Governance as Leadership

A new framework for helping nonprofit organizations maximize the effectiveness of their boards.

Written by noted consultants and researchers attuned to the needs of practitioners, Governance as Leadership redefines nonprofit governance. It provides a powerful framework for a new covenant between trustees and executives: more macrogovernance in exchange for less micromanagement.

Informed by theories that have transformed the practice of organizational leadership, this book sheds new light on the traditional fiduciary and strategic work of the board and introduces a critical third dimension of effective trusteeship: generative governance. It serves boards as both a resource of fresh approaches to familiar territory and a lucid guide to important new territory, and provides a road map that leads nonprofit trustees and executives to governance as leadership.

Governance as Leadership was developed in collaboration with BoardSource, the premier resource for practical information, tools and best practices, training, and leadership development for board members of nonprofit organizations. Through its highly acclaimed programs and services, BoardSource enables organizations to fulfill their missions by helping build effective nonprofit boards and offering credible support in solving tough problems. For the latest in nonprofit governance, visit www.boardsource.org, or call us at 1-800-883-6262.

about boardsource x

about the authors xi

preface xv

acknowledgments xxv

chapter 1 First Principles 1

Principle One: Nonprofit Managers Have Become Leaders 2

Principle Two:Trustees Are Acting More Like Managers 4

Principle Three:There Are Three Modes of Governance, All Created Equal 6

Principle Four:Three Modes Are Better Than Two or One 8

chapter 2 Problem Boards or Board Problems? 11

Problems of Performance 12

From Problems of Performance to Problems of Purpose 15

Some Official Work Is Highly Episodic 17

Some Official Work Is Intrinsically Unsatisfying 18

Some Important Unofficial Work Is Undemanding 20

Some Unofficial Work Is Rewarding but Discouraged 22

The Challenge of Reform 23

chapter 3 Type I Governing: Fiduciary 33

Type I Governing 34

The Type I Mental Map 38

The Type I Board 40

Assessing the Problems 45

Conclusion 49

chapter 4 Type II Governing: Strategic 51

Nonprofits Enter the Marketplace 52

Boards and Formal Strategy: A Type I Approach to Type II Work 54

Strategic Disillusionment 56

Strategic Thinking: Beyond a Type I Mindset 62

Governing in Type II Mode 65

The Evolution of Strategic Governance 66

Processes and Structures for Type II Governing 68

Implementing Strategy 75

Why Not Just Types I and II? 76

chapter 5 Type III: Generative Thinking 79

The Power of Generative Thinking in Organizations 80

Inside the Black Box of Generative Thinking 82

Toward Generative Governing 89

Leadership as Governance: Executives Displace Trustees 90

Governance by Default:Trustees and Executives Disengage 93

Governance by Fiat:Trustees Displace Executives 94

Type III Governance:Trustees and Executives Collaborate 94

Can Boards Do It? 99

chapter 6 Type III: Generative Governing 101

Using a Type III Mental Map of the Organization 104

Recognizing Generative Landmarks 107

Generative Landmarks 107

Embedded Issues 108

Spotting “Triple Helix” Situations 109

Working at the Boundary 111

Working at the Internal Boundary 111

Working at the External Boundary 115

Looking Back:The Future in the Rear-View Mirror 116

Deliberating and Discussing Differently 119

The Cardinal Rule: Suspend the Rules 120

Promoting Robust Dialogue 124

Mind the Mode 130

The Payoffs 131

Chapter 7 Working Capital That Makes Governance Work 137

Intellectual Capital 142

Reputational Capital 146

Political Capital 150

Social Capital 155

Capitalizing on Trustees 161

chapter 8 Where to Next? 163

Is the Game Worth the Candle? 163

Diagnostics 167

“Attractive Nuisances” 174

A New Covenant 179

Coming Full Circle 181

references 183

index 189

"Governance as Leadership remains necessary reading for its intended audience as well as for the academic audience at large." (The Journal of Higher Education; Nov/Dec 2007)

RICHARD P. CHAIT is a professor at the Harvard Graduate School of Education. His research and consulting focus is on nonprofit governance and college and university management. He was recently honored as one of Harvard University’s “outstanding teachers.”

WILLIAM P. RYAN is a research fellow at the Hauser Center for Nonprofit Organizations at Harvard University, and a consultant to foundations and non-profit organizations. His work focuses on nonprofit organizational effectiveness and foundation strategy.

BARBARA E. TAYLOR is a researcher and consultant to nonprofit organizations whose work focuses on trusteeship, executive search, and organizational planning and assessment. She is a senior consultant with the Academic Search Consultation Service and a former vice president of the Association of Governing Boards of Universities and Colleges.

Governance as Leadership offers trustees and executives a new and practical framework to govern nonprofit organizations more effectively. The book provides ideas, tactics, and examples that enrich the work of trustees and enhance a board’s value to the organization it governs.

The authors reframe the purpose and practice of nonprofit governance by drawing on theories that have reshaped the concept and practice of leadership. In contrast to conventional advice that unwittingly urges trustees to think and govern like managers, the authors’ new approach invites boards to think and govern like leaders.

Governance as Leadership describes three modes of governance—fiduciary, strategic, and generative—that together enable effective trusteeship. While the first two are more familiar to most boards, trustees often overlook opportunities to be a source of leadership as well as a source of advice, expertise, and fundraising. Most important, the book explains the power and payoff to organizations and boards when trustees govern in the generative mode—the most neglected yet most consequential type of work a board can do.

When trustees gain proficiency in all three modes, the board practices governance as leadership. The trustees discover and do meaningful work, and the organization derives maximum benefit from a previously underutilized resource.

Written by noted researchers and consultants, Governance as Leadership introduces a fresh way to think about governance with sensible guidance to turn these ideas into concrete actions. It will be particularly valuable to trustees and senior staff of professionally managed nonprofit organizations, as well as many others, including foundation officers, donors, consultants, and students of nonprofit organizations who are interested in improving nonprofit governance.