Best of Boards, 2nd Edition

Chapter 4When Management and the Governing Board Disagree

Martin is an investment banker. His firm encourages partners to become involved in the local nonprofit community and in service projects. Because of this and his interest in eradicating child abuse, he agreed to his nomination for the board of a local family violence prevention agency. The nonprofit was excited, too. The executive director and board president were eager to bolster the “money know-how” on the board and anticipated that Martin might be willing to serve as treasurer in the future. In the meantime, they assigned him to the Finance and Investments Subcommittee (FIS). At the first meeting of the FIS, Martin was astonished to find that the agency had exclusively allocated its investments to highly restrictive socially responsible funds. Although his plan had been to be a silent “learner” until he got more familiar with the board, he could not contain his discomfort. "Look, I’m all for socially responsible investing, but you also have to look at return on investment and diversification. You are missing a lot of opportunities for income that you sorely need. It seems irresponsible to stick with this investment plan."

Martin’s lecture was met with silence, but the air was filled with the unspoken reactions of others around the table. One committee member thought, "Who the hell does this guy think he is, coming in here and telling us what to do?" Another thought, “This is the classic corporate patriarchy! I don’t ...