have matching gifts to match. You know, if you give a certain number of hours, you can also earn a match and gifts. So, big established companies absolutely encourage – professional service firms, legal, accounting, encourage it because of business development purposes.
Cindy Cheatham: [00:46:17] So, you know, it really varies. And then, of course, just talking to your boss. A lot of times it’s you and your relationship to your direct supervisor in terms of how this is going to impact. If your meetings are always at lunch time or always during the workday, you just have to have a good – even if your corporation encourages it, it’s always good to just kind of give a heads up to your supervisor and get them on board. But some of the best companies, the most thriving, purposeful companies are also encouraging of leadership in the community for both personal satisfaction as well as a corporate benefit. They see the learning. They see the professional development. They see the goodwill that comes when their employees know that their employer is encouraging them to have a life in the community and not just in their building.
Mike Blake: [00:47:13] Cindy, we are unfortunately out of time, as is typically the case. I have a lot more questions that I could ask, but we do need to be respectful of your time. But I’m sure our listeners have other questions they love to follow up with you about. How can people contact you for more information about this topic?
Cindy Cheatham: [00:47:31] Sure. Well, I have a website. It’s www.good, G-O-O-D, and then, dash advisors, A-D-V-I-S-O-R-S.com. And then, email@example.com. I welcome additional questions and opportunities. I really enjoyed this conversation, Mike. And appreciate any time to collaborate with you. Let’s keep it going.
Mike Blake: [00:47:57] All right. Thanks so much. That’s going to wrap it up for today’s program. I’d like to thank Cindy Cheatham so much for joining us and sharing her expertise with us today.
Mike Blake: [00:48:06] We’ll be exploring a new topic each week. So, please tune in so that when you’re faced with your next executive decision, you have clear vision when making it. If you enjoy this podcast, please consider leaving a review with your favorite podcast aggregator. It helps people find us that we can help them. Once again, this is Mike Blake. Our sponsor is Brady Ware & Company. And this has been the Decision Vision podcast.