Boardroom Confidential

February 23, 2011

Have you ever noticed how board members sometimes conflate confidentiality and transparency, two important, but essentially opposite, values? Nonprofit organizations are expected to function in a transparent manner, but if you are supposed to function in an open manner, how can you keep information confidential? It helps to understand the difference between the two terms and how they relate to each other.

Transparency is the disclosure of information to the public and supporters to indicate the organization is managed well, functions in an ethical manner, and handles its finances with efficiency and responsibility. It’s part of your duty of obedience. Confidentiality is the obligation and right not to disclose information to unauthorized individuals, entities, or processes if it would harm the organization, its business relationships, or an individual. It’s part of your duty of loyalty.

We are all constantly aware as board members that our stakeholders – our clients, the government, the sector – want and expect transparency from our organizations. As the Form 990 asks for more and more disclosure – How much does our CEO make? How did we arrive at our compensation decisions? Do we have X, Y, and Z policies? – it raises expectations that all information is fair game for public knowledge.

But transparency does not, and should not, extend to boardroom decision making. Board discussions are confidential. Period. Even if your organization is subject to sunshine laws, there are exceptions for topics of extreme confidentiality such as legal and personnel issues. Your board should have a rigorous confidentiality policy that board members agree to and adhere to without exception.

Why is confidentiality so critical? Board members must feel at liberty to express their ideas and opinions in an open and welcoming atmosphere, and nothing chills candor like the fear that one’s words will be repeated (or worse, misquoted) outside the boardroom. The only way your board can transform your organization is if it feels free enough to discuss the big, audacious issues…to dare to dream…and to challenge each other’s assumptions about how much you can achieve.

Look at this way: A strict adherence to transparency and disclosure ensures that your board is firmly grounded in compliance with the law, while a culture of confidentiality ensures your board has the freedom to soar as far and as high as it may.


2 Responses to “Boardroom Confidential”

  1. Pester Says:

    we recently had a situation whereby our CEO was reported in public media to have bent policies in his favour to abuse his powers, evade tax, acquire property, promote friends, etc. Our board chair engaged a private lawyer to investigate the allegations which were later found to be true. The CEO resigned before the board to usher their verdict. Upon addressing employees on the case, the board chair refused blatantly to provide details of the findings of the investigations and who was implicated. her reasons were that the confidentiality policy protects the CEO and the culprits? Somebody help me here.

  2. Deborah Davidson Says:

    Berit Lakey Says:

    February 23, 2011 at 3:49 pm
    Response to the February Report, Transformative Governance:
    I think the piece does a disservice to the notion of Transformative Governance by describing transparency as essentially sharing the good news rather than a willingness to recognize both the good news and the news that are not so good. Also, I don’t think it is correct to state that board discussions are confidential – only discussions conducted in executive sessions can be categorically described as confidential. Association members would be up in arms at the notion of all board discussions being confidential, and what about the many boards where senior staff often sit in on board meetings?

    From Deborah Davidson at BoardSource:
    Thanks, Berit, for flagging these issues. While the post only mentions the positive aspect of transparency, the willingness and duty to be transparent include the necessity of disclosure of the negative as well. And regarding boardroom confidentiality: you are correct, perhaps a better way to frame it might be that executive sessions, as opposed to all board meetings, are truly confidential. The important point is that board members need some time to discuss, deliberate, debate, and even decompress, with the guarantee of confidentiality that allows freedom of expression.

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