Investor’s Business Daily: When Your Client Is A Nonprofit Board, Woo Allies To Make Progress

As published in Investor’s Business Daily

By MOREY STETTNER 08:00 AM ET 03/20/2020

Too many cooks in the kitchen can pose a problem. So can too many clients in your office.

For advisors who work with nonprofit organizations, the board of directors often becomes the client. Trying to serve a diverse group of people — addressing all their concerns and satisfying all their preferences — can prove exhausting.

Board members may express divergent ideas on how to manage the organization’s endowment. They may also jockey for influence by cozying up to the advisor.

To minimize such undue influence, advisors should insist on transparency from the outset. Ideally, they start by establishing a clearly defined protocol that governs how collective decisions will be made.

“It has to be an open discussion,” said David Shotwell, a certified financial planner in Lansing, Mich. “A board member’s private agenda can’t play a role in decision-making.”

An added benefit of setting a clear process: Boards can then promulgate their investment goals and strategy to the public.

“A board needs to be able to go to constituents and donors and say, ‘Here’s how we make decisions and why,’ ” Shotwell said.

How do advisors convert nonprofit boards into clients? It’s rarely easy.

“We must gain the trust of all board members before they’re comfortable contracting with us,” said Maya Tussing, a San Francisco-based advisor. “Gaining that trust could take months or even years.”

Tussing’s firm targets nonprofits. She enjoys serving them, but acknowledges the difficulties that can arise.

“It’s a thornier kind of engagement,” she said.

Navigate Internal Politics

Part of the challenge in managing a nonprofit’s money is handling legal and regulatory issues. Donor grants can designate restrictions on the use of their gifts and boards have a legal duty to follow certain rules. Advisors, in turn, must understand the legalities in deploying funds.

Group dynamics play a vital role. Advisors often need to navigate sensitive issues among board members and appeal to wide-ranging personalities.

“You’ve got to figure out the internal politics because they’re not going to tell you,” Tussing said. “It helps to have two or three advocates on the board, because you can’t satisfy everybody all the time.”

If conflicts erupt, advisors’ listening skills are paramount. Rather than rush to respond to board members’ opinions, it’s better to ask clarifying questions in an effort to understand their viewpoint.

“You can’t dismiss detractors,” Tussing said. “Ask, ‘Tell me how you think this can be resolved’ vs. trying to argue and strong-arm, which won’t help.”

From her experience advising boards, Tussing has found that it pays to remain objective and show receptivity to everyone’s input before recommending a course of action. It’s important to listen respectfully not only to your favorite board members, but also to the rest of the group.

Facing strong objections or ongoing headaches, an advisor may pull the plug on a nonprofit client. Confronting battle after battle becomes counterproductive.

“You have to be authentic and true for what’s a good fit,” Tussing said. “Our firm tends to be more into passive investing. Someone on the board may be suspicious of that. If it gets to fighting over strategy, you have to be able to opt out and say, ‘If I can’t satisfy enough of you, it’ll be a tough journey and maybe you should hire someone else.’ “

Equal Treatment

Patience is a prerequisite for working with nonprofit boards. Decisions rarely happen quickly as deliberations drag on.

“You’ll make a proposal and then wait as the board gets back to you with changes,” Tussing said. “Maybe the board meets four times a year, so things move slowly.”

This plodding pace in itself poses problems. Personnel changes within the organization — or its board — can create roadblocks. For example, a new finance chair might prefer to start over with a fresh approach.

Building a network of resources enables advisors to add value. Because Tussing’s firm focuses on nonprofits, her team looks for opportunities to connect clients to experts in the field.

“We try to be helpful in a variety of ways,” she said. “We may refer (our nonprofit clients) to capital campaign consultants, grant writers and recruiters.”

When communicating with a board, savvy advisors strive to build rapport with each individual. Resist the temptation to lean too heavily on your top allies; instead pay close attention to everyone else in the room.

Alvin Carlos, a certified financial planner in Washington, D.C., recalls working with a seven-member nonprofit board. Even though only two or three asked questions and seemed engaged, he made eye contact with everyone in equal measure.

“Even though someone is not speaking, they can still have an opinion,” Carlos said. “You don’t know what that person might say after I leave.”