Doomed at the Start

Doomed at the Start


BOB HARRIS, CAE

Contributing Writer

What follows are four scenarios of chamber leadership that could signal trouble for the year ahead.

Governance Isn’t My Thing
At a leadership forum for officers and executives, I asked a participating chamber of commerce executive/president if she had brought her chief elected officer along with her. I was surprised by her answer.

“No,” she replied, “the chairman said that governance is not something he’s comfortable with and suggested that I attend onhis behalf.”

This answer surprised me because the primary role of the elected chair is governance, which is generally defined as “advancing the mission in accordance with governing documents to achieve results on behalf of members.” If discomfort exists therein for an elected chair, it should be resolved before he or she takes office.

When a person is nominated or installed, they must understand their role; watching someone rise through the board chairs might lead one to assume that that person is comfortable with governance.

The job requires the chief elected officer to be a model of good governance. Other directors will follow his or her example.

Governance is different from management. An executive director is responsible for managing the organization; the chief elected officer leads the governance. Therefore, assuming the role of chief elected officer requires one to be a model of good governance, as other directors will follow his or her example.

Directors unfamiliar with governance tend to slide into micromanagement. Their discussions become tactical, bordering on staff and committee work Fiduciary duties bolster goverance. Directors are fiduciaries acting as agents for members to make sound decisions. A fiduciary must use the utmost care in preserving the organization’s assets to advance the mission.

Some organizations refer to their directors as “trustees.” This serves as a reminder that members should be able to trust that directors are working on behalf of their interests.

Hearing an officer say, “Governance is not my thing” could be a sign that the coming year will be a difficult one.

Not Good With Finances
The board is responsible for the assets of the chamber. In this scenario, the financial statement was distributed at the board meeting. Several directors began questioning the merits of $75 line item. (The “deep dive” often starts with a director saying, “I just have a question …”).

The $75 expenditure had to do with memorial service flowers. Directors deliberated for an hour questioning the purpose, continuation, and exchanging points of view. Eventually, a motion was made to increase the line item to $500 to take care of memorial service needs for members.

After the robust discussion, I asked the board chairman why he allowed an hour for a discussion that was slated to take ten minutes on the agenda. He said, “I’m not good with finances and I didn’t fully understand their questions.”

In this case, the chamber’s assets were $2.4 million, as indicated on Form 990 and the board’s quarterly financial statements. They had more than $1.4 million in savings. But directors focused on the smaller line items rather than the organization’s comprehensive assets.

I questioned why they had amassed an amount far exceeding the annual budget. He said, “It’s our rainy day fund.” This spoke to a deeper trend of current directors being afraid to spend what had been built up before them.

That was regretful because the strategic plan, as well as the executive director, had suggested spending a small portion of the savings (less than three percent) on technology and a needed staff position.

I suggested that the board might spend less time on $75 line items and focus more on the $2.4 million intended to advance the chamber’s mission and goals.

I Should Have Asked; Do We Have A Strategic Plan?
The chamber chair in this scenario had served nearly half of his term when he turned to the executive director and said, “I should have asked; do we have a strategic plan?”

Before taking office, this chair developed a lengthy to-do list for himself and his staff. He explained to the executive that he wanted to “leave a legacy.”

During weekly calls with the executive director, the conversations were about what the staff was doing and how said to-do list was being advanced.

The chamber, however, had developed a strategic plan eighteen months earlier. But this chairman had missed that retreat and indicated that he didn’t think the stragic plan represented his interests.

Do We Have A Foundation?
The chamber in this scenario had developed some subsidiaries in the past decade: a foundation to support research and scholarship efforts, and a political action committee to increase political influence. The foundation shared the chamber’s logo and a few directors served on both boards.

When I asked how the foundation was doing, several directors directors replied, “I didn’t know we had a foundation.” There was no mention of it in the board manual, orientation proceedings, organizational chart, or meeting agendas.

While they did not have a direct responsibility for the governance of this foundation, its purpose was to complement the chamber’s efforts. (I noted that the foundation had not filed IRS Form 990 in the past four years.)

These four scenarios are nearly verbatim examples of chambers that could be doomed from the start. Let their stories help you chamber avoid similar pitfalls.

Note: Bob Harris, CAE, provides governance tips and templates at www.nonprofitcenter.com


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