Was Liberty’s Board Set up to Support Falwell or Liberty?
Written by TM of JC on August 29, 2020
Jerry Falwell Jr. resigned as president of Liberty University on Monday. The news came after Reuters reported that a friend and business partner of the couple had sex with Becki Falwell while Jerry Falwell Jr. watched. Falwell Jr. himself submitted his resignation only to reverse course twice.
Falwell Jr. was already on an indefinite leave of absence after he posted a picture on Instagram of him posing with his arm around a woman at a party with their zippers down and midsections exposed.
With one notable exception, Liberty’s board has stayed largely silent in the wake of Falwell’s increasingly controversial public statements and financial dealings.
For ministry boards that have run into moral or ethic issues with their CEOs, one common mistake is allowing the CEO to recommend too many board members, says Bob Andringa, the managing partner of the Andringa Group who specializes in governance and the relationship between boards and chief executives.
“Who’s a CEO going to recommend? They’re going to recommend friends,” said Andringa, who has written several books on board governance, including The Nonprofit Board Answer Book and Good Governance for Nonprofits. “And so when it comes down to crunch time, those friends have more loyalty to the CEO than they do to the mission of the whole organization.”
Andringa joined global media manager Morgan Lee and editorial director Ted Olsen to discuss the blind spots of christian boards, what encourages and discourages them in holding leaders accountable, and why more retired people should serve on boards.
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Quick to Listen is produced by Morgan Lee and Matt Linder
The transcript is edited by Bunmi Ishola
Highlights from Quick to Listen: Episode #227
What is the role of a board at a christian ministry and how does that differ from a secular business or a nonprofit board?
Bob Andringa: First, a nonprofit does differ in many ways from a for-profit company that has a board. So I always see a red flag when a ministry is depending on a lawyer who works mainly with the for-profit sector or with a CPA; it’s a world that needs to be understood with its own uniqueness.
In simple terms, governance is what the board does. The law requires a board. It could be as small as three, and I’ve worked with a board of 65. The average board is about 17. The average board size in christian higher education is around 21. So the trend is to get smaller, to be more effective.
So governance is what the board does, and it is led by a board chair, who is elected by the board. They’re the leader of the board. They are the leader of governance. The board has one direct report, regardless of however many people are hired by the ministry—they typically relate only to the one, generally what we call the CEO or the equivalent. The board sets the policy, belief system, and other parameters for staff to fulfill the organization’s mission and goals as part of their jobs. And the CEO runs the organization within the parameters that the board sets.
The relationship between the board and the CEO is worth an hour’s discussion itself. No board is perfect, and every board has much to learn. Boards dealing with founders—or in this case, a son of a founder—have unique challenges.
But in cases that go bad, usually, the governance process has been negligent.
What is the general cause of this negligence? Where does it most often come into play more?
Bob Andringa: Most board members don’t have a lot of experience in the nonprofit sector. And when you hire a businessman to come on, who doesn’t see the difference, they’re used to dealing with management issues. So they often ask questions and ask for reports that are really about management to the neglect of the role of governance well.
Envision flying at 10,000 feet. Hopefully, together, the board can see what God is doing in the world, and not just this ministry. They can look forward and they can look backward at 10,000 feet, but the risk is that they themselves want to dip down and be on the ground to be in the trenches.
Staff unfortunately help that. Staff who serve committees will write reports. So what are they going to write about? Their biggest problems, and they’re going to ask the board to deal with those. So both board and staff complicate and confuse the two roles.
In the dozens and dozens of surveys that I’ve done, most board members say, “Clarify for me, what is the role of the board? What is the role of the committee I serve on? I see the CEO sort of leading meetings. What is the role of our board chair? What is the role of the committee?” So clarifying roles is very, very important.
So boards are responsible for the bottom line of an organization—making sure it’s financially viable, all the details of how that money is being spent—as well as the mission and vision. Is that a fair summary, or is there something at a nonprofit that’s a little different there?
Bob Andringa: Part of the role of the board is to clarify the mission and then, by writing parameters around what staff can do, prevent mission drift. CEOs always have big ideas, or a big donor comes along but only if things are done their way. So they create another program and then another program and pretty soon the mission that the board wants them to stick with gets off the tracks. So that is one problem—mission drift.
Now, legally, the buck stops with a board. A CEO is an employee of a nonprofit corporation, and, legally, the nonprofit corporation is managed by a board of directors. And so the financial sustainability and viability is a very important part of the board’s role. What they often get are long spreadsheets with detail that only the CFO and one or two others understand. Everyone else pretends they understand it.
Boards need different kinds of information. They like trends. They like comparisons. They like to know where we were five years ago compared to today. And very few boards get that level of digestible, understandable information—particularly with finances.
When it comes to organizational dysfunction, what type of questions would you ask as a board member to figure out if there was dysfunction among the C-suite or between them and the staff? How would you suss that out?
Bob Andringa: A major role of the board is to monitor the organization without getting too deep into personalities and so forth. I believe in Best christian Workplaces, those kinds of surveys that allow the board to see how the employees view them and their christian commitment and consistency. Do they have trust in governance? Do they have trust in the CEO? So I like that.
Evaluating the CEO is a primary function of the board. The board hires, compensates, nurtures, gives direction to, and monitors the CEO. So a question I always have when these kinds of things hit the fan is, how often did the board truly evaluate their CEO?
One of my favorite strategies for a board is to say to the CEO, “If you ever are aware of anything, that if made public, would hurt our mission and our brand, you are obligated to let the chair or the executive committee know immediately. And if not, it could lead to suspension or termination.”
Then there could be a whistleblower policy, where you’re saying to the staff, “If you see things that are hurting, in your opinion, our functioning as a Christ-centered ministry, here’s how you go about informing us.”
Any board of a ministry of over a couple of million dollars, I would ask, “Why aren’t you a member of ECFA (Evangelical Council for Financial Accountability)?” They have standards that you are obligating yourself to follow, including governance standards.
I would have a policy where every three, four, or five years, we do a 360 interview. We survey the CEO’s peers, the leaders of the community that you’re in, your direct reports, maybe all of the faculty.
So there’s a lot of strategies that a board should be holding their CEO accountable to.
What are ways in which boards can strengthen their backbone, especially when it comes to holding CEOs and executives accountable?
Bob Andringa: For the several ministry boards that have run into moral and ethical issues with our CEO, I’m guessing that they lean far too much on their own CEO to recommend board members. Who’s a CEO going to recommend? They’re going to recommend friends. And so when it comes down to crunch time, those friends have more loyalty to the CEO than they do to the mission of the whole organization.
I hope every board would have a governance committee or a board development committee to first get agreement on a profile of what criteria every board member should meet. One of them might be serving on another nonprofit board. One would certainly be a follower of Jesus Christ and known for integrity, etc.
Among those basic criteria, the committee should ask, “What do we want to look like in terms of no more than X percent of pastors? No more than X percent of businesspeople? At least 20 percent board members of color. No more than 20 percent coming from ministry.” You kind of say, broadly speaking, what do we want our dream team to look like?
And then a third category is, what kind of experience and expertise do we need on the board? And there may be 12 areas where you say we have to have at least someone on the board who’s an expert in nonprofit law, nonprofit finances, marketing, facilities, theology, whatever you want.
And then the board development committee is saying, the next people we bring on the board have to meet these criteria. Every board member, every senior staff member, including the CEO, should be recommending people. And this committee is constantly vetting them, involving them in an advisory group or a task force, testing out their loyalty, testing out how well they work in a group setting, testing how well they prepare for the tasks that we give them.
And then, of course, you need to evaluate board members at the end of their first term before you reelect them. And you evaluate them on six or eight criteria that everybody agrees on.
Then you have an annual affirmation statement, which says, even in the middle of your term life changes. So we want you to say every year, “If I can’t do these things during the year, I will take responsibility for resigning so you can find someone who can.”
Now, if you go through a few things like that, you’re going to limit the influence of the CEO and putting his favorites on the board.
Liberty University has a fairly big board, and all the reporting is that it’s been the executive committee that’s been meeting with Falwell Jr. Are large boards effective? What do you think about executive committees? And how do we balance governance, representation, expertise if you have a small board and no executive committee?
Bob Andringa: I’m okay with executive committees if they’re used properly. I see them like insurance—if a decision needs to be made in 24 hours, and the board is scattered all over the country, the executive committee can step in to make that decision. For 12 years I served a board of 15 and we had an executive committee. Over the 12 years, I think they met three or four times.
I looked up Liberty’s board, and I think they have 33 members and they have an executive committee of six, including the president. And the chairman looks to be someone who has very little knowledge of large organizations or higher education. So I’m imagining that the president is the biggest voice on the executive committee by far.
So you get a second-class, first-class attitude. “Hey, I’m not an executive committee. Those guys make all the big decisions. I’m just second-class. I go to meetings. It’s good fellowship. I love to be around the other board members, and it gets me out of my office, et cetera, et cetera.” I’ve met higher ed trustees who [for them] that’s it. They love the fellowship. They don’t do their homework. They don’t study about governance or higher education.
So I’m not a big fan of big boards. If you can run General Motors, Ford, General Electric, and so forth with 12 or fewer board members, you’ve got to be able to run a christian college with 15, maybe 17. That’s kind of the sweet spot for me in terms of effectiveness.
Well, they say, “That’s too small!” But it’s not too small. If the president has a blue-ribbon advisory council that meets on campus once a year, those are where you’d put the major donors who don’t want to give the time, talent, and treasure to the university governing body.
Then if the board has four, five, or six committees, your policies allow board committees to have non-board members on them. Why is that not a problem? Because board committees speak to the board. They don’t speak for the board. They’re not making decisions for the board. They speak to the board. They do their homework and they recommend policies to the board.
And the other thing that boards don’t use nearly enough are task forces. So for example, if somebody wants to give us a building downtown, we think obviously we’d take a building. But someone should say, “Let’s pay one of our trustees to take to lunch a contractor, an environmentalist, a former city councilman, etc. and have them walk through a building.” These people can provide insight into the building or zoning laws that complicate accepting such a gift, and the task force might come back and say, “Our advice really is I wouldn’t accept that as a gift.” So task forces with expertise are really underutilized as advisors to the board on specific complex issues.
What are some blind spots that christian boards often have?
Bob Andringa: Well, we’ve covered a few of them.
I think not taking seriously the responsibility of the board. If I’m on a board of 33, it’s easy to think, “I don’t have to do it. Someone else will do it.”
The other thing they do is they don’t expect homework. So I’ve been in hundreds of board meetings where a thick notebook is FedEx-ed out weeks in advance, and then people don’t read it until they’re on the plane going into the meeting. They’re skimming it, right? Well, then they get to the meeting and guess what? They spend the first three hours listening to reports from the president and vice presidents on exactly what was mailed out. So they become, they become dependent on the administration, rather than owning their responsibility to be leaders.
Another one is the feeling that the CEO knows so much more than they do. A “what would we do without him?” attitude. So they allow the CEO to get away with things that are bad governance—or in the case of Liberty, I think they were given warnings either months or years ago. And it doesn’t seem like they found a way to put the right parameters around the president to prevent him from doing what he has been doing. A friend who has kids at Liberty sent me something that said, “Money plus power plus sex plus no accountability equals catastrophe.”
So there is a blind spot. How do you hold a powerful man, the son of another powerful man, a guy who’s built it three times bigger than it was, who’s got close to a hundred thousand enrollees, accountable? Who are we to second guess him?
Well, you are the board, and if you don’t, nobody will.
So when and how should the board step in? Specifically when it comes to moral failings or immoral behavior.
Bob Andringa: There are some books published by ECFA with Dan Busby and John Pearson. They have a chapter on soul care of the CEO, the board’s responsibility for soul care, and how that plays out in different ways.
It might be that the board says in an annual evaluation summary, “We want you to have an accountability group of at least three people, and we want them to help you ward off temptations. We want them to be a sounding board for you.” Wise counsel from a biblical worldview. That could be one way.
Usually, a board would feel like if they appointed three people to be the CEO’s accountability group, it’s probably not going to work really well. So they ask the CEO to do it and tell them who the godly men or women who are willing to surround them with prayer and wise counsel regularly. And the board should ask them whether or not they feel the CEO is being sufficiently transparent in the areas they are struggling with. And if the CEO finds that they need professional counseling to deal with something, it’s in the budget.
The board has to appreciate that this is a tough job. The job is unrelenting, pressure every day, so much to do. And how do we support spiritually, emotionally, physically, and mentally our CEO so that God’s best is what we get? It’s delicate, but boards right now today should be saying, “How should we be dealing with our CEO?”
Another thing is they don’t have any risk management plans. They don’t anticipate anything like this. Who speaks for the board? In the case of Liberty, journalists are calling up members of the board and what they’re getting is, “I’m not on the executive committee. I didn’t know anything about this.” Well, who did the president resign and then change his mind to? Who got that letter of resignation?
So it’s good to know who is the spokesperson for the board and who should shut up. Because now the story goes on for two months rather than two weeks.
Let’s focus more on what happened at Liberty. What are the concrete ways are that Liberty’s board failed in this situation? And what are some of the areas where you think that they might have picked a different course?
Bob Andringa: Do you recall how many years he’s been president? It’s more than a dozen years. That’s longer than the average tenure. And just reading what I read in the media over several years, I’m thinking, “What in the world? Where’s the board on that?”
I mean, nonprofits are not supposed to endorse [political] candidates, for example. So to have candidates come into chapel, if I were a board member I’d say, “I don’t know about that.” And then to have my president endorse any candidate, I don’t know about that.
So there were warnings. Unless, as I mentioned earlier, most of that board’s loyalty was to a person not to the mission. That’s where we run into a problem. And that’s why you can’t allow a CEO to have the major input. He needs to have some input, but not the major input on who serves on the board.
What’s the role of disagreement as a board member? Should there be a strong “iron sharpening iron” or is it more important that the board be unified? Should a board member stay on a board to challenge them or should they resign if they are in disagreement? What’s your counsel to board members in that regard?
Bob Andringa: Well, I’ve seen presidents resign over a fundamental difference with a board. They tried to convince the board that this is the way we should go. The board said no. They tried again. The board said no. And the president has to decide, “Can I really serve this board and its definition of our mission and our priorities and our goals? Can I serve it when I’ve really lost my passion for it?” So they leave. So yes, I think a board member should leave.
Now how does a board member try to get the board to go in a direction that he or she wants? One is to say to the chairman, “I’d like to serve on the academic affairs committee because my issues are mainly around our curriculum, our offerings, and so forth. So I want to get on that and that committee, so I can talk to a smaller group and try to convince them that we ought to study my idea as a potential recommendation.” I want to get my idea up before the board in writing and see where it comes out. And if I lose 80 percent of the board, I have to think about whether my idea really is going to work here.
Boards have to have unity. They don’t have to have unanimity. There are some denominations whose church boards require unanimous decisions. And in my experience, several of those board members will tell me privately, “I go home feeling dirty. I agreed to two things I don’t agree to, but I knew that if I didn’t vote the way the majority’s going…”
So I believe that iron sharpens iron in the committee meeting, in the board room, but then when the decision is made, you’re all obligated to go outside of the board room and explain—even if you voted against it—what the board agreed upon. That’s unity without requiring unanimity.
What would you advise christian board members to particularly learn from this situation that we’ve seen? Is there one takeaway that you have?
Bob Andringa: Well, I think doing what you two are doing today. I would call a board zoom or conference call and say, “We need to talk about how we prepare for this, how we prevent this, and how we do this in partnership with our CEO.”
So I hope that thousands of boards in the next few weeks will be using this as yet another case study on how things can go wrong. The board to have a very transparent, open discussion. What policies should we review and look at? We haven’t done an annual evaluation in three years; maybe we should do that? Maybe, for a while, we should have an executive session at every board meeting without the CEO or any staff members?
Things like that. The solutions may vary, but every board should be asking the question of “How are we holding our CEO accountable so that we aren’t surprised by a moral, ethical issue?”
I’ve done this since, uh, 1985. And we haven’t had a national leader in higher ed for a while to help the world understand the Christ-centered view that’s where we’re coming from. We need people to be a spokesperson and say, “This is not what we stand for. This is not representative of Christ-followers,” and urge the board to do the right thing down there.
We need to prepare, nurture, and put strong leaders at the head of our boards, which often does not happen. Often, it’s the nice guy. Everybody loves him. Or it’s the woman who gave half a million last year and she wants to stay as chairman. Rather than looking for who on the board is gifted—by spiritual gifts, natural gifts, personality, and experience—to manage a group of strong people. Who can do that?
I’m urging [boards] to look for recently retired people. The CEOs of other ministries cannot go public because it’ll offend 20-30 percent of their donor base, so they’re silent. So we need people who may be recently headed national organizations. They have more time, they have more freedom, they definitely have seen enough to have some good opinions.
I hope that around the country, leaders of universities, but also a lot of other ministries, say, what does my silence say about this? I can’t be silent. I need wisdom. And let’s all pray that some of those steps up and lead more and more boards and ministries to do the God-honoring thing. That’s my prayer.