Business People as Charity Directors

Many ministries want a few business leaders on their boards, thinking they have great experience and insight to share. While it is true that business people have much to offer, it is also true that there are a few things they should leave behind when they join a charity board. Here’s what those things are and the positive aspects of them that they can bring to their charity boards.

It’s Mission, Not Profit

Business is in the business of creating satisfied customers who pay the business for goods or services they want, resulting in a profit for the shareholders. Thus business boards are primarily concerned with building shareholder wealth. Their focus is on the financial statements (income statement, cashflow statement, and the balance sheet) and the strategic plans that will maximize value.

Charities are in the ‘business’ of accomplishing a mission. Thus charity boards are primarily concerned with mission fulfillment. Their focus is on effectiveness measures: the strategic plan, program evaluations, and mission metrics.

Business people on charity boards shouldn’t expect to see growing surpluses the way they want to see growing profits in business because once a charity has sufficient reserve funds to weather a temporary downturn, anything extra is spent on programs.

Here’s what business people could contribute in the area of financial management to a charity board:

• Efficiency in spending and program design
• Analysis of true program costs
• Quality standards
• Introductions to people of means who could become supporters
• Identify overlooked revenue sources (social enterprise, advertising etc)
• Challenge the charity to look hard for ways to achieve sustainability

Forget about Competition

The business world is becoming more collaborative to be sure, but in the end it is about market share and acquiring more of it. It’s about market domination. It’s about analyzing the competition and finding relative strengths and unique value propositions. It’s about growing the business.

Let’s not kid ourselves about the charity world. It too is concerned with self-preservation, but other than a protective concern about staying ‘in business’ in order to accomplish the mission, charities are not about outmanoeuvring other charities, causing their demise or growth for the sake of growth. Their concern is with getting their mission accomplished the best way possible. Just as their focus is mission — not profit, their focus is mission — not competition. They may look at the services available to their beneficiaries to find gaps, but they are not looking for weaknesses in the other charities that share their mission.

Business people can take what they’ve learned from their competitive activities and redeploy it in the charity world in a number of ways:

• They’ve learned how to write a management discussion about operational results. This would be a great addition to a charity’s annual report, because most charities do not do this, but donors and funders would be quite interested in reading it.
• They’ve learned how to write concise, persuasive marketing messages, and they could share what they know with fundraisers and grant writers.
• They know about joint ventures and co-marketing, mergers and acquisitions, and could contribute their expertise for foreign activity arrangements, issues related to charity mergers when they happen, and helping charities structure shared programs with charities that have complementary programs.

It’s Relationship, Not Business

A fairly frequent refrain in the business world to justify an action that may have hurt someone or disadvantaged another business is, “It’s not personal, it’s just business!” Not in Christian ministry. While hard decisions sometimes have to be made, it is the way they are made, the way they are communicated, and the way we try to mitigate the negative affects of them that are important. We can’t just write someone off. Our Christian witness is damaged if we don’t treat another ministry as a part of our own body. People and their ministries are not tools for us to use. We can’t be utilitarian when it comes to dealing with a human being. We must think about the consequences and impact of our decisions on people. The end result might be the same, say the closing of a program, but the way it was done may be quite different from a purely business approach. Our goal at the end of the day is that everyone feels fairly treated even if the outcome isn’t what they had hoped for.

Business leaders can use their business thinking habits to help charities in at least two ways:

• Push for a charity to deal with a problem head-on. Sometimes charity leaders avoid dealing with the tough issues because the issues are too heart-wrenching. Business leaders can help them address the issue dispassionately, but then the charity leader must find a compassionate way to implement the decision.
• Sometimes charity staff can be too selfless, and for the sake of relationship they might jeopardize their ministry’s long term sustainability. In other words, it’s easy to be too agreeable and some requests are just unreasonable. Business people can tell charity leaders to ‘give their head a shake’ and get a realistic picture of what is going on. The board will have to discern what is reasonable and unreasonable and how much God expects them to use their human reasoning capacity and what they should rely on the Lord for, but a business person can help surface the issues.

It’s Stewardship, Not Ownership

People serving on business boards can take a proprietary stance towards the business because they are virtually always shareholders in it. They own it.They are playing with their own money and can make things happen when they want them to happen. Charity directors can’t just make things happen, because they don’t have the power that goes with ownership. The ministry belongs to Christ and they are his stewards. They don’t have the same freedom to do what they want with charitable assets as they might with their business assets and in the charity world, things happen because people are persuaded to make them happen. Business people will have to be prepared for a slightly slower pace of decision making as people are brought on board through persuasion, not power.

Business people (particularly business owners) should leave behind their “What do I want to do?” mentality and replace it with “What’s in the best interest of the mission?” They should leave behind their short term focus on maximizing share value for the next quarterly report and replace it with a long term focus on mission accomplishment.

One thing that business directors and charity directors have in common is that they are both representatives. Usually business directors represent a larger group of shareholders. If they grab on to that representative aspect of their governance role they have a connecting point with charity directors who also represent the ‘moral’ owners of a charity — the public and, for a Christian ministry, Jesus Christ. That might help them loosen up on their feeling of personal ownership.

Business people can find some ways to help a charity through their ownership mindset:

• They’re used to thinking “That’s my money the staff is spending,” so they might help instil a greater sense of care for how money is spent. They might introduce better purchasing procedures.
• They probably think a lot about opportunity and creative solutions, so they could help a charity lift its view of what is possible and get it out of any rut it may have fallen into.

Well, those are my ideas. Any others to contribute? Alternative views?