There’s an academic literature (and caselaw) concerning what interests a board can/should consider when making decisions, and this may vary to some extent on state law. It can get tricky, but the scope isn’t as narrow as some people may assume.
Don’t want to derail this thread, but I did feel I should flag the complexity on this topic for benefit of those who serve as board members.
Hopefully organizations are offering good training / onboarding for board members, but I don’t think that always happens. Maybe the community could think about funding webinars on nonprofit corporate governance and encouraging orgs to send new (or current) board members. Should be pretty cheap; the main cost would likely be the members’ time.
This seems great and I appreciate your contributions.
It seems tough, but it would be useful if you or someone else shared information about this. This content could be academic legal content, or just as importantly public articles or statements from senior people working on non-profit boards that confirms this
Respectfully, I’ve talked with many lawyers of great quality, including on the board I was involved in. Overall, I’m worried of the substance or practicalities about this thread. I expect that most board members and officers and will just “round down” and obey the instructions in the documents they signed, which seemed quite unequivocal to me about conflicts.
On the object level, one complication is that like many, my non-profit was registered as both a 401k in the US, and also a charity in the UK. Things like layering on jurisdictions or other things probably increase the issues in practice, and seem impractical to attend to.
Other issues involve board dynamics (that increases with the activity of the board, that you principledly aim to increase). Based on my experiences, I think principled but “de jure” violations can be weaponized by opposing factions on a board.
The board member I spoke to at Rethink Priorities, was not at all the most junior board member, and clearly expressed concern about the conflict themselves. As mentioned above, the issue with advising was because the idea involved the creation of a new think tank, which seems like a clear conflict. This could be under the umbrella of Rethink Priorities, or not. The considerations about which way to do this are immensely complicated, and probably only understood by a small group of people with an enormous amount of context.
I sense that you are referring to a specific past situation that I don’t think it is helpful to attempt to hash out here (although I have no idea what the backstory is). A brief discussion of various constitutencies the board needs to consider can be found at https://corpgov.law.harvard.edu/2012/04/15/nonprofit-corporate-governance-the-boards-role/, but I’m sure someone could do better with more Google searches.
If an organization’s management is dictating to the a board what its job is, or is controlling the onboarding process, I think that organization has a board problem. I don’t tell my supervisor at work how to do his job.
I think my example gives intuition well for why conflict of interest and de jure constraints can be bad. There is no further subtext.
As an aside, because of where we are, and the ideas in your other comments, I want to say, on the subject of lawyers or other ideas about institutions, I do not share anything like Habryka’s aesthetics which you spent a lot of time pushing back on. I am not from California and I did not come through an EA club at some HYPS school. I’m grateful for your discussions on this and other legal matters.
What Jason said about EA orgs adding or changing its board to have 2-3 non-EA board members, especially to an organization with 4 directors, is something you might do to an organization after a major crisis such as misconduct by the management, or a major pivot, maybe after a massive funding change.
To calibrate and give intuition, if we were talking about an employee, not an organization, the magnitude of this change would be like being put on a PIP, being demoted, or moved to another department involuntarily. If you were changing the board this way and done poorly (or sometimes well) many executives or staff would consider leaving.
The issue at hand is changing board, from the close network containing the CEO and often close friends. Yes, independent governance is often nil and the CEO often dominates decisions in the modal (almost all really) start-up as well as most small nonprofits. This happens everywhere, including smaller organizations in EA. I’m 80% sure this was how GiveWell was built.
Nil governance could be bad or good, but the advice being discussed here is far too basic. If there actually was misconduct on the level of FTX fraud, this advice be easily co-opted. For example, Tyler Shultz was the relative of a Theranos board member and extensively explained the outright fraud to his board member relative, and was ignored. SBF could have constructed a performative board to dominate as well.
The level of discussion being given to this on the EA forum is low and risks cargo culting (wasting time working on processes that need true management ability to be effective), or create systemic issues, e.g. “Matthew effects” ( board members become a currency, orgs that can attract them to win the game of funding).
There is unlikely to be unusually high base rate of fraud in current respected EA organizations. Ultimately, the limiting issue in EA is management and talent, and people have worked on this for a long time. Some reactions can be counterproductive.
To clarify, I said that “organizations” should “aim” for “at least one—preferably two or even three—board members who are not ‘full-time’ EAs.” That statement did not refer to RP, and was not intended to suggest that an organization with four directors should immediately jump to adding 2-3 board members in the category I indicated. I also didn’t specify a board size -- “even 3″ makes more sense for a 9+ member board than for a smaller one.
(Not necessarily on the above project) I believe in theory, if it was net positive for impact, Peter, Marcus and Abraham would agree, and even use resources that don’t directly improve Rethink Priorities, to help start a new think tank or other entity. In fact, as an EA, I would feel obligated to do so, if on balance it made sense.
I could easily see such actions being opposed by an outside, muscular, board member who has other visions for Rethink Priorities, who won’t understand or care about the considerations. This might not be absolutely wrong, but would alter the EA landscape in complicated ways.
There’s an academic literature (and caselaw) concerning what interests a board can/should consider when making decisions, and this may vary to some extent on state law. It can get tricky, but the scope isn’t as narrow as some people may assume.
Don’t want to derail this thread, but I did feel I should flag the complexity on this topic for benefit of those who serve as board members.
Hopefully organizations are offering good training / onboarding for board members, but I don’t think that always happens. Maybe the community could think about funding webinars on nonprofit corporate governance and encouraging orgs to send new (or current) board members. Should be pretty cheap; the main cost would likely be the members’ time.
This seems great and I appreciate your contributions.
It seems tough, but it would be useful if you or someone else shared information about this. This content could be academic legal content, or just as importantly public articles or statements from senior people working on non-profit boards that confirms this
Respectfully, I’ve talked with many lawyers of great quality, including on the board I was involved in. Overall, I’m worried of the substance or practicalities about this thread. I expect that most board members and officers and will just “round down” and obey the instructions in the documents they signed, which seemed quite unequivocal to me about conflicts.
On the object level, one complication is that like many, my non-profit was registered as both a 401k in the US, and also a charity in the UK. Things like layering on jurisdictions or other things probably increase the issues in practice, and seem impractical to attend to.
Other issues involve board dynamics (that increases with the activity of the board, that you principledly aim to increase). Based on my experiences, I think principled but “de jure” violations can be weaponized by opposing factions on a board.
The board member I spoke to at Rethink Priorities, was not at all the most junior board member, and clearly expressed concern about the conflict themselves. As mentioned above, the issue with advising was because the idea involved the creation of a new think tank, which seems like a clear conflict. This could be under the umbrella of Rethink Priorities, or not. The considerations about which way to do this are immensely complicated, and probably only understood by a small group of people with an enormous amount of context.
I sense that you are referring to a specific past situation that I don’t think it is helpful to attempt to hash out here (although I have no idea what the backstory is). A brief discussion of various constitutencies the board needs to consider can be found at https://corpgov.law.harvard.edu/2012/04/15/nonprofit-corporate-governance-the-boards-role/, but I’m sure someone could do better with more Google searches.
If an organization’s management is dictating to the a board what its job is, or is controlling the onboarding process, I think that organization has a board problem. I don’t tell my supervisor at work how to do his job.
Hi Jason,
I think my example gives intuition well for why conflict of interest and de jure constraints can be bad. There is no further subtext.
As an aside, because of where we are, and the ideas in your other comments, I want to say, on the subject of lawyers
or other ideas about institutions, I do not share anything like Habryka’s aesthetics which you spent a lot of time pushing back on. I am not from California and I did not come through an EA club at some HYPS school. I’m grateful for your discussions on this and other legal matters.Writing to onlookers:
What Jason said about EA orgs adding or changing its board to have 2-3 non-EA board members, especially to an organization with 4 directors, is something you might do to an organization after a major crisis such as misconduct by the management, or a major pivot, maybe after a massive funding change.
To calibrate and give intuition, if we were talking about an employee, not an organization, the magnitude of this change would be like being put on a PIP, being demoted, or moved to another department involuntarily. If you were changing the board this way and done poorly (or sometimes well) many executives or staff would consider leaving.
The issue at hand is changing board, from the close network containing the CEO and often close friends. Yes, independent governance is often nil and the CEO often dominates decisions in the modal (almost all really) start-up as well as most small nonprofits. This happens everywhere, including smaller organizations in EA. I’m 80% sure this was how GiveWell was built.
Nil governance could be bad or good, but the advice being discussed here is far too basic. If there actually was misconduct on the level of FTX fraud, this advice be easily co-opted. For example, Tyler Shultz was the relative of a Theranos board member and extensively explained the outright fraud to his board member relative, and was ignored. SBF could have constructed a performative board to dominate as well.
The level of discussion being given to this on the EA forum is low and risks cargo culting (wasting time working on processes that need true management ability to be effective), or create systemic issues, e.g. “Matthew effects” ( board members become a currency, orgs that can attract them to win the game of funding).
There is unlikely to be unusually high base rate of fraud in current respected EA organizations. Ultimately, the limiting issue in EA is management and talent, and people have worked on this for a long time. Some reactions can be counterproductive.
To clarify, I said that “organizations” should “aim” for “at least one—preferably two or even three—board members who are not ‘full-time’ EAs.” That statement did not refer to RP, and was not intended to suggest that an organization with four directors should immediately jump to adding 2-3 board members in the category I indicated. I also didn’t specify a board size -- “even 3″ makes more sense for a 9+ member board than for a smaller one.
(Not necessarily on the above project) I believe in theory, if it was net positive for impact, Peter, Marcus and Abraham would agree, and even use resources that don’t directly improve Rethink Priorities, to help start a new think tank or other entity. In fact, as an EA, I would feel obligated to do so, if on balance it made sense.
I could easily see such actions being opposed by an outside, muscular, board member who has other visions for Rethink Priorities, who won’t understand or care about the considerations. This might not be absolutely wrong, but would alter the EA landscape in complicated ways.