Caroline Copeman shares questions that trustees should be asking as part of their responsibilities, which include challenging the organisation to find alternative and even more sustainable ways of delivering mission impact.
The writers on governance - Chait, Ryan and Taylor in Governance as Leadership (2005) introduce us to the important concept of governance 'modes' for nonprofit boards. In particular the notion that as well as the fiduciary mode (our stewardship and scrutiny responsibilities as trustees) and the strategic mode (our responsibility alongside management to shape and evaluate our strategy to deliver impact), there is also the generative mode.
This is the requirement for us as trustees to reframe our thinking, challenge the organisation to generate new ways of looking at opportunities, issues and solutions, stretch and challenge the organisation to find alternative and even more sustainable ways of delivering mission impact. Or even reframe our understanding of "mission impact."
Surely conversations about new funding models such as social investment have to play a part in these deliberations?
In our consultancy work with nonprofits, we are increasingly being asked to support boards to ask the right questions about social investment. So here is a selection for each governance mode:
- How can we diversify to create both greater mission impact for our beneficiaries and new flourishing income streams?
- How can we deliver our mission in a way that will generate both impact and regular financial return?
- How could a loan help us grow our impact?
- What's the cost of not finding a new approach to funding our work?
- Who would pay for our services – what new markets can we look at? Who in our existing market could pay?
- How can we use technology to create more impact for those we serve?
- How can we scale up those activities where our business model is sound?
- If we’ve got an income stream for this (even if it’s payment by results), why can’t we look at getting a loan to help us rather than fund start up from unrestricted monies?
- If we turn to a social investor, maybe one who is aligned to our mission, can we both improve our focus on social impact and get a better rate on our loan than we get from the bank?
- What's our risk appetite? Where must we have low risk tolerance? Where can we afford to flex?
- Do we have sufficiently different attitudes to risk across board members to ensure that we challenge each other to explore new and different options?
- Is social investment culturally right for us?
- Do we have the DNA to market ourselves differently if we are going to start trading differently?
- Do we have sound data and management systems that enable us to monitor and evaluate results and report these against expected outputs, and outcomes?
- Do we have the right people, skills, systems and processes (and culture) in place to handle new and different ways of working? Are we investment ready? (And you could say that being investment ready is a good benchmark whether you are looking for social finance or not!)
The Centre for Charity Effectiveness at Cass Business School (Cass CCE) is the leading nonprofit and philanthropy centre in the UK. Find out more about their resources and events for charities and social enterprises.