Going ‘glocal’ with governance
When Eurasia Foundation transformed its office in Kyiv, Ukraine, into the independent East Europe Foundation (EEF) in 2007, one of its first priorities was ambitious, given the local environment for governance: to establish a locally focused, internationally constituted, fully functioning board of trustees.
EEF is the fourth in a series of five foundations established by Eurasia Foundation in the former Soviet Union since 2004. These locally registered institutions – all spin-offs from Eurasia Foundation field offices – have introduced what the founder calls a unique breed of institution to the region, able to combine local knowledge, leadership and legitimacy with a global mindset and internationally recognized best practices. Tapping into both local and foreign sources of funding, the new foundations are intended to provide their communities with lasting channels of support for civil society and private enterprise. They are linked together through the Eurasia Foundation Network, which promotes exchanges among the foundations and other local and international institutions in the region.[1]
This vision of an enduring, diversely funded network of institutions has prompted Eurasia Foundation to pay close attention to an element of institution-building that is often overlooked: foundation boards. ‘We regarded a strong board as an institutional imperative that would help make the new foundations grantworthy from Day One,’ explains Horton Beebe-Center, Eurasia Foundation’s president. ‘So we took care to design durable and effective governance structures.’[2] The attention to governance stands out in a region where non-profit leadership is typically conceived as a dynamic chief executive, and neither the law nor tradition foster independent, deeply engaged governing bodies.[3] The challenge of building the new boards is further complicated by their composition: the boards bring together international groups of individuals with widely varied backgrounds, experiences and assumptions about the nature of boards.
Eurasia Foundation’s experience suggests that thoughtful board member selection, a careful launch and well-crafted governing documents and structures can go a long way towards establishing boards with an effective mix of international and local components. Interviews with board and staff members reveal a network-wide commitment to good governance that is rooted in the mission and being realized in such practices as regular board self-assessment and increasing board attention to strategy and long-term development.
At the same time, inherent tensions between local and international elements of governance persist and are likely to grow. Indeed, as the new foundations continue to take root, a key issue is likely to be whether the boards can retain their international character and remain a convincing measure of ‘grantworthiness’ as the individual partners that constitute the Eurasia Foundation Network continue to evolve.
Launching the new boards
Eurasia Foundation’s effort to build ‘durable and effective governance structures’ is evident in its three-pronged approach to launching the EEF board in Ukraine. The first step was to ‘hardwire’ best practices into the board, with governance structures and processes mostly derived from the Eurasia Foundation board in the US. This was far from an easy task, says Regina Yan, the Eurasia Foundation executive vice president with responsibility for setting up the new institutions. Because foundation governance is so vaguely defined in local law, Eurasia Foundation ‘had to twist the charter like a pretzel’ to replicate the checks and balances that are understood as good governance in the American sense.
The main ‘twist’ is that, in conformity with local regulation, the EEF charter names a management board, which in local practice is normally an oversight body composed mainly or entirely of staff. But EEF’s internal bylaws stipulate that the chief executive or president may not serve on the board; that the board must approve all policies, strategies and programmes and may take all other decisions that are not the prerogative of the founder; and that the board must operate according to a precise set of instructions on such matters as the election of officers, voting, committee formation and avoidance of conflict of interest.[4] In this manner, a governing board, understood as an independent body with supreme decision-making authority, was essentially grafted onto local legal structures by means of an extensive set of bylaws or internal rules.
The next step in launching the EEF board was to assemble a careful mix of members able to present a variety of local and international perspectives. ‘We looked for people who would enjoy the work while bringing credibility and help in fundraising,’ says Yan. In contrast to the Eurasia Foundation board, which is entirely American, four of the 10 original EEF board members were from Ukraine, four from the US, and two from Western Europe; about half were resident in Kyiv. Members represented a broad array of professional backgrounds: corporate, non-profit and, somewhat unusually, government, in the form of retired diplomats from donor countries. Also on the board were a Eurasia Foundation board member and a member of the senior staff.
A similar balance in board composition was achieved at the other foundations. With subsequent turnover, more than half of board members in the network today are local nationals and reside in the regions their foundations serve. The only exception to this mix is Eurasia Partnership Foundation (EPF) in the Caucasus, where it is politically infeasible to have Azerbaijani and Armenian nationals on the same board and thus all board members are non-nationals. But even there, says Andrew Coxshall, an EPF board member, Eurasia Foundation’s results in assembling the first governing body are admirable: ‘The board brought together people with key skills, backgrounds and connections, covering all issues and offering deep regional expertise.’
What motivated board members to join? EEF board chair Yuriy Sivitsky from Kyiv says that, while he had a lot of previous governance experience, it was mostly with corporate boards. When invited to join the EEF board, he was not sure he had the time but in the end decided the opportunity to build philanthropy in Ukraine was too good to pass up. Other board members in the network say they similarly welcomed the opportunity to serve the community, and some saw professional benefits, too: a local board member in central Asia, for example, admits to joining the board for more solid governance experience that could help his career. Like Sivitsky, most board members had previous corporate or non-profit board experience, with the exception of the retirees from government, who usually had none.
The third step in setting up the EEF board was to offer the new board an orientation. At their first meeting, four of the five boards received training lasting either several hours or a full day. These orientations focused on the board’s roles and responsibilities, expectations for individual trustees, special circumstances facing the board, team building and board goals in the first year. ‘Orientations for the board are extremely helpful,’ says the second EEF president, Tim Pylate. ‘For the incoming members, they provide a perspective on how the board should engage and set the stage for the board to work together.’ Board members who underwent training agree it was ‘worthwhile’, ‘interesting’ and ‘well done’ – though a European member of the EEF Moldova board adds wryly that the induction seemed typically ‘American’ in its elaborateness and detail.
Eurasia Foundation staff members in Washington acknowledge that the main reason it invests heavily in the careful recruitment and training of board members is its experience with the first spin-off, New Eurasia Foundation (FNE) in Russia. Unlike the other foundations, FNE had multiple founders, each of which brought to the table different ideas about governance. As the board was set up, vague or conflicting approaches to building the board were never fully examined, says Beebe-Center. He notes a particular challenge that was posed by the many high-profile members, both international and local, who were brought onto the first board: although they gave FNE ‘instant legitimacy’, they were unable to commit enough time to the board to ensure a strong start. Further compounding the board’s weakness was the fact that it was never trained as a group. In the absence of a local culture of boards to draw on, board members’ disparate assumptions about their role were never harmonized and the board failed to come together as a team. An FNE board member agrees that in the beginning some board members, especially local nationals, had trouble grasping the purpose of the board and did not bother even to attend meetings. Thereafter, Eurasia Foundation has sought to be the sole founder of subsequent spin-offs and to be more deliberate in shaping the boards. Lessons learned include more exacting discussions with potential board members about time commitments and other requirements, a screening-out of candidates who are unlikely to comply with expectations, and mandatory orientations.
The boards in action
It would probably be unreasonable to expect a mature governing board to spring, like Minerva, fully formed from the head of its founder. So, though off to a good start, the foundation boards are still finding their feet, in the meantime relying heavily on the staff for support and direction. Although board members have a good grasp of their leadership duties – for example, EEF chair Yuriy Sivitsky says that his board’s main duty is ‘to keep the foundation actively on track’, and Beth Jones of the Central Asia foundation (EFCA) describes her board’s role as ‘assuring the direction EFCA is taking is a good one’ – specific descriptions of board activities suggest that they are still more concerned with tactics than strategy. The most frequently mentioned board tasks include interventions with government officials, introductions to donors, and the review and approval of policies and procedures coming from staff. Board members also perform an important advisory function: for example, EPF president George Zarubin mentions that each of his board members has a specific area of knowledge (such as finances, regional developments or law) in which they serve as his advisers.
Overall, the impression is of staff-driven boards that, over time, are coming into their own. Typically at EEF, ‘the president proposes, the board disposes’, says Dutch board member Adriaan Jacobovits de Szeged. EEF president Timothy Pylate agrees that ‘much of the impetus for board action has been from the staff rather than the board itself, although this is gradually changing’. His chair, Yuriy Sivitsky, concurs, pointing out that board discussions have recently taken a higher-level focus with the introduction of brainstorming sessions about such topics as measuring organizational performance. At EFCA, a similar trend is also apparent. Chair Erkinbek Kasybekov admits that the bulk of work for meetings is still performed by staff, but adds that his board, too, is beginning to take the lead on a strategic level: for example, it recently devoted an entire meeting to reformulating the organization’s mission, vision and values prior to approving a strategic plan. Kasybekov notes that the comprehensive list of governance duties was simply too much for the new board to take on at once, so it began by exercising oversight tasks and is gradually building up other capacities. EFCA president Jeff Erlich welcomes the fact that his board is growing more independent, suggesting that the main reason has to do with funding. ‘At times the board no longer automatically asks what Eurasia Foundation in Washington would think,’ he explains. Even though Eurasia Foundation remains the core donor, ‘the board now has other donors to listen to, too’.
While in Central Asia, Ukraine and the Caucasus the boards show signs of evolving from an auxiliary function to a more complete governing role, in Russia a reverse process seems under way. President Andrey Kortunov says that in the early days, despite lapses in attendance, his board had the attributes of a real governing body in that it was able to decide strategy and make financial decisions. But now it has a more consultative role, mainly because local sources of funding have grown more important, shifting the focus from institutional capacity to project fulfilment. He puts it bluntly: ‘Russian private sources of funds want a successful product. They don’t care about governance.’ This has led to a ‘painful process’, in which the board is relinquishing its strategic and decision-making function and now largely follows the staff’s direction. ‘Essentially, the FNE board is becoming less like the board of a US foundation and more like the board of a regular Russian NGO,’ he says. FNE board member Jacek Wojnarowski agrees that the board’s role has shrunk. It is difficult to say whether this trend is the result of a greater preponderance of project funding or the fact that such funding issues from local sources with little interest in governance – or simply that the board itself has failed to assert its authority as the governing body. Whatever the cause, Kortunov sees the shrinking board role as an inevitable process if proportionately more funding is to be for projects and to come from local, rather than US or international, sources.
Evaluating the boards’ performance
In addition to investing in the boards’ start-up, Eurasia Foundation also tends to their continued development. (‘Otherwise, who else would do so?’ asks Yan.) The primary means of board development is a customized tool known as the Capacity Mapping Initiative, or CMI, licensed from the Local Initiatives Support Corporation, a US non-profit that originally developed the instrument for use with community development organizations. Every year, teams from Eurasia Foundation’s Washington office use CMI to rate the foundations against criteria in various areas, interviewing board members in the process. The section on governance examines such aspects as the board’s adherence to bylaws and policies, board member engagement in fundraising, and their effectiveness in forging strategic relationships.
Board members’ reactions to the CMI are mixed, largely split along geographic lines. An American board member called taking part in the exercise a ‘nice’ experience but not very important. European members complained that it was ‘overdone’, ‘strange’, ‘complicated’, and ‘too time-consuming’. Overall, board members seem to take the exercise less seriously than their presidents, who, with the exception of Kortunov in Russia, are also Eurasia Foundation regional vice-presidents and thus to some degree accountable to Washington for the performance of their boards. For them, CMI offers important benchmarks that may not always align with what the boards themselves consider their most important priorities. For example, none of the foundations has fulfilled all criteria in the area of fundraising, which require, among other things, that board members contribute from their own pockets. Although many board members agree they could be doing a better job in this area, some European members say they do not see fundraising as a front-line board responsibility, or that they are willing to assist staff with advice and contacts but do not believe they should have to make donations themselves.
In addition to CMI, at least one of the boards has begun to perform separate self-evaluations annually, and another plans to introduce the practice this year. These self-evaluations may allow board members better to evaluate their performance on their own terms. Comments by board members suggest there are two areas not specifically covered by CMI in which board performance could be addressed.
The first area for improvement is the engagement of non-local board members. EFCA board member Beth Jones says her contributions are usually reactive, since she does not live in the region. Steven Pifer of the EEF board similarly says he sometimes feels disconnected because he is not in Ukraine. While committees are said to function well through phone calls, several interviewees observe that a board cannot cohere as a team if it meets in person only twice a year. The challenge of getting international boards together is imposing, partly because of the time involved, but more importantly because of the cost. Thus each board will need actively to understand and confirm the value of its members who live outside the region, then work hard – and raise money – to keep them involved and informed.
A second area for improvement is the engagement of local nationals – a challenge mentioned on all of the boards. The issue, said several interviewees, is not just that local nationals do not share the same concept of board membership. They are often just too immersed in their daily lives to have time left for volunteering for non-profit boards. Finding and retaining committed local board members is problematic for NGOs throughout the region, but for the Eurasia Foundation Network the task may be tougher, since expectations of board members are unusually high. At each foundation, the recruitment of more local nationals is a stated priority, ‘provided they are committed to maintaining international standards’, says executive vice-president Yan.[5] To meet these standards, local members may need mentoring or coaching, most likely through the Eurasia Foundation Network, which already offers foundation chairs the opportunity to attend events with the Eurasia Foundation board. A reasonable aim would be for the foundations to invest as much in mentoring local board members as they do on board launches and on flying international members to semi-annual meetings – though, again, the cost would be high.
Localization and the future of the boards
Thus funding and board member engagement are linked in the dual challenge of establishing institutions that unite local leadership with international best practices. Eurasia Foundation has articulated a strategy of localization in the new foundations that includes devolvement of leadership and funding to a local level. However, as the case of the FNE in Russia suggests, more local board members and more local funding risk diluting the model of good governance that is the boards’ defining characteristic. Eventually, all the boards in the Eurasia Foundation Network may be faced with this same dilemma: that for predominantly local donors, a strong international board may, as Andrey Kortunov remarks, be irrelevant as a test of ‘grantworthiness’.
Yet two responses to this conundrum are already emerging. The first, pursued by Eurasia Foundation, is to maintain the foundations’ multiple ties to itself as founder. While its stated goal is to create autonomous institutions, ‘ultimately, we want the foundations to stay internationally engaged, whether as members of our international network, as beneficiaries of international donors, or through international boards. We want the best of both worlds – operating locally yet linked globally,’ says Eurasia Foundation president Beebe-Center. For Eurasia Foundation, the local foundations’ international engagement demands that the original founder-offspring link stays strong, especially as Eurasia Foundation sees itself as better positioned, at least for now, to raise the core funding needed for network programmes, board development and other non-project activities. For the donors who provide such funding, Eurasia Foundation’s commitment to good governance is still key. Thus, although this approach may seem counter to the strategy of localization, Eurasia Foundation is unlikely to give up its seats on the board and its legal powers as founder any time soon.
A second response is up to the boards themselves – that is, whether they can independently own and sustain their commitment to international best practices. In what will perhaps be the ultimate test of board leadership, the boards must show that they themselves can actively pursue their own development as well as that of the foundations they serve. The boards have begun to step in this direction by focusing on the longer-term future and taking their performance assessments seriously. But, for ECFA chair Erkinbek Kasybekov, meeting this challenge comes down in the end to a choice of values:
‘We are determined to keep the board international. This is a voluntary decision – most Kyrgyz NGOs are not even required to have boards. But even though it’s a Western concept, any organization that wants a higher profile needs a board. It gets down to values that are universal: integrity, accountability, responsibility. The board is still the best tool for ensuring these values are observed.’
Postscript: lessons learned
Here is some advice gleaned from interviews about maximizing success in setting up foundation boards.
- Be careful about the selection of members for the first board. Make sure every incoming board member knows the individual and collective responsibilities of the board, and also allow board members to see projects with their own eyes so they better understand what the foundation does.
- Offer an orientation, and be systematic about following through with additional training. It is important to instill good patterns and healthy traditions on the board from the start. These can be changed over time but they do not happen on their own.
- Be sure the chief executive understands that the board can be an asset and strength. Include the chief executive in training sessions about the role of boards and the nature of a productive partnership.
- Appoint a chair with experience in the responsibilities and constraints of boards and the ability to guide discussion. The chair must ensure that the board drives the agenda for its own meetings. Once members of staff start performing this task, it may be hard for the board to get the initiative back.
- Pay careful attention to communications. All board members need to be kept in the loop. Telephone calls work between meetings only if enough time is invested at meetings in face-to-face interaction and team-building activities.
1 Other members of the Eurasia Foundation Network are: New Eurasia Foundation (FNE, founded in Russia in 2004); Eurasia Foundation of Central Asia (EFCA, founded in 2005); European Partnership Foundation (EPF, operating in the Caucasus and founded 2007); and East Europe Foundation Moldova (EEF Moldova, launched in April 2010). Since EEF Moldova began operations so recently, it does not for the most part feature in this report.
2 From an interview conducted 19 January 2010 at the Eurasia Foundation office in Washington DC. I’m grateful to the 15 board and staff members who agreed to be interviewed for this article during January and February 2010.
3 See my earlier article, ‘New Approaches to Governance’, Alliance vol 8, no 4 (December 2003), pp36-37.
4 ‘We basically took the BoardSource list of board roles and responsibilities,’ says Beebe-Center, referring to a well-known tool for boards produced by a US organization. The BoardSource approach emphasizes board leadership in policy formulation, fundraising, financial oversight, the setting of programmatic priorities, and long-term strategic direction, along with clear board procedures and regular self-evaluation. See www.boardsource.org.
5 Even in the Caucasus, where the president and board members say they hope eventually to be able to recruit local nationals to the board.
Marilyn Wyatt is a consultant to non-profit boards and author of the Handbook of Nonprofit Governance, now available in 14 languages. Email marilynwyatt@gmail.com
For more information
www.eurasia.org
