Why Another Book on Governance?

Excellent books already exist to help nonprofit leaders identify high-impact nonprofit practices. Now in a second edition, Forces for Good (Crutchfield and Grant 2012) has sold more than 50,000 copies. Jim Collins's Good to Great has been shared across all three sectors and spurred a follow-up monograph applicable to the social sectors. BoardSource has published Exceptional Board Practices: The Source in Action (2008) and The Source: Twelve Principles of Governance That Power Exceptional Boards (2005). Another joint publication of BoardSource and Jossey-Bass has also become a bestseller: Governance as Leadership (Chait, Ryan, and Taylor 2005). This literature joins plentiful resources from Jossey-Bass/Wiley, the Panel on the Nonprofit Sector, BoardSource, and elsewhere on the prescribed general duties and responsibilities of boards.

The association field has also produced several books on high-performing organizations and boards (some of which our interview subjects mentioned as instrumental in their board growth, in addition to those listed earlier). These include 7 Measures of Success (ASAE and The Center for Association Leadership, 2006); What Makes High Performing Boards (ASAE; Gazley and Bowers 2013); The Perfect Board, Third Edition (Clemons 2011); High-Impact Governing in a Nutshell (ASAE; Eadie 2004), and The Will to Govern Well (ASAE; Tecker, Frankel, and Meyer 2002, now in a second edition, 2010).

Supporting this practitioner-oriented literature are dozens of scholarly books and articles on nonprofit governance. Recently, the Association for Research on Nonprofit Organizations and Voluntary Action (ARNOVA)—also a membership association, since it serves as the principal international learned society for nonprofit research—formed interest groups on board research and governance. There is scattered but growing interest in testing governance theories more broadly—see, for example, Will Brown's (2007) analysis of credit union board performance. The accumulating knowledge helped us frame this study by identifying the theories and variables that seem to matter most when explaining good governance.

Ultimately, we decided that while these valuable texts clearly have changed the nonprofit landscape for the better, an important gap in our common knowledge of good governance remains. This is addressed via three key contributions:

1. A book that addresses the specific governance needs of member-serving organizations regardless of tax code.

   Any discussion of good governance must begin with an understanding that a membership base changes the governance context. Associations may be organized around more complex chapter, section, or affiliate structures that complicate the board's ability to govern well. Associations are more likely to be led by member-elected boards and to place a stronger emphasis on representative or shared governance. Trade associations, in particular, may also rely on appointed board members. Bylaws may dictate bicameral governance structures or shared leadership responsibilities among several formal boards, which are known by many names (“councils of representatives,” “houses of delegates,” etc.). These features of the association world are not necessarily familiar to or regularly addressed in the general nonprofit board management literature.

   Additionally, the existing research literature on good governance overemphasizes the context of 501(c)3 charities since historically these organizations have been subject to more public, media, regulatory, and scholarly scrutiny than nonprofits recognized under other parts of the tax code. But this situation will not continue forever given the pace of state and national regulatory activity. Indeed, all filing nonprofit organizations regardless of tax code have been meeting new governance expectations since a revised 990 informational return was introduced in 2008. Associations representing distinct and sometimes unique constituencies and micro-sectors (auctioneers, dog walkers, epidemiologists, automobile tire manufacturers, etc.) can just as easily get bogged down by past practices, misplaced assumptions of exceptionalism, and the baggage of organizational history as any other part of the nonprofit sector.

   We suggest that studies of nonprofit performance that select their cases based on tax status may do a disservice to the sector. So this book is intended to help both (c)3 and non-(c)3 educational, research, social welfare, fraternal, and trade and professional associations meet public expectations. In other words, this book avoids false distinctions about what good governance means across tax codes, since good governance is expected of all nonprofit organizations. The focus instead is on the common experience of boards and the common need for public accountability regardless of mission.

   In fact, 501(c)6 associations, on average, perform well when it comes to good governance, according to a recent analysis (Gazley 2014). Considerable attention has been focused on board development for trade and professional associations, and the importance of a strong board for both strategic and fiduciary reasons has been actively discussed for some time. So for those organizations, we offer an additional resource to help other (c)6 associations learn from their peers.

   This book avoids false distinctions about what good governance means across tax codes since good governance is expected of all nonprofit organizations.

2. A book that focuses on the change process itself.

   An emphasis on the “journey” rather than the destination: This book focuses on elements missing or underemphasized in earlier practitioner publications. Many books have described the characteristics of high-performing nonprofit organizations. And there is also a small but growing interest in the role of nonprofit leadership in crisis management (see, for example, Reid and Turbide 2012). Absent, however, are resources and, at times, an understanding of the processes designed to guide nonprofit leaders through the stages of change that lead to higher performance. But we know this kind of book is needed—BoardSource's 2012 Governance Survey (2013) found the majority of member organizations had completed a new strategic plan or launched a major initiative in the past two years. To support organizations dealing with change, this book emphasizes the journey to good governance and not simply the destination.

   Diagnostic help: There is an emphasis on problem diagnosis and application of solutions by including the strategies, activities, and tools these associations used to achieve stronger governance. Many of the good governance books end with diagnostic tools, but few are aimed at helping organizations understand how to use the tools to identify problems and restructure themselves to perform better (there are exceptions, such as Tecker, Frankel, and Meyer's The Will to Govern Well). For example, we know that boards are advised to achieve a strategic orientation, but what has to change within an organization—and how do we change it—to become “strategic”? We use real stories of organizations that have walked the path of change to offer such guidance.

   An unbiased approach to the tools: The how-to literature purchased often for board development tends to apply a particular framework or model developed by those authors at the possible expense of other valuable board-building strategies. By contrast, this book transcends specific models in favor of understanding the roles that any and all models play in improving association governance. As a result, among the stories and cases in this book, the reader will recognize popular governance tools but will also discover examples of associations that chose other strategies for improvement, or designed their own strategy.

3. An evidence-driven book.

   This is principally a book for the practitioner, based in research. The cases, illustrations, and data on good governance practices included in this book emerged from three years of mixed methods research supervised by both a university institutional review board and a practitioner advisory committee (see the following Study Design section for details). The goal was to offer any CEO, board member, or consultant who is wrestling with the challenge of good governance evidence-driven information about how successful board change happens.

   Our central theme of strategic change and change management is already of interest to nonprofit scholars. For example, governance experts have observed that research strategies treat boards too often as static entities. Scholars suggest that the nonprofit sector could benefit from more research into board dynamics, including how governance change happens (Cornforth 2012; Reid and Turbide 2012). Such a perspective supports a long-held view that all nonprofit performance is related in some way to board performance, so that board health is vital to the health of the nonprofit sector (Herman and Renz 1999).

Study Design

This book is based on two sources: ASAE's 2013 national survey of good governance practices, and new qualitative research produced for this book. The 2013 ASAE Governance Study, published in What Makes High Performing Boards (Gazley and Bowers), used a stratified random sample, weighting, and other sophisticated techniques to produce a representative dataset of 1,585 association executives who were surveyed extensively on their board's structure, dynamics, and performance. The resulting analysis identified the key drivers of association board performance.

A key finding of the 2013 study, which became an important starting point for this second study, was the knowledge that most aspects of board structure, including board size, committee composition, meeting frequency, and recruitment practices, have less impact on performance than do board dynamics, specifically an association's success at forging strong board–staff relationships, creating a strategic orientation, and developing a culture of learning and accountability.

A key finding of the 2013 study was the knowledge that most aspects of board structure have less impact on performance than do board dynamics.

This book therefore serves as somewhat of a sequel, to address a discussion point that emerged from the 2013 study: Now that we understand what high-performing association boards look like, how do we help associations get there? Study design began with discussions among governance experts and the ASAE Foundation's Research Advisory Committee (see Acknowledgments), feedback from conference presentations, an additional literature review, and a pilot focus group held during the ASAE annual meeting in Atlanta in August 2013. Portions of the study were conducted under the supervision of the Indiana University Institutional Review Board.

Because this is the first study (to our knowledge) that examines full-scale change management at the level of a nonprofit board of directors, we used structured interviews to capture the full story, followed by open coding of the interviews. In scholarly terms, this strategy produces qualitative case studies developed using the principles of grounded theory (Glaser and Strauss 2009). A grounded theory approach is recommended when the goal is new theory development or when it's uncertain how existing theories (particularly theories of change management) apply to the situations we are studying. The results include thematic organization of the cases throughout this book and presentation of the key concepts and ingredients of successful board change. We hope in turn that this material lends itself to future theory testing, now that we have captured the dynamics of governance change.

Data collection began by ranking participants in the 2013 study according to their assessment of their board's performance on 20 measures. The list of measures had been developed based on practitioner and academic literature reviews, cognitive interviews with association leaders, survey pretests, and consultation with governance experts (Gazley and Bowers 2013). Figures I.1 and I.2 display the performance measures and how the 1,585 association CEOs who participated in the 2013 survey ranked their boards. Overall, out of a total possible score of 60 (20 measures × top score of 3), the mean score was 38 and scores in the top quartile ranged from 44 to 60.

Based on each board's overall performance score, the CEOs representing approximately the top quartile (N = 424, 27 percent of the sample) were contacted once by e-mail in March–April 2014, and asked to participate in a follow-up study if their high performance had involved transformational change at the board level and if they were willing to share their stories in a follow-up book. “Transformational governance change” was defined as the practices and strategies boards and staff had used to achieve profound cultural or governance change, and respondents were asked to be prepared to explain details on the stages of change they experienced, how challenges were addressed, who was involved, and the tools they used. At this stage of the research, respondents were offered confidentiality. Additionally, we reached out to 182 additional associations generated from personal networks, alternate lists, and a literature review of prior news stories about association board change.

These strategies produced 62 replies, of which 56 were interviewed. This figure should not be confused with a response rate, since we never identified our full “sampling frame” (i.e., the total possible number of associations that had participated in board change). Rather, this figure reflects the individuals who responded to our request, self-identified as representing boards that had experienced transformational board change, had sufficient recall of the process to participate in our study, were available within the two-month time frame we offered for an interview, responded to our e-mails, and were willing to share their stories with researchers.

Telephone interviews of 30–60 minutes were carried out with the 56 individuals, nearly all association CEOs.¹ While not all respondents ultimately described transformational change processes (see Chapter 2), all interviews identified at least one aspect of board change that supported the goals of this book.

Questions used in these interviews had been tested in advance and refined following a focus-group session with 12 association CEOs and management consultants in August 2013. The structured telephone interviews asked the following questions:

• What was the governance problem your association faced, and what change needed to happen?
• What were the catalysts or turning points?
• Who were the change agents?
• How much time has the change process taken?
• What resources, qualities, or strategies were crucial to success?
• What specific strategic tools did your association make use of?
• What was most challenging? What obstacles did you face?

Additionally, 1,261 association heads working in the Washington, D.C. and Chicago areas were invited to an alternative event, a series of four facilitated, recorded discussions conducted in May and June 2014 in D.C. and Chicago. Twenty-nine individuals attended (see Acknowledgments). An abbreviated version of the same interview questions was used.

Full transcripts from both the interviews and focus groups were analyzed by hand and with NVivo qualitative software to identify key themes, response patterns, and information that should be included in the book. The tables and figures in this book report on only the 56 full interviews, but many quotations from the larger set of 86 full and focus-group interviews are also included in the book.

Additionally, 15 of these associations were asked to participate in a second telephone interview, this time adding past or present board leaders who had been involved in the change process; 14 associations were able to participate and 18 new individuals—mainly board chairs and past chairs—were interviewed along with the original interviewees (CEOs). This material was added to the 14 cases that are included in full in this book. The inclusion criteria for selecting this smaller list of case studies were, in priority order:

1. Stories that offer the most illustrative examples of successful journeys to high-performing governance according to key themes identified in the data analysis (e.g., the change agents, catalyzing events, use of consultants, change management tools, etc.).
2. Cases that focus on real transformational change (e.g., profound culture) rather than superficial governance change (e.g., minor bylaws revisions).
3. Cases that cover the broadest amount of territory in the trade and professional associational world and offer stories and examples that readers may recognize and connect to. In this book, you will hear stories from associations representing solar power manufacturers, fraternities, summer camp professionals, estate planners, bankers, ski instructors, private school administrators, occupational therapists, realtors, caterers, nurses, and osteopaths, to name just a partial list.
4. Interview subjects were able to tell their story clearly.

Cases included in this book were edited for efficiency, tone, and chronological flow to the story. Quotes are minimally edited—the words you read are the stories we heard. Additional material pulled from association websites introduces each story to offer a fuller picture of the association's environment and mission.

Altogether, therefore, the information included in this book represents data and lessons learned from the 2013 survey of 1,585 association executive directors, plus focus groups and telephone interviews held in 2014 with 106 individuals. The data were analyzed using a “multiple case study method,” which uses inductive logic to identify patterns and themes in the interviews, build theories from this data, and compare these with prior literature to identify the patterns of organizational behavior that help to explain successful governance change (Eisenhardt and Graebner 2007). In this book, two literatures are used: practitioner and academic literature on strategic change and change management, and literature on governance and boards.

Organization of This Book

This book includes two kinds of information. First, 14 original cases describe the process of governance change as it was related to us by the change agents themselves, all association leaders. The cases are organized to highlight the governance challenges these associations faced and the change management strategies they implemented. These cases are organized thematically so that they follow 10 chapters introducing conceptual material about change management and relating that material to the stories we heard.

Chapters also make generous use of quotations from the 106 individuals who participated in the focus groups or interviews. All quotes have been approved, with minimal edits, by the people we interviewed, and we thank them for their generosity and eagerness to help the association world learn from their stories. Many offered tools and resources they found instrumental to their success, and some of these can be found at the end of the book. An index is included for convenience.

Terminology Used in This Book

We recognize that nonprofit organizations use many terms to define themselves. In this book, we have aimed for consistency in terminology. When we refer to organizations, we mean any association or other not-for-profit membership organization, organized to promote a trade, profession, union, or other public or mutual benefit mission. We may sometimes refer to the chief staff person in this organization as the CEO, although many are called executive directors or hold another title. The term board of directors refers to the governing body with legal responsibility for the organization, although other leadership bodies may also exist and although other terms may be used to describe your board (trustees, governors).

When we refer to governance change we mean deliberate actions the board has taken to alter, update, or transform its fiduciary responsibilities and activities, including changes to bylaws, structure, policies, roles, activities, or expectations. Our study participants include any of the individuals who supported this study through interviews or focus groups.