Episode 143 - Policy Governance with Monroe Free

[00:00:06] Speaker A: Welcome to the Leadership window podcast with Dr. Patrick Jinks. Each week through a social sector lens, Patrick interviews leaders and experts and puts us in touch with trends and tips for leading effectively. Patrick is a board certified executive coach, a member of the Forbes Coaches Council, a best selling author, award winning photographer and a professional speaker. And now, here's Dr. Patrick Jinks. [00:00:32] Speaker B: Well, they say that we've hit the fall season, but it doesn't feel like it in Columbia, South Carolina. It's hot and humid this week. But anyway, happy fall technically and welcome to episode 143 of the Leadership Window. This one's a little overdue if I'm being honest. My guest today is not really a guest. He's a partner in our work at the Leaders Perspective, Monroe Free, who is a TLP certified adjunct coach with us and does some coaching work with leaders of all kinds. And Monroe is good at playing a hybrid role of coach, mentor, advisor, consultant. For me, the role he plays is that of dear friend. And we have really formed an amazing relationship over the years. Met Monroe through our shared work in the South Carolina nonprofit space. He is a former chair of our state NonProfit association together SC and he is fairly recently retired from decades of service in the social sector. In particular, his latest run was at Habitat for Humanity in Greenville, South Carolina where he just led amazing growth and change. And we got to know each other a lot more through that work because Monroe engaged me to help them go through strategic planning. And we spent some time doing leadership coaching with his senior team, one on one. And as a team we did some board coaching with them. And Monroe just, Monroe always got it. He always understood what our model and approach was. And so when he moved toward retirement, he said, Patrick, I'm going to retire from this particular career, but I'm not stopping and I want to be of service and of value and I like what you're doing and I think I could help you. And I said, I know you could. And so Monroe joined the team and he's just been a fantastic partner. We're going to, we're doing this episode today and then he and I are both headed down to Charleston, South Carolina to work with a board down there of an organization we've been working with systemically for the better part of a year now. And yeah, Monroe is just, we could spend, we could spend the episode talking about the rest of his credentials, but we'll just start the conversation. So Monroe always obviously glad to have you. We need to do this more often. I think we've said that. But yeah, you're here now. [00:03:20] Speaker A: It's good to be here. I was thinking, Patrick, you've done 143 of these, right? [00:03:24] Speaker B: 143 of these. And then about the same number of the YouTube episodes, which are a little different. [00:03:32] Speaker A: So you started when you were 13? Yeah. Right. [00:03:35] Speaker B: You know, we run these. We try to run them every week. We don't always do it, but typically this show is once every other week. [00:03:47] Speaker A: Yeah. [00:03:47] Speaker B: And it's been up and running since, gosh, when? Four years now maybe. [00:03:52] Speaker A: Yeah. So, yeah, I remember when you started it, actually. [00:03:56] Speaker B: Yeah, they go fast, but they're just so much fun. And, you know, when we started it, it was, you know, calling all my friends and saying, hey, come do an episode with me. I need some content. And pretty soon it just, it took off and it. Today I'll take the moment to brag a little bit about the show. And it's not really bragging, just I'm amazed at how this has actually happened. There is a platform called Feedspot that is the world's largest human curated database of blogs and podcasts. And they rank podcasts by genre. And it's amazing how many podcasts there are in all these different spaces. But in nonprofit leadership, there's a ton of them. And we have ranked in the top 10 for probably the last three years. We're still there. Right now we're at number six. And, you know, we're in there with some people I really highly respect. Joan Gary is in that list of top 10. Rob Harder, Greg Nielsen is a friend and colleague of mine. There's some really good content out there. So what has happened is. Excuse me. What has happened is that I started when the show got out there. I started getting outreach from agents who are doing some PR and things for all these different people. And so I get multiple inquiries a week saying, hey, I've got someone who would be perfect for your show. And some of them aren't. Many of them have been absolutely wonderful. I've met some best selling authors and globally known speakers and from all over the world. I mean, we've had them from Nigeria and the UK and South Africa. And just it's been an amazing run. And now I have the ability to say, hey, Monroe, come over, I want to do an episode because of a conversation we've been having or call up a Ron Harvey or someone. But for the most part, the show comes to me and, you know, I just have to vet it and make sure that it's content that our audience would find relevant. But, yeah, it's been. It's been a great run. [00:06:19] Speaker A: Well, I don't know about you, Patrick. When I do things like this, I learned to, I mean, in the conversation or he's carry nuggets away. And of course, I listen to this when they come out and know a lot of people who listen to it. And it's a. It's just a great learning tool. [00:06:39] Speaker B: It is. And it's. It's great learning for me, for sure. You know, it's just like they say, if you want to learn, teach. [00:06:46] Speaker A: Yeah, that's right. [00:06:47] Speaker B: And not that this is teaching, but. But just getting in there and getting to have conversations with people who have really honed their skill in a particular area. [00:06:56] Speaker A: Yep. [00:06:57] Speaker B: From social media to succession planning to emotional intelligence and burnout, we've had it all. And it's. Yeah, it's just been good. [00:07:05] Speaker A: You kind of get a Reader's Digest version that you can learn from. From people. [00:07:12] Speaker B: That's right. [00:07:12] Speaker A: You don't have to go read the book. You don't have time to go read the book. So you. [00:07:17] Speaker B: I try to read the books. If, If I've got a guest who has a book, I do my best to read the book before the show, before they get there, because I. And I mean, I find it's great. That's the content for the, for the show. And, man, it's just put me on some great books that I might not have otherwise even known about and know about some books coming out. So. So you and I were talking. Well, we've had this conversation many times, but particularly the last couple of days, we've had some conversations about boards. And, you know, we're. [00:07:54] Speaker A: We're. [00:07:54] Speaker B: We're about to hit the road down to Charleston to work with a board who is like many other boards, trying to grapple with what their role is and how to be effective as a board. And you and I have been around the sector long enough in the crucible of staff leadership, as well as on many boards. We've been around long enough to see typical patterns of the way nonprofit boards work or don't work. And one of the things that has come up many times with you and me is a model of governance that it's. It's not the model, but it is a model of governance that can be, I think, highly effective for boards trying to find their way and their. Their role because it's codified, it's structured, it's researched, it's. It's well built, and it's called the Carver Model. Of governance. [00:08:57] Speaker A: JOHN Carver Founder, Carver Policy Governance model. [00:09:00] Speaker B: Carver Policy Governance model. Yeah. And so for our listeners, Monroe is a bit of an expert on this model and has met John Carver and has been through some of his training and has operated in organizations using that model. And so often in our conversations when we're talking about boards and some of the struggles and even dysfunctions of boards have prompted Monroe to say, you know, Carver would say. And so I just thought, well, let's just talk, let's have an episode about what Carver would say. [00:09:34] Speaker A: Yeah. [00:09:35] Speaker B: And because I think a lot of people have heard the name, it's a familiar name, but I think probably very few, relatively few people really know. Well, okay, but what is it? What's the, what's the governance bottle? I mean, we have bylaws and we have a constitution and we have, you know, we, we meet and have minutes and like, what, what's, what's the deal? [00:09:54] Speaker A: Yeah. [00:09:54] Speaker B: So I'm going to turn it to you and just kind of set this up in terms of what is it and how would you put it in simple terms for people who don't know why it would be important for them? [00:10:08] Speaker A: Well, and Patrick, I appreciate you doing this. I'm one of those crazy people that likes to talk about governance as, you know, and because I think it's so critical, the executive director and the staff often get credit for the success or failure of an organization. But the board, there's never a case where a board is not an integral part of the success or failure of an organization. There never is a case for that. That, that's, that's not the, the truth. So it is important. And we, we all know sometimes boards get themselves in trouble and sometimes executives get themselves crossways with the board. There's, there's those kinds of things. And, and what I've come to believe, doing this kind of leadership is that the way you can judge the health of an organization is to look at the relationship between the executive and the board. That relationship will tell you the be the best indicator of the overall health of the organization. So this is a really critical piece. I had someone tell me when I was young that ought to spend 30% of my time just on board stuff as I was leading the organization, just on board issues. I found that to be largely correct, though, if we were functioning well, I was spending about a third of my time and some kind of around governance. And so historically, the traditional, if you will, the traditional model of governance, there's, it's a lot of it is we have Traditions, but we basically fly by the seat of our pants and what. And, and every board, you know, takes those traditions and spins them a little bit and does them a little bit differently. But there was no concise, you know, here's the model. And, and John Carver, years ago as an executive of a non profit, said, I'm going to put one system together. And he really, he thought through it from, from alpha to omega and put a system together that you follow. And it's thought through the issues. It, you know, boards say, well, we're a policy board. If you follow the Carver model, you really are a policy board. And I see a lot of boards that follow traditional model. They say we're a policy board, but all they ever talk about is operations. I'm even on a board that's, that's like this where the board meeting is all historical. The staff comes and says, this is what we did last month. And that's, you know, that's not particularly helpful in terms of the overall health of the organization. So all that to say Carver, Carver's model is, is concise. It focuses on written policies, it focuses on accountability, systems of accountability and it focuses, it focuses the board on the future. And so that's, that's what the model does. I think the. Well, let me stop there. I'll just ramble. I don't need to ramble. I need to, I need to be specific here. [00:13:53] Speaker B: That's what we do on the show. So the question then, the first question would be for a non profit leader out there who would say, well, I don't, I think everything. You just, we must be a Carver board then because we have policies, you know, we have a reserve policy and a finance policy and we have a code of ethics and we have, you know, we have bylaws and we meet and do minutes and we have like, we must be a Carver board. [00:14:18] Speaker A: Yep. [00:14:19] Speaker B: So what is the difference really between a Carver run board and what we're saying is a. Yes, traditional model. [00:14:28] Speaker A: So in the Carver model there are four kinds of policies. And the first, first policy is the most critical policy. It's called an ends policy. And the ends policy says, this is who we serve, this is what we do, this how we do it, and here's what the cost will be. So let's take Habitat, my latest example, and said, okay, Habitat, we serve families with low income with affordable home ownership. That's a just a general, general statement, but it really lays, these are what we're trying to achieve. This is what we're, who we're reaching for. This is what we're trying to achieve. These are the ends we are after. And so that's the first and the most critical, the one the board has to focus on constantly. [00:15:25] Speaker B: And are those when you say ends, like as opposed to means? [00:15:30] Speaker A: Yes. Right. [00:15:31] Speaker B: We care about the results. And this is, this is who we are. So that ends policy would state what I think if we were to, if I were to parallel that with the traditional. We would say our strategic objectives. I mean, is it the same thing to say. Yeah, at Habitat, here's who we serve. So we have our mission statement that's part of, I guess, the INS policy. But we also say, you know, are there, are there key, like big strategic objective indicators that are the. Well, because I think most people, when they hear the word policy, they're not thinking about the articulation of the mission piece. [00:16:07] Speaker A: Yeah. So when a board sets a policy, it starts at the most global level. This is, you know, we, we serve low income families with affordable housing. That's the most general level. And then they kind of narrow it down and say, what else do we want to say in this policy? So you might say that we're going to serve 15 families with new home ownership opportunities and we're going to do 60, have 60 families with repair work. And so yeah, you, you start globally, you narrow it down and narrow it as much as you board feels like it has to to say. And that when I say have to say that they feel comfortable that, that if I say this much, the organization will, will be in good. Be in a good position to serve the parameters. Yes. [00:17:10] Speaker B: In which we operate. So, but again, just to, just to hit on this a little bit more. Excuse me, what you're describing, tell me if I have this right because so far everything you're describing, every board I know, every organization I know has those things. Right. We're, this is our mission. We're going to serve 15 family. You know, we've got these again, what I would call strategic objectives. [00:17:33] Speaker A: Sure. [00:17:34] Speaker B: Okay. Is the difference that Carver or a. Having an ENDS policy codifies it more securely? Strictly, you know, is it just make it less. I'm trying to figure out the difference between a policy and a strategic objective. [00:17:59] Speaker A: Well, what's unique about the ENDS policy is it fits into the total model. You don't stop at the end policy. Most organizations in a real sense stop at those strategic objectives. We either achieve them or we didn't. Right. And so it's important to take the ENDS policy and match them up with another with the next kind of policy, which is called executive limitations policies. And executive limitations tells the executive, don't cross this boundary. Give you an example of, from a financial policy might say, don't spend more money than you bring in. It might say, don't violate HR laws. You know, very. Some very broad things, but at the same time, very, very relevant. And it says, don't do this. Don't do. Don't do these things. It's in a limitation. It's always written in the negative. And, you know, people struggle with that a little bit. But think about it this way. In the traditional model, a board says to the executive, stop until we say go. I can't go do things until I get board approval. I hear executives say that all the time. Well, I have to talk to my board. I have to get approval for that. Well, what the policy governance model says is go until we say stop. It's very entrepreneurial. [00:19:35] Speaker B: It's empowering to the executive. [00:19:37] Speaker A: Powering to the executive. You don't, you, you don't have to ask the question, can I do this? The board's already said, don't do this. Everything else is. Is okay with us. So it's a. It's a very, very structured model. So as an executive, here's what I loved about it. I always knew what my evaluation was going to be. Did I achieve the ends? Was I in compliant with the executive? Was I in compliance with the executive limitations policy? I knew as a board member, and I'm a. I'm a board member and a chair of the governance committee of a board that uses Carver's model. And as a board member, I love it because I can look very clearly and say, did we achieve the ends? Are we. Are we as our executive, in compliance with the policies now, those policies? And Carver says something I think is really important, that those, those policies are expressions of our values. And I think that's a really important distinction. And I think policies in the traditional model are expressions of our values, but we don't necessarily think about them like that. So we value financial health. So here's some policies that are going to help us be, in fact, financially healthy. We value our employees. We see them as critical to the success of the mission. So here's the values, here's our values around how we want to have relationship with our employees. It really. Go ahead. [00:21:30] Speaker B: So when you talk about the executive limitations policies, are there any limitations? How do I want to word this? Limitations on the executive is one thing, but as I understand Carver, it's also an articulation of the board's limitations, is it not, does it not say, yeah, so, so it's, here's what we can and can't do as well, not just what the executive can do. [00:22:00] Speaker A: That's a great intro to the third level of policy. Okay. The third kind of policy in the policy governance model is called board staff linkage. And in those policies, it describes how the board is going to relate to the executive and how they're going to relate to other staff, what the relationship, what the relationship will be, how it will function. And it spells it out real clearly. You know, most commonly it'll say something about the board has one employee, the executive, you know, and it says, we won't, we won't interfere in staff, personnel, personnel issues, et cetera, et cetera. I mean, it'll lay that, lay that out in written policy. So it does do that. And then the fourth level of policy, a fourth kind of policy is governance. I'm blocking the name at the moment. I don't have my book Process, Government Processes where the board says, this is how we're going to operate. So committees, agenda of how board agendas are put together. All the stuff that we, you know, we used to say, do we follow Robert's Rules of Orders? Well, this is how a board wants to operate. It has its own Roberts rules of orders in those, in. In those policies. So those are the four policies. And then here's a key to the model is it gives you a clean system so that you can review those policies regularly and consistently. So what, what the COVID model says is that at least annually, at least annually, we will review the ends policy and executive limitations policies in a written form. And that written form says, here's here, executive Director, here CEO is the policy. Our financial policies. Tell us what your interpretation. Write down what your interpretation of that policy is and then give us the evidence that will support that you are in compliance. So let's take that basic policy, don't spend more money than you bring in in a year. The interpretation of executive may be that our P and L at the end of the year reflects that we, we're in good shape. Right? That we're, we've not spent more money than we brought in. And then the evidence will be that P and L, you know, annualized. Annualized. Annualized. Yeah. You don't have to. I mean, a board could say we want to look at it monthly and you got to make it. The board could say that. Right. I'd hate to be the executive in the Organization. But, and, and then in some structure, the executive at least once a year has to show the evidence that I'm in compliance or I'm not. And that accountability frees the board from worry. Is my executive director doing their job or is it not? [00:25:22] Speaker B: So that leads to one of the biggest questions then about the model. And you heard this and I've heard this and we've been in the same room when it's come up. A policy governance board squelches board engagement. Okay, myth or reality? [00:25:41] Speaker A: Well, I want to answer that question. Both is a myth because the idea. [00:25:52] Speaker B: Is that it, it, it creates a hands off board. Right from the very beginning, the first policy you talked about was the ends policy. Like these are the ends, these are the limitations. Now we're going to step out of the way, do your thing in each year. I mean I'm just, I'm playing devil's advocate here. But, but you know, each year you tell us as you comply, we're going to look at the ends. Other than that we don't have a role. In fact, we don't have standing committees. Yeah, we don't. If it's pure Carver, you know, there's certain things and so boards, boards have, or executives have the idea then that that creates a hands off board, that why do we need you when really we need you? We need engagement. And boards score low in engagement across the, across the sector really self assess. They say we're not very engaged and we'd like to be more engaged. How do you marry those two? [00:26:44] Speaker A: Yeah. So let me, let me just give you a live example of what I went through at Habitat. So Habitat's famous right for building new homes for families. You know, we and habitats really good at that. And, but, and initially the ends policy of Habitat Greenville said something. You know, we'll build 10 new houses a year. That was great, you know, but because the board stayed engaged and thought more and more about ends, what's the ends we want to achieve? They started asking the question, if we believe home ownership, if we really believe that home ownership is critical to the financial well being of families, that it can be transformative to families, and if we believe that it's healthy for the communities, how else can we use home ownership to, to, to serve families? And we said, gosh, there's a bunch of low income families out there who own their homes but can't afford repairs. Said so our ends, we need to change our ends policy not just to build new homes, but to repair homes and impact low income families by Repairing homes. That's a. That's how a board stays engaged, thinking, how can we take what we do and make greater impact? And that needs to be a constant question. [00:28:20] Speaker B: Yeah, so you're onto something now that I preach a lot. So. So Carver doesn't squelch engagement, it redirects it. [00:28:30] Speaker A: Absolutely, Reader. [00:28:32] Speaker B: And so the engagement is in itself, the engagement is the board engaging in its own active governance. [00:28:41] Speaker A: That's exactly right. [00:28:42] Speaker B: And at the top of that is strategic thinking and direction, which, I mean, which I'm equating within policy. [00:28:50] Speaker A: And Patrick, you. The reason it can do that is because the system is in place that says operations are taken care of. We have written policies about our expectations about operations. And we can ask the executive. We ask the executive, and he gives us evidence that he's in compliance. Our operations are okay. We don't need to think about whether we have a new need, a new telephone system. We don't need to think about those things. What we need to do is focus on how do we. How do we impact our community in larger ways? And let me give you just another example that I'm in right now with an organization that serves seniors in retirement. And so we have all these residential services that we offer, but we see that the population of seniors is exploding, you know, baby boomers. As we retire, that crowd is just getting larger and larger. We can't build enough. We cannot afford to build enough residential services. So how do we take our services to people who are retired in our community? What's the way that we can take our services and impact the community, impact the population? We could serve different than residential services. [00:30:29] Speaker B: I think you've read the book Governance as Leadership. [00:30:32] Speaker A: Yes. [00:30:34] Speaker B: And I think it's seminal work in the sector. And they talk about three. They talk about three kinds of boards. [00:30:41] Speaker A: Not. [00:30:41] Speaker B: Not governance models, but yeah, fiduciary, strategic and generative. And the idea that most boards only operate in the fiduciary, and even at the base level of what we call fiduciary, like managing the budget and, you know, approving the minutes and even hearing reports and the things we associate with the term fiduciary a lot, which is wrong, but that's what we associate it with versus the. The amount of time that boards spend on strategy and thinking about strategy and articulating it and measuring risk and, and. And innovating and. And then generatively, am I creating and innovating? Am I. Am I adding value? Are we building something? You know, yes. Or are we just doing the fiduciary stuff. And you know, I did some research on this and for the book on strategic planning I wrote a number of years ago. And here's what, what I found. We asked 100 nonprofits across the country, all different kinds, shapes and sizes, arts organizations, health and human services. We said, how often does your board meet? And the average answer among the hundred randomly chosen nonprofits was six times a year. Is the average. We then asked, how long are your board meetings, not counting meal times, average, about an hour. Now I pause there and I always do some math with boards when I go through this. That's six hours a year that the board is together now, not counting committee work or attending events or even doing other work for the organization, but as a governing body together in one place doing governing stuff six hours a year. And these are volunteers who are off, who are more often than not, not experts and professionals in the field that the organization is in. And they're spending six hours a year together. [00:32:47] Speaker A: Yeah. [00:32:48] Speaker B: Articulating really important stuff or not. Now the math gets worse. We ask them how much of your meeting time is spent at that fiduciary level. Report outs, operations budgets versus strategic or generative dialogue. 87 of the 100 organizations said less than half our time is spent at strategic and generative levels. That's less than three hours a year. [00:33:23] Speaker A: Yes. [00:33:24] Speaker B: That the governing body, on average is spending together on strategic thinking, dialogue articulation, or generative ideating and value creation. [00:33:35] Speaker A: Yes. [00:33:36] Speaker B: That's horrific when you think about it. [00:33:38] Speaker A: Yes. [00:33:39] Speaker B: And we ask boards all the time, how are you spend. What do your board meetings look like? And they'll tell you, oh gosh, we sit around and argue about, you know, the cost of toilet paper went up this month on the, on the, on the line item. [00:33:53] Speaker A: Yeah, yeah. I was in a meeting one time where they, somebody 15 minutes was spent on the light bulb was out on the back entrance of the building. [00:34:02] Speaker B: And we need to fix that, don't we? I mean, isn't that fiduciary oversight? [00:34:06] Speaker A: Let's. [00:34:07] Speaker B: Because people are coming into that. You know, it's a safety issue and it's a thing. I mean really. You're so right. And, but, but, and it's not, it is an indictment on the boards, but it's not an indictment on their character. They've been trained to act that way. [00:34:21] Speaker A: That's exactly right. [00:34:22] Speaker B: We've done that. And so they, they want to do well. You know, number one reason why boards aren't as engaged as they would like to be. I love asking boards this Question. Because they self assess. [00:34:34] Speaker A: Yeah. [00:34:34] Speaker B: You've seen our five by five assessment. It measures 25 competencies of a nonprofit board. Engagement always 9.5 out of 10 times is always in the bottom three of the 25 components. And then we ask them, why is that? Number one reason. We don't know what to do. It's not correct. It's not. We don't have time. We're too busy. We're on too many other boards. We don't really care that much. We don't know what the organization wants from us. If you ask me to do it, I'll probably say yes. [00:35:06] Speaker A: And the CEO has some responsibility in this very much. But from a CEO's perspective, you're trying to get what you believe needs to be gotten. You're trying to get something approved, trying to get money allocated and are either you're defending your position and that's what you spend your time doing. And so you set up the board meeting, you plan the board meeting with the board chair around those two things instead of the generative thinking. So what if. If I was. If I was trying to convince you right now of the Carver model? I'd say what if. What if I could handle all the operational, the issues of the organization in the first 10 minutes of the board meeting? I could say, here's where we are in our ends policy. Here's. We're in compliance with all these policies except this one. And here's our plan to get back in compliance. And the board says, okay, great. Or either the board says, we don't like that policy anymore and we need to appoint a task force to deal with, to. To look at that policy and see the ways we need to adjust it. And now we're done. Now we got 50 minutes. If you only take an hour, you got 50 minutes to think, okay. How can we use our mission to impact this community? [00:36:32] Speaker B: Yeah. And that's the part you have to prepare for even more. [00:36:37] Speaker A: Yes, that is much harder to do. [00:36:39] Speaker B: That's right. [00:36:40] Speaker A: And I mean, I should have started with this probably. What Carver says is the fundamental role. [00:36:45] Speaker B: Of the board. [00:36:48] Speaker A: Is to represent the owners and stewardship. Yeah. So you. We think about that with for profit boards. That's what they do. Right. [00:36:58] Speaker B: They represent the owners, which are easy to define. [00:37:02] Speaker A: Which are easy to define. So how many boards, nonprofit boards of you do you know who wrestle. Who are the owners? Who are the owners? Who are we representing here? How is the best way to hear from them? How is the best way to represent them in this meeting? Yeah. I mean it's, those are, you know, if you spent, if you spent that 50 minutes, every board meeting just wrestling with who are our owners and how do we hear from them? What's the best way to represent them? And you're going to have some really. [00:37:38] Speaker B: Strategic issues or unpacking what we are hearing from them because we are intentionally hearing from them. [00:37:44] Speaker A: That's exactly, that's exactly right. But it's a really tough question. I mean, it really is a tough question. My example, my most recent example is Habitat. Who are the owners of Habitat? Habitat homeowners. Wow, that's an interesting question. You know, you get into all things. You could talk about conflict of interest, you could talk all sorts of things because you've, you're starting to define. So let's say donors or donors. Well, a donor who gives us $5 a year. Are they really an owner? [00:38:20] Speaker B: So I'll tell you what we learned in organizational leadership in my, in my doctoral program. And I've heard this in other sort of avenues like you know, Duke's nonprofit management thing and all that. Everyone who is a citizen of the geographic footprint of the organization is technically an owner. [00:38:40] Speaker A: Technically. [00:38:42] Speaker B: And they, so most of the owners don't even know their owners. [00:38:46] Speaker A: And, and, but, but okay, but which, which group are we going to represent? Right. [00:38:51] Speaker B: Who are the key stakeholders we need to hear from? Who are the, who are the primary ones? But I want to come back to that ownership thing for a minute. We break it down simply. Nonprofits are businesses with a different tax status. [00:39:05] Speaker A: Okay. [00:39:06] Speaker B: And there's argument about that. But if you think otherwise, you're wrong. And it's my show. It's my show. But, but no, the idea is you get a tax break from the federal government in exchange for what? Yeah, in exchange for a social promise. Your mission statement. That's why you have to put your mission statement on your 990 tax return as a non profit you're getting in exchange for a creation of social value. [00:39:33] Speaker A: Yep. [00:39:34] Speaker B: A tax break. Now, but we still need to raise. The government still needs to raise revenue. [00:39:40] Speaker A: Yes. [00:39:42] Speaker B: So that, that money gets paid somewhere by someone, by somebody you know who pays it. The owners of the non profit that don't know their owners. [00:39:51] Speaker A: That's right. [00:39:51] Speaker B: Like that's the break is it is a citizenry sort of thing. And so when we do what we call stakeholder mapping, it's okay. But now who are the owners that do know their owners? And they, they have a voice in what's going on. It's their resources and assets and mission. You are stewarding. [00:40:13] Speaker A: Yep. [00:40:13] Speaker B: And what about the owners that don't know their owners? [00:40:16] Speaker A: That's right. [00:40:17] Speaker B: And how are we hearing from them? [00:40:18] Speaker A: How. What are we hearing from them? That's exactly right. And what's the system by which we're going to hear? So. And there's a difference, just as you were describing. There's habitat. There's somebody who shows up and works three hours on Saturday morning to help build a house, and then there's a guy who gives us 250 hours a year volunteering. We need to hear from them differently. [00:40:46] Speaker B: Yeah. [00:40:47] Speaker A: One has one. One opinion, frankly, matters more than another opinion. But you're right. And then how do we. How do we hear from the. The public that we represent? We. By reading. By. By reading our environment. So we have to be constantly being. Doing. We used to call them environmental scans, or they used still call them environmental hands. So. But it's. It's. It's fascinating work for the board. It's more work for the executive to help the board, but it is healthier for the organization. [00:41:24] Speaker B: Okay, but Monroe, we don't need our board to sit around and talk. You know that. That our board. We know what we need from our board. We need them to raise money. Doggone it. [00:41:34] Speaker A: Yeah, yeah. [00:41:35] Speaker B: And Carver. Carver won't let you do that. Right? I mean, these are the conversations. It's like, well, if I have a Carver board, then how do I get him to raise money? I need him to raise money. [00:41:48] Speaker A: You said during the introduction, I spent a week with Carver himself doing the model. This would have been in early 90s, late mid-90s, maybe. I went to Atlanta and spent a week with him and his training with a group he was training, and I challenged him on that. And Carver was not a person who held weak opinions. [00:42:16] Speaker B: And he didn't mince words. [00:42:18] Speaker A: He did not mince words. And he said, well, Monroe, answer this question for me. Which is more important, governance or fundraising? Would you rather your board govern well or raise more money? I think that's a false dichotomy, and probably if you pushed him, he would too. But his point is that there's only one. His point was only a board can govern. You can hire people to raise money, and you do everybody. Not everybody, but most people. Most nonprofits hire somebody to raise money, but you can't do governance. Only the board can do that. And I think that's a valid point, but I don't think it's either. Or, in fact, if. If you got a board that's sitting there wrestling with how can we advance our mission in this community? How can we have more impact? How can we take home ownership and apply it in a bigger way to impact people with low income? You get them wrestling with that and get some consensus around this is what we need to do. Now you got a board who's energized to go out and talk to family and friends and employers and raise more money. [00:43:36] Speaker B: What I've. What little I've read on Carver would suggest that you can have board members do all kinds of things. [00:43:42] Speaker A: That's right. [00:43:43] Speaker B: But it has to be clear that what they're doing is outside their governance role. [00:43:47] Speaker A: That's exactly right. He talked about putting hats on. [00:43:50] Speaker B: Yeah, yeah. So even committees by standing committee. I think what Carver's talking about is that that have an authority or a management authority of sorts versus an advisory committee or something like that that you can have. [00:44:08] Speaker A: That's right. [00:44:08] Speaker B: But it's outside the governance policies. [00:44:10] Speaker A: That's right. Cover would say when you, when you're raising money, you got a volunteer hat on. You know, you're. You put your governance hat on to deal with the governance issues. And he did say he. He was against committees. I'm. I'm not that pure. Yeah. But that there's. There's not a place for committees. And he would say you can have these groups that can help, and a board member can be on these in these groups, but they're a volunteer there. So he would also say keep a board small. In fact, I heard him say any board bigger than seven, you need to have. You need to justify why it needs to be more than seven. I don't buy that. But his point is that the whole board dealt with the finances. The whole bill or board belt dealt with the critical part of governance. Yes. [00:45:07] Speaker B: Yeah. [00:45:08] Speaker A: Yeah, yeah, boy. [00:45:10] Speaker B: Well, we could do another hour on the right side. [00:45:13] Speaker A: We've been doing this an hour. [00:45:14] Speaker B: No, not quite. But we could do a whole hour on the. On the optimal size of a board, too. A whole different thing on that. So a lot of what I hear is that for organizations who don't like the. The purest nature of Carver, the rigidity of it is that they'll do what's called Carver Lite or a hybrid, where let's have. We like the policy. We like the executive limitations. We like the INS policy idea and the staff board linkage and all that. But we also, we do want to engage our board in some of the function of the organization, from marketing to fundraising to investment strategy, whatever programs Even. And so we don't want to give that up. And for organizations that would say, that's why we don't do a Carver model, there actually are steps you can take toward a more Carveresque model and still engage your board. Would that be a fair statement? [00:46:17] Speaker A: That is a fair statement. I've never seen a board that ran purely on the model by Carver's definition. [00:46:25] Speaker B: Right. The pure model. [00:46:27] Speaker A: And, you know, this was Carver's baby. So he would say, no, you can't. You got to do it all over or none at all. Or at least that's what he said early in his career. And I think. I think you can. You can adjust in some ways. You can adjust some ways. You can have. You can have committees. [00:46:52] Speaker B: In your opinion, and we will. We will wrap this here in a minute. In your opinion, is there an optimal size organization that's conducive to a Carver model? In other words, is Carver easier to implement and more valuable in a small organization of five staff or in a large national movement? Or is it somewhere in between? Is there a sweet spot for where that policy governance model works best? [00:47:24] Speaker A: To answer your question, I've worked with. To put the Carver model in place with organizations that had 150, $200,000 budget, work with an organization of 25 million to put the Carver model in. I don't know. I don't think there's an. I think it works across any size organization. I will say this, Patrick. The organizations that tend to call you about helping with this are organizations that are dealing with board staff conflict. You know, how do we. How do we keep the board out of management? And the. The other group that tends to call you somebody a board that really likes or an executive that really likes a system that likes to know this is that this is the way this is going to work. Those are the people that. That tend to call you boards that have problems. And frankly, frankly, one of the places that I've instituted where I was the executive, where we brought in the Carver model was because in the three years previous to my taking that role, they had had three executive directors. The longest tenure was 14 months. And it was around board. Board and executive couldn't get on the same page. And we needed a model that kept the board focused on governance issues and an executive on. On management issues. And so that tends to be who calls you. But man, if you really want your organization to spend time. I love the word generative. If you. If you want them to generate new future for you, this can free you up to do it without. Without sacrificing oversight. And, you know, here's a, Here's a key, here's a key. The traditional model. The traditional model is a board is a heightened management, has a heightened management role. And in the carver model, you have a heightened owner role. You're hearing from the owners, you're thinking about the community, you're thinking about how to apply the best way. So, and that's a, that's a really. If, if you need more the board to manage more Carver's pop not your may not be the model you choose. [00:50:18] Speaker B: Right. [00:50:18] Speaker A: If you want your board to be more generative, Carver is a really good way to do that. [00:50:23] Speaker B: Well, you're, you're a champion of it. Let me ask you one last question. I have, I have come over the years to describe the role of a board in three pillars. And these are. You can argue these to the sun comes up. Governance, strategic direction, and stewardship or ambassadorship of the brand. Do those line up with a policy governance model? [00:50:56] Speaker A: Yeah, they absolutely, absolutely do. In fact, I think in the, in the policy governance model, it'd be hard to separate governance and strategic direction because. [00:51:05] Speaker B: The strategic direction is the ends policy. [00:51:07] Speaker A: That's exactly right. And I think if, if you got a board that's. That's not thinking about can we pay the telephone bill or do we need a new light put up in the. On the back of the building if you get them, that doesn't excite a board. It bores the socks off people. If you're the executive, it bores the socks off you. But if you got a board who's talking about how do we generate more impact in our community with our mission? [00:51:42] Speaker B: That excites people. [00:51:43] Speaker A: That helps people express their creativity. It helps, you know, people are imagining and in their imagination, it takes them to. It gives them energy. [00:51:56] Speaker B: And especially when you can see it get implemented. [00:51:59] Speaker A: Yeah, it's absolutely correct. That's absolutely correct. And so, you know, I like the model. That's not the only model I've ever done. I've done the traditional model. I've worked with boards that do the traditional model, worked with organizations that, you know, if you got good people, the structure matters less. But if you want to be a great organization, board structure really matters. [00:52:23] Speaker B: This just came to my mind and I. It took me a minute to get it, but then I really got it. And so I'm a fan of this concept. You can tell me yours, Marty Martin is a. Or was. I guess he still is. I haven't seen him in years. But he was a nonprofit attorney and one of the teachers in Duke University's nonprofit management program. And this is, off topic, a little bit of the governance thing, but it just came to my mind, and I'll get people angry with this, and then we'll sign off. He says, you can serve on one board in your community without having a conflict of interest. And I heard him say it in the room, and hands started going up, Right. Well, wait a minute, Dr. Martin, you don't understand. We have a small community. I mean, there's only so many board members to go around. And, you know, we've got people who are volunteers who have the time to serve on four different organizations, and we don't see a conflict. We think you can serve. And he says, well, you can't, and you're wrong. But I'll give you this question. You're sitting at dinner tonight with a wealthy potential donor. Who you pitching? [00:53:46] Speaker A: Yep. [00:53:48] Speaker B: Boom. Conflict of interest. Because if the answer is, I'm pitching all four. Okay, that's. So you're diluting the gift four ways. [00:54:00] Speaker A: Yeah. [00:54:01] Speaker B: That is a textbook conflict of interest is just not the kind we think about when we think conflict. We think, I'm getting a kickback for some, you know, thing in the organization. But that's his stance. He says, I don't care how small your community is, you should not be serving on multiple. And I mean, I. I go to board meetings where board members brag about the eight boards they're on. [00:54:23] Speaker A: Yeah, I know. [00:54:25] Speaker B: What do you think about that? I think that's a big. I think that's a. I do think it's an issue, and I see it. And then you have. Well, I, I l. People who say, well, I was going to be here this afternoon, but I got another board meeting. Really? [00:54:39] Speaker A: Yeah. Yeah. I think that's a. I think that's a point that really needs to be talked about. Patrick, I would. I would say this. There are at times benefits from somebody serving on multiple boards because they see they. They have a broader view of the community. Yeah. And they see ways that collaboration can happen that maybe wouldn't see naturally. I think, to respond to the illustration he used of potential conflict of interest, I think my answer to your question is doesn't have to be a conflict of interest. If what you ask for is what the donor wants, that we think about fundraising is raising money for the organization. If we think of it more as helping us helping a donor find what they want to give to what their passion is, then it's Less of a conflict. Now, having said that, not very many are sophisticated enough in their fundraising to do that. So I think it is a problem. I mean, I've run into it in, in my, my career, I think. Yeah. Anyway, we can talk once again, we could talk about this for, for a long time. And I won't, I won't drag it out. [00:56:06] Speaker B: Give me, give me the one thing you would tell non profit boards as we sign off. What's your, what's your, what's the most important principle to you for a, for a non profit board to keep in mind? [00:56:19] Speaker A: Well, and maybe this because of our conversations recently, what I've been thinking about, but I had a wise old board member. He died last year, as a matter of fact. He was from Knoxville, Tennessee. And he, he said to me one time, we were wrestling with, with a problem and he was a board chair, and he said to me, says Monroe, don't judge things by where they are at any given moment. Judge things by the direction they're going. And I would encourage boards to think about direction, not events. [00:57:01] Speaker B: It's good. [00:57:02] Speaker A: And the model we've been talking about helps, can help with that. [00:57:08] Speaker B: Yeah. But you know, we always say strategy is not an event, but it is for a lot of organizations. And strategy is a four hour board retreat once every five years where you do a SWOT analysis on a flip chart, come up with five strategies that the organization's never going to implement. That's right. I'm irreverent when I say those things. My book is full of those little, what I call irreverent moments, but they're true to too large a degree. And so you and I were talking last night about, is strategic planning dead? Well, in its former form it might be, or it's at least far less relevant and impactful. But strategy and strategic thinking and strategic directing can't, Is not dead. It can't be. [00:57:59] Speaker A: Well, if you think about. Yes. And if you think about direction in that context. [00:58:04] Speaker B: Yeah. [00:58:05] Speaker A: You got a lot of nonprofits out there who are happy with what they're doing. [00:58:12] Speaker B: Yeah. [00:58:14] Speaker A: And the board, the board's not thinking direction. Yeah. They're thinking satisfaction. Yeah. And you know, we need, well, where, where are we headed? Where are we going? Are we going backwards? Are we going where? Anyway, you and I can talk, as we've proven on a number of occasions, and we talk about this a long time. [00:58:34] Speaker B: Yeah, we can. Hey, thanks. Yeah. This is an important conversation. I mean, you can get into, you know, you can go get the Carver books and look it up online if you're interested in this. I have more and more come to appreciate its. Its value. If for no other reason, it gets us thinking about what our role is and how we ought to be functioning as a board. So, hey, folks, folks, thanks for joining us. We'll see you here next time. Lead on.