Helen Hatch, EWMBA 22, and Adjunct Professor Paul Jansen believe that every nonprofit organization could benefit from hiring a chief governance officer. So what’s holding them back?
(Read the article co-authored by Jansen and Hatch: Does your nonprofit board need a CGO? in The Stanford Social Innovation Review.)
We asked Hatch about why a chief governance officer is essential and how she’s helping with a plan to train the first class of chief governance officers through a pilot program sponsored by the Center for Social Sector Leadership at Haas.
Berkeley Haas News: How did you get interested in the topic of improving nonprofit governance?
Helen Hatch: Good governance is integral to the success or failure of nonprofit organizations. My interest in investigating nonprofit governance was twofold. First, I work in development at a large nonprofit arts organization and wanted to understand the nuances of governance while exploring a solution to the challenges that frequently face nonprofit boards, and second, I was excited by the opportunity to impact the entire nonprofit sector by providing an actionable way for boards to address common governance obstacles before they become major issues.
How did you and Paul Jansen decide to work together on this?
Nora Silver, adjunct professor and founder and faculty director for the Center for Social Sector Leadership, introduced me to Paul in August 2020 when he was developing a hypothesis called “Board Chair as Chief Governance Officer” and seeking a research partner. I saw a tremendous opportunity to learn from Paul, who has deep expertise in the nonprofit sector and nonprofit boards, and was excited to immerse myself in a subject that was so relevant to my professional field. Paul and I met virtually in September 2020 and have been working together ever since.
Good governance is integral to the success or failure of nonprofit organizations.
What’s at stake when a nonprofit has poor governance, and can you provide a few examples of how it hurts an organization?
High-profile governance failures make headlines and come with real costs to nonprofits. For example, the Wounded Warrior Project was hit by allegations of “waste and unbridled spending” by leadership in 2016. The CEO and COO were fired, and total revenues fell from a peak in 2015 of $483M to $280M in 2017 and still have not returned to pre-crisis levels. In higher education, How USC Became the Most Scandal-Plagued Campus in America details how the University of Southern California suffered from a “contagion of shaky oversight and money grabbing” with the cost of lawsuits expected to exceed $1 billion. Damage to reputation and the finances of nonprofits likewise transpired from oversight scandals at the United Way USA, Boy Scouts of America, and numerous private high schools and colleges around the country.
Governance failures, however, are not always so public or so headline grabbing. Still, the costs in terms of weaker strategies, underperformance against mission, donor hesitancy, ineffective advocacy, discouraged employees, and time spent managing potentially damaging revelations are just as real and go a long way to explain why some nonprofits successfully grow and increase their impact while others quietly fail.
Do any nonprofits have a CGO? Why should nonprofits appoint one?
No such position currently exists, but the experienced directors we spoke with agreed that an “independent, objective, organization-first mindset and willingness to ask hard, sometimes uncomfortable questions” constituted the essential skill set for this role.
And while the idea of “Board Chair as CGO” was the initial hypothesis of our research, we quickly realized that it would be more impactful for the board chair to have a trusted, governance-focused thought partner who was empowered to credibly raise and address issues when they happen. The CGO is proposed as a board leadership role that seeks to improve board effectiveness by sharpening compliance oversight and helping the board dedicate time to high-value organization leadership activities and mission fulfillment.
What’s next for the research?
We are now looking to test and refine the CGO concept through a pilot program sponsored by the Center for Social Sector Leadership. We plan to train a class of CGOs, measure the impact on board performance over time, and use the learnings to refine the CGO concept. We invite interested organizations to contact us at [email protected] and [email protected].