Nonprofits’ boards must include people who benefit from their services

Tivoni Devor’s “Getting Good Done” column focuses on new models of enacting impact.

Does your board truly have “skin in the game”?

That phrase, either attributed to Warren Buffet or William Shakespeare’s “The Merchant of Venice,” denotes a personal risk in an investment strategy. In “The Merchant of Venice,” they’re talking about literal skin, a pound of flesh. In the context of an investor, it means, “Trust me with your money because my money is at risk, too.”

Often for nonprofits, skin in the game is interpreted as having a giving board where all members donate money to the organization. This is used as a measurement of the board’s commitment to the organization it’s overseeing. The perception is that members will work to protect their “investment” and be committed to seeing that their money is spent wisely, equating money with knowledge.

Let’s be clear: Donating to an organization is not putting your skin in the game. This is yet another business-speak term that’s been misinterpreted in the nonprofit sector to ill effects.

As much as it gets spun, a donation is not an investment, a donation is not risk capital, you don’t mortgage your house on a hot donation tip because your brother-in-law promises you a thousand-percent return. There’s a reason that both a donation and investment loss are considered tax write-offs.

So, let’s unpack who really has really has skin in the the game of your nonprofit: Who is financially at-risk if your nonprofit fails? It’s not your board members or donors. They will not suffer if your organization fails.

Only those who receive the services your organization provides are at risk if you close up shop. They are the ones who have skin in the game. Are they on your board?

The never-ending pressure to raise money lends itself to finding board members who can give big, but stacking your board with one percent-ers further distances your board from the people you serve. A board that doesn’t have its clients represented in its governance can never be fully invested in the organization’s success and sustainability.

Client representation on the board will give your organization true 360-degree governance. One of the key responsibilities of a board is to evaluate and manage the organization’s executive director, and the people with the best first hand knowledge of the ED’s performance will be those receiving the services the organization it providing, not those that meet a few times a year for a few hours a pop.

Client serving on boards can also bring great insight into the work the organizations as they are experiencing it firsthand: They know what works and what doesn’t, and where the gaps are that can be turned into opportunities for growth.

Look, having board members with money can be excellent and still worthwhile for the organization. But don’t let the pressure of raising every dollar imaginable exclude potential board members who are fully committed to the success of the organization and will provide insight from the user level to improve your operations and programming.