We therefore delight in seeing how others interpret and explain why starting with purpose and related outcomes is so important. And so it was when we discovered a thought-provoking piece by Anne Wallestad, chief executive of BoardSource, that challenges conventional thinking about the way ‘for [social] purpose’ organisations are governed.

In The Four Principles of Purpose-Driven Board Leadership, Wallestad questions whether not-for-profit boards, as they exist today, are equipped to govern the social good organisations for which they are responsible. She argues that boards as they currently operate are not well-positioned to lead society toward a more equitable future.

So why is that and what it would take to change? And might the lessons be more widely applicable?

Wallestad starts by noting that many boards have great control over the way they interpret and apply their own expectations of their role and responsibilities. As she says, in most of the ways that matter, boards are their own accountability mechanism. They can work beautifully or fail miserably depending on how they are populated and self-managed.

She suggests that, for most boards, their interpretation of what is most important is the basis on which they organise themselves. For example, if a board sees itself primarily as a fundraising body it will likely mostly comprise people with access to wealth and wealthy networks. It is likely, however, that such a board would lack a deep understanding of the work the organisation does, and of the community it seeks to serve.

Wallestad describes two deeply problematic options that arise in such situations. Either significant strategic decisions will be made by an ill-informed board, or the board must somehow be side-lined from making those decisions.

The current state of not-for-profit boards

Wallestad quotes a recent BoardSource survey of more than 800 public charity chief executives and board chairs. Its findings suggested that not-for-profit boards are currently:

Consequently, Wallestad argues, organisations need purpose-driven leadership of a kind that will provoke more explicit conversations about what a board’s most essential work is and how its composition must change to support that.

She proposes four fundamental principles that are interdependent and mutually reinforcing:

Purpose before organisation

While boards are traditionally understood to be ‘mission-driven’, this typically centres on the organisation’s role in doing good. Wallestad argues (correctly in our view) that boards need to focus on the fundamental reason for their organisation’s existence. This distinction, which she acknowledges may seem like semantics, moves the organisation away from a preoccupation with its own existence—and being at the centre of its own universe and sphere of influence—to addressing the question of how best it can steward its resources in service of its purpose. It means an organisation and its board being open to its purpose being served in ways that do not necessarily advance the organisation, and perhaps even work against it.

Rather than focusing on what is best for the organisation as an entity, a purpose-driven board asks what will best achieve the social outcome that is its core purpose.

Respect for ecosystem

The context within which an organisation operates matters. Not-for-profit boards have traditionally sought board members for their fundraising capacity and for their technical expertise in areas such as legal and financial oversight. This frequently means, however, that board members have difficulty seeing beyond narrow definitions of their governance role and have only a limited perspective on the organisation’s work and understanding of the context in which it operates.

Wallestad acknowledges that many boards try to address this through board education and exposure to organisational programmes, but—she emphatically states—second-hand insight is not enough.

Organisations are each part of informal (or formal) collectives working to address societal challenges. An individual organisation’s choices and actions affect the overall strength and success of the ecosystem. Boards must therefore understand how their actions might disrupt the ecosystem and consider the impact on the ecosystem as part of their decision-making process.

A decision good for the organisation but bad for the ecosystem would signal to the board that it should consider a different path. ‘What would help us—as an ecosystem—to do the most good?’

Equity mindset

Our societies are rife with inequities. These are often the result of intentional and systemic choices designed to advantage some and disadvantage others. Wallestad advocates for aboard role in advancing equity that involves embracing an equity mindset across all its work and decision-making. This would include, for example, the thoughtful (ie, equity responsive) allocation of resources within the organisation; programmatic oversight that interrogates disparate outcomes based on race and other demographics, diverse and inclusive board composition; and power-sharing with and across the staff team.

Wallestad’s argument is that an awareness of how systemic inequities have affected our society—and those an organisation's programmes seek to serve—creates powerful opportunities to deepen the organisation's impact, relevance and advancement of the public good. Conversely, the absence of that kind of understanding can lead to flawed strategies and a damaging effect on programmatic participants and the community as a whole.

While a traditional board may have asked ‘how will our strategy advance our mission?’, a purpose-driven board asks how this decision or strategy will create more equitable outcomes.

Authorised voice and power

Wallestad starts the description of her fourth principle by observing that the individuals who comprise a not-for-profit board reflect the organisation's values and beliefs about who should be empowered and entrusted with its most important decisions. She uses a compelling example to illustrate how this plays out. She describes a scenario in which a community development organisation is struggling with how best to serve its constituency in the context of rapid and severe gentrification that is displacing communities of colour.

If, based mainly on fundraising goals and assumptions, the board were composed primarily of developers and bankers, it would likely be considered well-equipped. It would be easily perceived, however, that some of these people would likely benefit from, or at least be well disposed towards the development that was driving gentrification.

Wallestad points out that it is not enough to have good intentions or be well-informed; boards have a responsibility to engage directly with those they seek to serve. They should want to ensure that board and organisational decisions reflect a real understanding of community assets, needs, preferences and aspirations. This requires deep listening to programme participants' needs and experiences. But that, she suggests, is not enough. Boards need to go beyond inviting input from those with relevant lived experience. They need to share power by ensuring that lived experiences are embedded into the composition of the board itself—with all the rights, responsibilities and power that board membership brings with it.

A traditional board that, in the example, lacks community voice and perspective is likely to be driven by ‘what we think is best’—without an awareness that who ‘we’ are informs (and possibly distorts) its perspective. In contrast, a purpose-driven board asks whether its membership ensures its power is authorised by, and inclusive of, the community affected by the work it does.

Looking ahead to a wider application of purpose-driven board concepts

Wallestad concludes that purpose-driven board leadership as she has described it makes explicit how social sector governance is different from ‘corporate’ governance. Our experience is that governance basics are more generic than segmented. So, we would dispute that the principles she has enunciated cannot also be usefully translated into other organisational categories. In that regard, we found great value in her article in several respects.

First, Wallestad has demonstrated how deterministic the composition of a board can be. In that respect, her analysis reminds us of the comment by Abraham Maslow that if the only tool you have is a hammer you tend to see every problem as a nail.

Second, she has underlined why it is vitally important for a board to ‘start with the end in mind’. An organisation’s purpose—its reason for existence—should be the starting point for its thinking. What is more important: the organisation for its own sake or the purpose it exists to fulfil?

Third, she has introduced some concepts that are seldom given explicit attention—in particular, the idea of an organisation being part of a wider, interdependent ecosystem. That interdependence is relatively easily acknowledged in the social sector examples Wallestad uses, but current global supply chain issues must surely demonstrate the wider applicability of the principle.

Regardless of context, Wallestad is right to point out that purpose-driven board leadership is:

…a shift in thinking and orientation toward the board's role, less a structure or set of technical practices than a way of being and thinking. It is radical in its simplicity: a large-scale move toward purpose-driven board leadership would not only address the very real challenges of boards as they currently exist but create an upswell of boards and organizations that are deeply connected and interconnected in their service...

Encouragingly, Wallestad concludes that:

Embracing purpose-driven board leadership is absolutely within our reach because it is an evolutionary approach. It does not require us to tear down the existing board structure and create something new from scratch. A shift toward purpose-driven board leadership is transformational, but the initial steps are incremental enough that every board can do it, including yours.