Paula Goedert is a partner at Barnes and Thornburg, LLC.
Opportunities emerge during crises—including chances to update outdated governance structures. Here are some ideas for dusting off ineffective procedures and making real progress in the face of adversity.
We are seeing that the first reaction of many nonprofits to a crisis is to stand still. When faced with a black hole in front of us—of unknown depth and proportion—we stop moving and stare into the abyss.
Here in Chicago, we have another way of dealing with crises. Our politicians teach us to never let a crisis go to waste. How can we use the current crisis caused by the COVID-19 lockdowns to eliminate outdated governance structures that hinder leaders’ ability to act quickly to fast-changing circumstances? Now is the time to take a hard look at bylaws and policy provisions that shackle nonprofits to ineffective governance procedures.
Many national nonprofits have layered governance structures that include a large body of representatives from different geographic or special-interest constituencies, often called councils or houses of delegates. These bodies often include hundreds of individuals who meet in person once or twice a year to conduct business on behalf of the organization. I have never heard a nonprofit leader say, “Our house of delegates is nimble.”
Permitting a house of delegates to debate and recommend sweeping policy issues can add value to the board’s understanding of member needs and overall direction. Giving the house control of decisions that are crucial to day-to-day management of the nonprofit’s business operations doesn’t work. Management decisions should be made on a timely basis by leaders who really know what is going on at headquarters. The board can do that—even if the discussions are on Zoom or other online platforms—not the house of delegates.
Take a hard look at the responsibilities of the house. Even the most die-hard supporters of expansive governance will have to admit that more flexibility is necessary to face a crisis, and we don’t know how long this crisis will continue.
Even the most die-hard supporters of expansive governance will have to admit that more flexibility is necessary to face a crisis, and we don’t know how long this crisis will continue.
So many nonprofits have election procedures that require an in-person meeting. During a crisis, the law will permit a nonprofit to follow the “cy pres” doctrine and do the “next best thing.” But many nonprofits have procedures that are hard to replicate in a virtual world.
One of these procedures is nominations from the floor during the election. It is a vestige of when nonprofits were small clubs, in which members generally knew each other. Permitting a member to self-nominate or someone to nominate from the floor today can result in a member who may be unsuitable for all sorts of reasons to end up on the board and be disruptive or ineffectual.
Nominations from the floor are not an ideal way to get the best talent. Board members need to be interviewed and vetted, and those who can make the most significant contributions should be presented to members as candidates for election. If self-nominations or member nominations are permitted, they should be done in advance, with mechanisms for the voters to get to know each candidate’s good and bad points well before being asked to vote. Now is the time to move the process back a few steps, giving voters a chance to make informed decisions.
The lack of trust in future leaders is never so apparent as in bylaws provisions governing the process of bylaws amendments. Many nonprofits have processes that were designed to be slow and cumbersome, to make sure future leaders and voters carefully consider each amendment as if it were a momentous and permanent change. For example, some bylaws can only be changed after two “readings” at house of delegates meetings, separated by a lengthy period of time. It guarantees a delay of many months, or sometimes a year, to make any changes.
Bylaws must be a living document, changing with the times, and these times are changing fast. Nonprofits can’t wait a year to adapt to this or any coming crisis—and we have no idea what is coming next. Members may be more inclined to agree to an elimination of provisions like this, especially when presented with evidence of how they slow necessary changes to keep the nonprofit afloat.