Often challenges within the board stem from a lack of agreements about governance.

Cooperatives and nonprofit organizations differ in key ways from private corporations. Perhaps most importantly, operating within a defined social purpose requires skillful and conscientious governance by the board of directors—and the board’s leadership is felt throughout the entire organization.

Governance is the act of steering an organization toward success. It consists of answering key questions, defining roles and responsibilities, and establishing processes for setting expectations and ensuring accountability.

Governance is as much an art as it is a science. While many governance models and theories have been put forward, the systems and processes that will ensure successful governance depend as much on the manner in which they are applied as on their design. Excellent governance is achieved by attention to both the external and internal organizational realities, including social, cultural, economic, and interpersonal dynamics.

Governance—steering, making key decisions, working together for common goals—happens throughout an organization at every level. Within any organizational structure, everyone regardless of role has shared responsibility for: working together effectively; being accountable to and able to empower others; being focused on purpose; and participating in a healthy organizational democracy.

Of course, the board of directors has a special role.  At a bare minimum, a successful board of directors should not take value away from their organizations. At the other end of the spectrum, an excellent board will not only add value but also create meaning, and in doing so it will establish a positive organizational culture.

The power of the fiduciary

It is worth reflecting for a moment on the reasons that state enabling laws require that corporations and cooperatives have boards of directors. The requirement is based, among other things, upon a belief in the power of the fiduciary: that an empowered and accountable relationship can best be upheld by a small group of people who are entrusted with the responsibility to look out for an organization’s wellbeing. The requirement is also based on the belief that groups of people collectively are likely to make wiser decisions than an individual acting alone.

Responsible people often join boards of community organizations with admirable intentions. How often are those good intentions realized? In Boards that Make a Difference (Jossey-Bass 2006), John Carver commented, “…by and large, board members do not spend their time exploring, debating and defining [their] dreams. Instead they expend their energy on a host of demonstrably less important, even trivial items.”

At Columinate, we believe that boards of directors can add value and create meaning for their organizations. We also believe that stewardship of community organizations, both cooperatives and nonprofits, is a foundational opportunity to practice the skills of democracy.

In our work with retail food cooperatives over the last twenty years, we have had the opportunity to learn with hundreds if not thousands of well-intentioned individuals who stepped forward to lead and govern their community-owned grocery stores. How often have we heard a board member say with real frustration, “I didn’t sign up for this!” when the interpersonal challenges within the board threaten the success of their organization. Often these challenges stem from a lack of agreements about governance.

In the 1990s the University of Wisconsin and others began to teach John Carver’s Policy Governance model to boards of consumer food co-ops—reportedly so that “the boards didn’t kill the co-ops.” In “Creating Boards That Lead,” a 1995 Cooperative Grocer article, Professor Ann Hoyt led with these words: “Listen up!  We’ve got a problem here.” Widespread adoption of Policy Governance, along with improved depth of training resources, led to more effective boards and stronger organizations. Eventually, however, some boards—in their effort to ensure that they didn’t transgress the practical precepts of the model—became so skilled at Policy Governance that they lost sight of their overall responsibility for organizational performance.

John Carver never intended that. His model was intended to focus boards on the essential, and to ensure that they did not cause their organizations to fail either through “micro-managing” or “rubber-stamping” their executive’s decisions. In Part 2, we attempt to show how the Policy Governance model fits in a broader framework of governance.