“Don’t bring people on your Board just because they have money. That’s probably the worst criteria you can have if people do not share the vision of that organization on whose board they serve.” -Jerry White
[00:00:00] Jerry White: Risk has to be uncertain categories. There’s legal risk, there’s financial risk, and then there’s what I call uncontrolled risk of things you don’t expect that the government may impose. What if they decide for our property at Glen Erie that it no longer is going be tax exempt?
Or what if the state were to do that sort of thing? Those are risks over which we have no control. The risk on leveraged investments, I think, is quite important. For instance, you may propose to a larger organization a $3 million project, but the money is not in the bank. And you have four donors who said they’ll fund it, but will they, and if they do, what voice should they have in it? That’s a huge thing.
Money given with strings attached is really quite risky.
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[00:01:02] Tommy Thomas: In this episode, we will conclude the conversation that we began with Jerry White in Episode 85. If you didn’t hear that episode, Jerry White is the President Emeritus of The Navigators International. Prior to that he enjoyed a distinguished career in the United States Air Force, retiring as a two-star general. One of the reasons I wanted Jerry to be a guest is because of the depth of his nonprofit board service.
Among the boards he has served include
- World Vision,
- The Navigators.
- Christian Leadership Alliance.
- The Evangelical Council for Financial Accountability.
- The Lausanne Committee on World Evangelization.
- The Air Force Association.
Let’s pick up the conversation where we were beginning to discuss board governance.
Let’s shift over to board service. How did your first board show up?
[00:01:56] Jerry White: My first board that I served on was a small organization and besides a church board, every board is different. When I got into leading boards, like the Christian Leadership Alliance and being on boards like World Vision and leading The Navigator board the biggest thing is who you have on the board. And that they understand what their role is on the board.
And my view is that they’re not operational. They don’t make operational decisions, and they give the CEO a clear path to glide on. And hold that person accountable.
And on the board service, I found it extremely important to have people of varied backgrounds and competencies so that we weren’t all monolithic and the board could not be a rubber stamp board, whatever the leader wants.
Yeah, that’s fine. Just go ahead and do it. But to take on true, what I call policy governance, and to realize that you aren’t running it, but you’re holding the CEO accountable for what they say they’re going to do. And once in a while you have to intervene.
[00:03:14] Tommy Thomas: You mentioned having the right people on the board. What is the secret sauce?
[00:03:20] Jerry White: One secret sauce is you don’t bring them on just because they’ve got money. That’s probably the worst criteria you can have if people do not share the vision of that organization on whose board they serve. You don’t want them on there. And if they happen to have wealth and are generous people, that’s fine, but we don’t own them.
They have to be people who give more broadly. And before we bring someone on the board we have to first make sure for me, in the Christian world, to make sure that there are people of spiritual maturity. Not just people with a high reputation or lead a big church or are well known. I would not care if none of the people on my board were well known as long as they were people of high integrity and then have had some experience.
We’re always pushing for getting a younger generation of board members, but there’s a limit to that. You have to be sure that they’re really qualified as they come in. And then the next thing that I feel is extremely important is you train. You train them how to be a board member and what’s expected of them as a board member.
In a few weeks, I’ll be going to Kenya with The Navigators and we’ll be gathering the board chairman from all over the world for a time of interaction and sharing. That’s a trickier one, by the way, when you become a board chair, is how to become a board chair, particularly in our developing world where things aren’t quite westernized as much.
Yeah. And what should a board really do? Because people have different experiences. It’s different from a second board, a secondary board who has financial responsibility and is held accountable for the quantitative results of the organization. That’s a whole different picture, a different kind of board.
[00:05:40] Tommy Thomas: Let’s go to the board chair. Give me some words and phrases that would describe the best board chair you’ve ever seen or served under.
[00:05:48] Jerry White: I’ll tell you, there are two board chairs that I think of. One was a man by the name of Clay Brown. He wasn’t the board chair, because I was chairman at the time.
But he was certainly the key senior statesman on our board. He was measured. He was wise. He had a strong business background, and he had a passion for what we did. Our current Board Chair for The Navigators is doing an absolutely remarkable job and he leads several companies but has really given himself to being Chairman of The Navigator US board.
The other thing is that the Board Chairman cannot be a jack of all trades. In other words, they can’t be chairman of five different boards at once. Because I don’t think anybody who has another job has that kind of time. But in knowing that they bear a particular responsibility within that organization to draw together the board, the executive team or the executive committee, and to really help lead them and keep them in their track and their track being on the policy governance side.
And so the board chairs, and when I’ve done a board, I hope I’ve done this, is to really be prepared. You do not do this on the backhand, walking into a board meeting and 10 minutes ahead of time asking the CEO – what’s the agenda?
[00:07:25] Tommy Thomas: Speaking about that working relationship, I know that’s critical. Think back on your experience. How often does the Board Chair need to meet with his or her CEO?
[00:07:35] Jerry White: First of all, they need to be friends, but I remember as a board member of a particular organization I wanted to be friends with the CEO and very much was.
Then I became Board Chair and I said to him, our relationship is going to be a little different. I am your friend, but also, I’m accountable for the direction of the organization. And therefore, I’m going to be asking things of you that maybe I would not do if I was just a good buddy walking alongside and wanting to affirm you.
So I think you need to be friends, but you’ll also need to know that you have the responsibility for the policy direction of the organization and for the health and wellbeing of the CEO.
[00:08:27] Tommy Thomas: Go to that board meeting for a minute. What’s been your best experience and who sets the agenda for the Board Meeting?
[00:08:32] Jerry White: For me, the Executive Committee needs to set the agenda. It needs to be proposed by the CEO because he knows the action items. And you’ve got certain performer things you’ve got to do on accountability of finances and income and disbursements and so forth and certain things on personnel.
But I would want the CEO to come up with a list of what needs to be addressed, work with that CEO and perhaps the CFO to create an agenda with the Executive Committee that actually says how is this going to serve the work? And what are the decisions?
And I have three ways of assessing an agenda for the Board Meeting.
- What is information? We don’t have to make any decision on it.
- What is counsel? The CEO or somebody wants counsel on a particular item.
- What decision needs to be made?
So, every topic in the board meeting, I like to write along the side, the margin, inform counsel, decide.
[00:09:48] Tommy Thomas: From a functional point of view, they wouldn’t necessarily be in any order. They just as they come up, they’re one of those three.
[00:09:58] Jerry White: No, it’d be one of the three. Your board meeting is usually divided into segments.
- The CEO Report
- The Field Ministry Report
- The CFO Report
Then there’s a legal report. There may be certain personnel decisions that need to be affirmed. And by the way, that could be another way you would put it to affirm a decision. That’s a little weak. And so you would structure your meeting not according to what you’re going to decide, but according to what topics need to be addressed in the 24 hours you have together.
And by the way, to really require that homework be done on the part of the staff making the decisions that “read-aheads” are there. And the right people come to make reports inside the meetings.
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[00:10:51] Tommy Thomas: When somebody joins your board what does onboarding look like?
[00:10:55] Jerry White: The onboarding looks for several organizations I’ve been working for two to three years with before they come on board, talking with them about it, seeing their interest, getting a biography, bringing it to what I would call the nomination committee of the board. And the good boards that I work with have a roster of people that they’re talking to that’s very confidential and some of them never come on the board.
And then as they are approaching it, you may even ask someone to actually sit in on a board meeting. And to see whether or not it meets their expectations. That isn’t always possible. But in one board that I’m on, we have some junior members on it. This is on a board where we have younger leaders who come and serve for two years, and they don’t stay on the board, just to give them experience.
But then when you’re onboarding, every board annually at least, there needs to be, in my mind, an orientation for the board where you go over the history of the board, you go over things. So they’re not just in a befuddled mystery at terminology and history. It’s like being in a family joke and nobody knows what the story was behind it.
They have things that are ongoing and they have no clue. We need to bring them up to speed, both emotionally, historically, and personally. And it doesn’t need to be long. It’s for maybe half a day. And I’ve done this in a secular organization too, insisting that no one come on the board who doesn’t have some orientation, both as to what a board does and what a board has done.
[00:12:55] Tommy Thomas: Do you do a meeting evaluation or how do you keep your meetings fresh?
[00:13:00] Jerry White: Most boards do have a little evaluation afterward that they fill out. It’s often, Tommy, their perfunctory and there of some limited value, the value mainly being that you asked, but I think the Chairman and the CEO, when they see things happening in the board, that afterwards they need to interact with them and saying, what do you think about it?
How do you feel that board meeting went? And now that you’ve been in on X number of board meetings, say to tell me what you think and how can we help you be a better board member? Committee assignments are pretty important. Also, when I went on one board, it took me, Tommy, it took me two years to really figure out what was going on.
And I served nine years and it was such a complex organization that it was really hard and took a lot of work to try and understand the dynamics behind this organization
[00:14:08] Tommy Thomas: Let me ask you to respond to this quote. “You need a director on the board who will be a pleasant irritant. Someone who will force people to think a little differently. That’s what a good board does.”
[00:14:21] Jerry White: In one board that I’m on, we appoint someone at every board meeting to be what we call a responsible skeptic. And that person is designated ahead of time. And that person, their job in that board meeting is to be a bit skeptical. Now, I think you have to be a little careful about always having a person who’s always skeptical.
I don’t think I want a board member who every time something comes up, they raise their eyebrow, and you wonder what they’re thinking. I think everybody ought to be a little skeptical at some time. And the main thing is if they don’t understand something they need to ask. In other words, they need to do it.
I was in a board meeting recently where a particular decision was in the process. And two of us on the board, I was an emeritus to the board, and the other was on the board. And I could tell there was a bit of discomfort. And so the chair asked that other person, they hadn’t said anything, what do you think?
And came up with a pretty good counter. Now I haven’t got real good hearing, so I couldn’t hear what he said. And then the board chair said, Jerry, what do you think? And I was like a deer caught in the headlights. And I said I couldn’t hear what he said. And I said, we said exactly the same thing.
And what was moving down the road to be a crafted decision was put aside and not done. I’m very wary of creating board actions on the spot, a statement or whatever it may be. The best way is to say, would somebody take this and come up in three or four hours, take a coffee break and craft us a statement on what we’re trying to do.
So I do believe that the chair needs to be able to look in the eyeball all around the way and see if there are some questions or if someone has been particularly silent, I think you need to say what do you think?
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[00:16:34] Tommy Thomas: How do you draw that quiet board member out? Some people just don’t speak up unless they have something to say, which is probably a good thing. But how do you draw the quiet person out?
[00:16:46] Jerry White: I just say, Jack, what do you think about that? I say be very direct. I say, you’ve been listening to this discussion. Do you have anything to say?
I don’t want to force him to have to say something, but I say, this may be the expertise of the person that I’m asking. And I’ll say Joan, your expertise is in this area, I know you’ve been through this before. What are we not hearing? What questions do you have?
And that gives them freedom to speak out. And the other thing is I don’t think people should speak out, particularly declaratively. That is, I believe this, and you got to do this. And I don’t like that because that puts themselves on the table. But people learn to be able to share in a non-confrontive fashion.
[00:17:44] Tommy Thomas: Let’s go to financial accountability. You and I are old enough to remember the Enron scandal, and then if you’ve been paying any attention to the last two or three days, you’ve seen the Silicon Valley Bank go under. In both of those things, there was board culpability. Neither were nonprofit, but they will both board culpability. How do you get your boards to make sure you’re addressing the financial aspect, a judiciary responsibility of the board?
[00:18:10] Jerry White:
It’s a CEO’s responsibility to make sure that the right questions are answered. And it’s got to be more than just an audit. We want a clean audit.
And you don’t want to have to go to the bottom notes and say, here’s something we should correct, but we need to guide the board through the financial realities of what we’re doing. But at the end of it, I think you need to have a risk analysis that says, okay, where are we vulnerable?
For instance, in our litigious society today, we have a lot of risk, and I think of ministries that have Christian camps and all the sexual liabilities and all of that. They are at risk all the time when you’re working with minors and then I think people need to ask questions of the CFO and the auditor, where do you see us being at risk?
What would happen if, what if happened? You have a September 11 or you have a Covid pandemic. And you have to say, our whole income stream is going to be jeopardized. And then I think you need to look and say, where are our major vulnerabilities for both expenditure as well as income? Now that’s, it’s very different in a Christian organization than it is a secular organization like an Enron or the banks or whatever it is.
The fault there goes so that people don’t ask questions, or that the actual realities have been hidden from it and just saying, oh, it’ll be okay.
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[00:19:56] Tommy Thomas: From your perspective, how does the board get involved in strategic planning?
[00:20:02] Jerry White: Boy, that is a good question, Tommy. The question is, who does the strategic planning? Okay. Let’s say that we’re in a very small developing organization amid developing, and a large organization, they’re very different and the very smallest organizations, the board may be highly engaged in the strategic plan because it’s such a small organization and they’re so fragile.
As a general rule of thumb, the board may do strategic thinking, but strategic planning has to be on the part of the CEO and his or her staff.
And the plan needs to be brought to the board for their interaction. And then approval. And that’s particularly true with a large organization.
The board can’t do strategic planning. They can do some strategic planning for the board. That is, how should we develop our board? What expertise do we need? But as far as a ministry for most organizations, as large as the navigators or crew or some others, they aren’t gonna know the details of what’s going on out in the field or how they have to pretty well react and respond to the strategic planning initiatives that they may come up with.
How many staff, what countries are we doing to go into? What are we not going to do? What are we gonna stop doing etc. So the board certainly needs to approve the strategic plan. Chances are, even when they do that, They won’t know it very well. I’m just sorry that, when you’re not, when you don’t have to carry out a strategic plan, it’s hard to really know it.
[00:22:00] Tommy Thomas: The ones that created it, that have been involved in hammering it out, they’re the ones that know it.
[00:22:06] Jerry White: That’s right. And then you have to, with every strategic plan, you have to set, have a set of outcomes and a set of risks, and then you have to say, how much is it going to cost to implement this?
[00:22:22] Tommy Thomas: I think the risk thing, that could almost be a podcast in and of itself. I interviewed Dr. Sandra Gray, the President Emeritus at Asbury University and she was a former banker before she got into higher ed. And her thought was that nonprofit boards probably don’t pay enough attention to the risk of the organization.
[00:22:40] Jerry White: I think there’s no question on that, especially risk has to be uncertain categories.
There’s legal risk, there’s financial risk, and then there’s what I call uncontrolled risk of things you don’t expect that the government may impose.
What if they decide for our property at Glen Erie that it no longer is going to be tax exempt?
Or what if the state were to do that sort of thing? Those are risks over which we have no control and the risk on leveraged investments, I think is quite important. For instance, you may propose to a larger organization a $3 million project, but the money is not in the bank. And you have four donors who said they’ll fund it, but will they, and if they do, what voice should they have in it? That’s a huge thing. Money given with strings on it is really quite risky.
[00:23:46] Tommy Thomas: Hadn’t thought of that.
[00:23:46] Jerry White: And I’ve served on the board of the ECFA and they’re very good at this. In terms of helping people think through risk and failure and financial accountability.
[00:24:01] Tommy Thomas: Let’s look at the CEO evaluation. I know you’ve been involved in a number of those, and you’ve been evaluated as a CEO. What are some takeaways?
[00:24:10] Jerry White: You must be evaluated. Now we have a number of kinds of evaluations. You have a 360 evaluation, and some people are very skilled at that.
It’s very threatening to some CEOs, but it’s necessary. I feel that there needs to be an evaluation within the organization, I had one. I had someone who evaluated me every year and they had the freedom, and they did call my wife, call my kids, talked to my coworkers, my peers, talked to those who worked for me, gave a free reign to ask certain questions.
The questions need to be carefully thought through. They can’t be so invasive. But the evaluation is of several levels. One is certain on a moral personal level. I do not think a committee can do that. Every CEO needs to have the kind of people in their lives who will blow the whistle on them if they say anything wrong.
And the small Executive Committee needs to be aware of how that could happen. The second in terms of an evaluation is performance against set out goals. The third is relational. How’s their team going? What do they think? What are the issues? And to give the feedback to the CEO and I think to give it privately and then in the board, and we do this to give a summary analysis, but the board should not be privy to the detailed questions.
It’s a really touchy process. And the evaluation needs to be, not be a pass fail, but Loren Sanny taught me it should be a progress review. How are you making progress toward the things that you have said you want to do?
[00:26:15] Tommy Thomas: Let me close with a question that I ask often, particularly to people that have been on boards a long time as you have. How has board service changed over the last decade?
[00:26:25] Jerry White: I’m not sure about the last decade, but certainly over the last two decades the area of risk and financial accountability has increased tremendously.
The litigiousness of our society has made a tremendous impact on how a board functions. So those two things, the financial accountability and the potential lawsuits and things of that nature. Tommy, I don’t know that I can make a generalist statement about how boards have changed, but I can say that through the last 20 to 30 years, the boards have become more important and more vital to our organization’s future than they were a number of years ago.
Many years ago, even in The Navigators, the board was a cheering section for Dawson Trotman and Lawrence Annie. Go get ’em and thanks for letting us know what’s going on. To a point where we had to be accountable for the finances. 911 changed everything, by the way, particularly for anyone operating internationally.
When you’re sending money across international boundaries, you have a whole different level of accountability financially imposed by the government. And I’m speaking only from the viewpoint of the United States, and you get into all these other countries with all different kinds of demands and requirements and corruption and what have you.
The boards have become far more important to the organization’s health. And I think the public has a right to know who’s on your board. And when I look at an organization as I’ve done even the last few days, and I look through who the board members are, it isn’t that I need to know them, but that they’re there as real people with real names that if one needed to, you could connect with them.
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I hope you enjoyed this conversation with Jerry White. If you’re ever at a conference where Jerry is speaking or leading a breakout session, make sure you attend those sessions. We all have so much to learn from Jerry White. Our guest next week is Paul Mauer. Paul is the president of Montreat College.
When Paul was selected to be the President of Montreat, the college wasn’t very far from closing its doors. What has happened at Montreat over the past nine years is nothing short of miraculous.
[00:29:06] Paul Maurer: I started my first presidency 13 or 14 years ago, and I remember going to the president’s conferences and coming back after two or three of those, and I said to my cabinet, here’s my takeaway, change or die. And then I was out of the presidency for a couple years. I began to go back to those meetings again.
When I came to Montreat nine years ago, I came back to my cabinet, I said, they’ve inserted the words fast change, faster, die. We’ve taken on the mindset of a startup. So, we consider ourselves a 107-year-old startup. We’re not a turnaround. We’re not maintainers. We’re not traditionalists. We try to employ the principles of a startup, meaning we’re creating something new.
And so, I think in the next five to ten years, we’re going to see a pretty dramatic change in the number of colleges and universities in the United States. The enrollment cliff is real. The declining birth rates are real. And it’s going to have a really major impact on the number of schools that close.
“Effective Boards are not operational. They don’t make operational decisions. They give the CEO a clear path to glide on and hold that person accountable.” -Jerry White
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Next Gen Nonprofit Leadership with Tommy Thomas
Evangelical Council for Financial Accountability
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