The Next Steps in USCF Governance Reform

 

Teamwork is what nonprofit governance is all about - a group of diverse individuals who come together to put their collective talents, knowledge, and experience to work helping an organization be all it can be. All to often, however, boards wind up functioning less like teams and more like caste systems in which one individual or small group makes the important decisions while the others are ignored or even driven away. Naturally a board will feel accountable to those who nominated or selected them. Often, the very structure of a nonprofit board can inhibit teamwork and promote division and frustration. Many boards are simply too large to accommodate an inclusive approach to decision-making, while others have complicated structures and other obstacles that stand in the way of better participation.

 

Membership as a Key Element

 

A formal membership organization has members who can have a say in the structure and priorities of their organization. In 2001 the USCF membership was empowered to elect the directors who hire/evaluate the Executive Director. The first membership election of these directors will occur in 2003 and the first Executive Board to be fully elected by the membership will be put in place in late summer of 2005. As GM Larry Evans has stated, "No one has ever claimed that allowing the full adult membership to directly vote for their Policy Board is a panacea for all of the Federation's electoral problems, but why should the Federation be different from most other comparable membership organizations that extend voting rights to dues-paying members in good standing? How long will it continue to squander its most precious resource and best salesmen – its own members?"

 

In the for profit sector, we can easily see that a board of directors is the voice of the owners (shareholders) of the corporation. It is not always apparent that nonprofit organizations also have owners. Most modern governance models conceive of the governing board as being the on-site voice of that ownership. Just as the corporate board exists to speak for the shareholders, the nonprofit board exists to represent and to speak for the interests of the owners. A board that is committed to representing the interests of the owners should not allow itself to make decisions based on the best interests of those who are not the owners. Hence, boards with a sense of their legitimate ownership relationship should no longer act as if their job is to represent themselves, staff, volunteers, customers, or special interests.

 

Who are the owners of a nonprofit organization? For a membership organization, its members are the owners. It is the board as a body that speaks for the ownership, not each board member except as he or she contributes to the final board product. On behalf of the ownership, the board has total authority over the organization and total accountability for the organization. The leadership is accountable to the membership for producing results towards advancing the organizations mission. The board is responsible for sustaining the mission, ensuring the organization has the resources necessary to fulfill the mission, and providing oversight as well as independent verification ensuring fiduciary and legal requirements are met. Board members represent the membership and should be individually and collectively responsible to them for the sound and proper performance of their duties.

 

Better Accountability is Necessary

 

Accountability can exist in any environment as long as the membership can truly and directly have the final say if necessary. In other words, if any delegation of authority occurs by the membership the basic question is whether the delegation of authority is reversible -- controlled by those who delegated it. Various ways to become a more accountable organization include:

 

  • Survey your membership regularly.
  • Keep the membership well informed.
  • Have your board commit to representing the interests of the owners.
  • Ensure that the board of directors understands and can fulfill its financial responsibilities.
  • Ensure the accuracy of and make public your organization’s form 990.
  • Publish and make widely available an annual report with financial data.
  • Rely on annual independent audits and assessments.
  • Avoid and manage conflicts of interest or the appearance of conflicts.
  • Adopt a statement of values and code of ethics.
  • Establish and support a policy for employee/volunteer reporting of suspected misconduct or malfeasance.
  • Be familiar with intermediate sanctions.
  • Keep good records and keep them organized.
  • Know the federal regulations and your state laws.
  • Embrace inclusiveness and encourage participation.
  • Apply best practice.

 

Don't treat your membership like mushrooms-keeping them in the dark. The more you can share about your business, the more members can contribute to helping advance the mission. If you have dark secrets, you're in the wrong business. Be truthful to yourself and others. It is critical to keep the membership engaged. People want to know what is going on in the organization. Talk to them! Organize a consistent system of passing on information. Better accountability will be the USCF Board of Directors most important challenge.

 

What About New Blood?

 

Larry Cohen has stated: "The big question (either for the USCF or local clubs) has to be where will the new blood come from?  If the same people end up running things and new people get discouraged what will the future of USCF be?" In my view, James Eade probably gave the best definition of new blood.  "By new blood, I mean people who are not part of our state affiliate programs, who are not TDs or organizers, state officials or any of the other traditional sources. I don't simply mean people who haven't been on the PB before.  I mean NEW blood.  In fact, the more I observe the USCF governance system, the more I'm starting to believe that state affiliate service should be a disqualification for the Board, and I'm only half-joking. (IMHO) We need fewer people who have mastered the intricacies of petty chess politics on the Board of the USCF." This refers to what appears to be some sort of musical chairs between state officials, the Chess Trust/other chess organizations, and the USCF board. More importantly, too often there is the problem with former employees, contractors, organizers, or TDs becoming board members or former board members becoming employees, consultants, or CL contributers for the organization. This unhealthy cycle of overseeing the use of membership funds and being compensated by membership funds must stop. We need to use standard nonprofit methods to attract new talent and remove ineffective leaders.

 

Larry Cohen also asked "The USCF already has a problem with retaining members, how will it deal with the prospect of trying to get new people into the actual running of the USCF?" There is a best practice board building cycle that features multiple steps for a board to follow that assists with this effort that includes:

 

  • Identifying, cultivating, and recruiting prospective board members.
  • Removing barriers that prevent or limit board participation.
  • Orienting new board members.
  • Encouraging board members to become more active.
  • Educating the board about the organization's work and context.
  • Rotating out board members to make room for new skills and insights.
  • Engaging the board in a self-evaluation.

 

One of the more important responsibilities of a board is to ensure that it continuously adds qualified new members and keeps them engaged. Board building shouldn't just happen when it's time to fill a vacancy or by allowing state officers to arbitrarily seat board members at the Annual Meeting, but should be a continuous process that includes year-round activities. An important individual board member responsibility is to inform others about the organization and suggest possible nominees to the board who can make significant contributions to the work of the board and the organization.

 

Many boards have decided to craft a board member agreement or contract that they ask each new board member to sign as a part of the installation ceremony. These agreements usually spell out the responsibilities of board members and specific expectations tied to service on their particular board. These expectations may define requirements for personal giving, committee or task force duties, meeting attendance obligations, board member ethics, conflicts of interests, board recruitment, and other activities in which every board member is expected to participate. The purpose of these agreements is to remind board members of what serving on the board means. They are not legal documents like employment contracts. Such agreements act as gentle reminders while making a point that there are obligations with volunteering.

 

The recruitment of talented, team-oriented board members may be the number one issue facing the nonprofit sector in the 21st century. Finding the right people with the right expertise - whether it is in technology, fund-raising, marketing, or finance - is critical to the organizations success. The encouragement of other than the special interest and the wealthy to serve is important to improve the participation of talented individuals.  A lack of diversity and limited choice will stifle an organization over time. One of the most common ways of assisting the board in engaging the right people is through a governance committee, which is the entity that meets the need for a coordinated, continuous program of board member recruitment and board self-evaluation. The committee's role often is to identify, cultivate, recruit, orient, and educate board members as well as potential board members. This is the group that talks with the chair and the rest of the board about what kinds of people you need to make your board a well-rounded, high-performing team. The governance committee's main role is to increase the talent pool, recruit new board members and to assure that each board member is equipped with the proper tools and motivation to carry out his and her responsibilities.

 

Equally important with identifying, encouraging, cultivating, recruiting, and orienting prospective board members is rotating out board members to make room for new skills and insights. Term limits is an often-used mechanism to assist with such rotation. Three years is the most common term length for board members according to a recent survey conducted by BoardSource and Stanford University. The second most common length of terms is two years. Forty-eight percent of the responding boards allow board members to be elected for a second term; fifteen percent have three terms. Another rotation approach is allowing the membership to not elect poor performers. This is very difficult with a system of rank order voting where even a low vote getter can be elected as part of a slate. One needs to be able to vote YES or NO on if they wish a candidate to serve on their behalf. Those with a majority of no votes from the membership should not be eligible to serve as a board member. A final rotation approach for elected boards is a recall process by their electors. This is a last resort accountability mechanism (prior to derivative lawsuits) by the membership to reverse their delegation of authority in cases where fiduciary responsibility or a board members agreement has been materially breached.

 

A Common Message for Elections

 

The quality of election campaigns in the USCF has been notoriously low, and the mudslinging is awful. It can be very expensive to run a successful campaign. Many successful businessmen take one look at the USCF political arena and decide they have better things to do with their time and money. Hence the same faces year after year involved in USCF leadership. Providing a common message that stands or falls in the public arena, rather than private campaigning in the election of the Executive Board is an important goal. More information about the qualifications and actions of our Delegates is also important. To do this it is necessary to have a basic mechanism for a significant public message to voting members which provides an equal starting point for quality information from all candidates. Ethical guidelines for campaigning would be helpful. Access to more electoral information that is publicly available to all voting members will enhance the process. Such quality information can help equalize the need to spend a great deal of money on a campaign thus allowing relatively more resources to be directed to support chess related activities. Too little information is available under the current system. Less negative campaigning would be more productive. More USCF sponsored public information about candidate’s qualifications, their vision, perspectives on the challenges facing the USCF, and what they have produced or will accomplish for the membership as a board member will greatly improve the process. A well informed electorate on all issues is problematic for any size group and in reality impractical for a very large group, although enough quality information must be made available to allow the voters to become a monitorial membership that scans the environment for controversial or off course events that, in their opinion, require their response.

 

The Case for Election by Office

 

We favor a system in which the electorate vote for candidates by position as opposed to the system in which the elected Executive Board itself determines who is president, vice president, secretary and treasurer. A 'Yasser Seirawan' type might run for the presidency but would likely back away from running for an EB post without any guarantee of serving in any particular position. Under the Illinois General Not-For-Profit Corporation Act the President can call special meetings of the members. It is important this office of trust be given the consent of the governed.

 

Voting for candidates by position allows a competition like atmosphere and encourages debate. A candidate must tell you how he/she is qualified for a specific job, not just being on the board and they must convince you they can do it better than someone else can. This also involves debating against opponents. This process is highly informative to the membership and often gets them very involved.

 

When just having a group running for seven seats you rarely get any debate or battle of ideas. Such group activity encourages slates or tickets to run which destroys the diversity of ideas and talent a successful board requires. You may even have a member with the least votes become the President of the organization. Candidates can be elected based only on their affiliation with a slate and not on their qualifications. If there are few candidates for the number of seats then people can get elected with very few votes. However in this process we think each potential board member should state how they would handle a presidency and how the would move chess forward in America. Indeed under the current USCF bylaws each Executive Board member is a potential president. We also would encourage moderated debates [online] with the candidates so they can be asked questions and we can see how they respond.

 

In all of this we need to remember we are looking for board members to represent chess to the world, help guide a nonprofit corporation, and be the role models for our children. Chess credentials, wealth, and celebrity have little to do with this. The voting members need to understand this clearly. It takes several years to build up relationships and to carry out any plan so it behooves the corporation not to change its leader every year or midstream due to political disagreement.

 

Greater participation in elections is clearly an important goal. The goal has never been to have a majority of eligible voters participating as this is impractical with large groups. In fact, it is interesting to note that nonprofit organizations typically have participation rates among eligible voters of less than 20 percent with between 5 to 15 percent being the norm for a traditional process. You often will get more towards the 20 percent end of that membership participation rate in elections if you use mail ballots, have candidates run for a specific office, include informative election material with the ballot, and include return postage. Surprisingly it appears organizations have demonstrated a 30 to 50 percent increase in participation rates when the capability is offered to view election information and cast votes online using a special and secure election webpage.

 

Improving Governance Participation

 

Volunteers are the cornerstone on which the not for profit sector is predicated. Increasing volunteer involvement and building a more productive board for a nonprofit organization requires painstaking care and will take time. However, the effort does yield results towards a more informed and engaged membership as well as a more energetic board. It has taken more than twenty years to bring about the current Federation situation but there is now an opportunity to change the organizations course towards best practice. The very first steps involve listening to the membership, encouraging their participation, and respecting each other. The sooner one starts in this direction the sooner one can better accommodate a more inclusive approach and remove the obstacles that stand in the way of better organizational results.