Illustration of Robin Cardozo by Nate Schmold
Matt
Welcome back to Sound-Up Governance. My guest this week is Robin Cardozo, who's probably the most experienced, connected and remarkable executive and board member I know in the Canadian charitable space. He's been CEO, COO and/or CFO of multiple major organizations, including the SickKids Hospital Foundation in Toronto, the Ontario Trillium Foundation and the United Way of Toronto. And he's been on a whole bunch of boards, including his current role as board chair of the Soulpepper Theatre Company. He's also a consultant and advisor on a broad range of governance topics. Robin and I have been friends for years and share tons of mutual interests, including the intersection of corporate governance and equity, diversity, inclusion, anti-racism and more. We put out two papers a couple of years back, one titled "Not-for-profit board diversity and inclusion: is it essentially window dressing?" and another called "From window dressing to real change: success stories from boards on a journey of diversity and inclusion." And I'm not being modest when I say that Robin was really the brains behind both of those projects. Anyway, Robin agreed to chat with me about governance in the not for profit world, and the overall state of corporate governance more broadly. There was so much good stuff in our conversation that I'm going to split it into two episodes. What makes these episodes a bit different from normal is that you'll hear my voice "in the wild," so to speak, in addition to voiceover. Mostly because this was a bit more of a free flowing conversation rather than an interview. You all know, I like to ask my guests what they mean when they say "corporate governance," so let's start there.
Robin Cardozo
So that's a really good question. And I know, Matt, that you have defined governance, corporate governance as really how decisions get made. And I like that definition. And I would add a couple of things to it in my perspective. So yes, number one, how decisions get made. I would add two more points. The issue of culture and values: establishing, nurturing and maintenance of organizational culture and values I believe are essential elements of governance. And the third point I would add is how oversight gets exercised. Because I think oversight is critically important in any organization. Now, I will add that any of those things, decision making, culture and values, and exercising oversight, are not exclusively board responsibilities. They're responsibilities that go up and down through the organization. Now, clearly, everyone can't be involved with oversight, for example or nothing gets done. But really all those are elements that can and should be implemented and should be part of people's responsibilities through all aspects of an organization.
Matt
Okay, so I, first of all, I really like what you're saying. Second of all, I think one of the most rare conversations in the organizations that I've had the privilege of wandering around is a conversation that leads to a shared understanding of what good governance is for this organization. So maybe tell me a little bit, A. about what do you think good governance looks like to the extent that you can describe it, but maybe just as important, tell me about what you have experienced in the organizations you've worked with on either side of the table with respect to efforts to build a common understanding of what that is, and try to point ourselves in the same direction as each other.
Robin Cardozo
To me good governance is about working together across the organization to make decisions and to build a culture and to exercise oversight, really, always keeping in mind what is in the best long-term interests of the organization. I think quite often one makes decisions that seemed to be appropriate or convenient at the time without necessarily thinking about the long-term interest of the organization. I guess the question is "so what?" but I guess we need good governance, because good governance, I believe leads to organizations excelling in their mission. As you know, I've spent really both my professional and my volunteer life in the not for profit sector. And I would say that when I look at organizations that I believe were and are well-governed, I believe they're organizations that always keep that focus on what is in the best long-term interests of the organization. And what can they do every day to excel at that mission.
Matt
So I have, I have a couple of interesting thoughts just listening to you, because I really I love what you're saying. And it adds some layers of complexity, I think, to the way that I'm, if I'm understanding you correctly to the way that I'm thinking about governance. So, one piece would be...and I promise I'm not trying to give you a gotcha here, I let if we think of a relatively realistic scenario, we can imagine ourselves as leaders in an organization of any type, whether we're senior management or board, faced with a decision where the long-term interests of our organization as a going concern of whatever type, and the short term interests of some of our key stakeholders may not be well aligned. In your assessment, are we always supposed to choose the long-term interests of the organization? Or how do we manage the potential trade offs of that misalignment of interests?
Robin Cardozo
I think that's that is a good question. And I'm not sure that there needs to be that misalignment once one analyzes the impact of what is in the best interests of stakeholders in the short term versus stakeholders in the long term. I think one can evaluate the impact on stakeholders from a short term perspective, but also then push oneself to think "if this seems to be in the best short term interest, is it really in the best long term interests as well? And where is there an intersection?" Because I think that's where governance gets difficult! Absolutely, there often is a strong reason to go with the short-term implications, because that's what people may be asking for. But I think I think often if you sit down to talk to those stakeholders, and go through an analysis from a long term perspective, I think there is a potential area of intersection in most cases.
Matt
Okay, so adding an extra layer to this, I'm really interested - and in all the years we've worked together, I don't know that I've asked you this question. I really do want to know the answer - What was it that brought you specifically to the not for profit world and stuck you there? Because you really have had such an amazing career in that sector.
Robin Cardozo
Thank you, Matt. I have certainly been privileged with the organizations that I've worked with professionally and the organizations that I've volunteered with, either as a board member or in other capacities. I'd like to say that there was a whole clear career plan that was building blocks from step to step to step. I think it was what what actually happened was that I had an amazing opportunity. I applied for a job in the not for profit sector with an organization, which was the United Way of Toronto at the time, over 30 years ago that I thought was a long shot, but it was an organization that I believed in and I thought I would apply and see if I got the job of CFO. And and much to my surprise, I was hired as the CFO. I think it was that early introduction, that really caught my attention. I would say, building on that I would say two or three things. I think the people whom I've worked with in the sector, whether they were staff, or whether they were board members, or they were volunteers, were all people whom I felt I could learn from and who I enjoyed working with. There was just an enormous satisfaction for coming into work, knowing that I would be interacting with people who cared about what they were doing, were good at what they did, and whom I could learn from. And I can say that when I first started that United Way more than 30 years ago, all the way to the roles that I do today as a board member, with a couple of not for profits. I continue to learn, I continue to meet intriguing, fantastic people and continue to feel that I have the privilege of contributing to something that is making a difference.
Matt
Tell me what's special or unusual or unique or whatever the right word is about the intersection of governance and the not for profit world compared to governance and any other sector and maybe even zeroing specifically in on the charitable sector, which I think is the kind of the coolest and weirdest area of the not for profit world.
Robin Cardozo
So I would say that perhaps what is unique about the sector or special about the sector can be both a positive, an asset, and can also be a drawback from a governance perspective. I think what is unique and special is that you meet many people or encounter many people who feel passionate about the cause. Whether it's a social service program for at risk youth, whether it's an art program for for consumers of mental health services, a not for profit theater group, or a sports and recreation program for young people. You meet volunteers, you meet participants who feel passionate about the cause, and therefore, by definition, they care about the outcomes and are willing to work hard for that. Where that sometimes can become a challenge from a governance perspective, is that that passion doesn't always translate into the things that we were talking about earlier when we were talking about good governance. So, for example, being able to, or knowing how to, having the skills to exercise oversight. Sometimes there's a high degree of "we should just trust the people because they're so passionate." And it's not that one mistrusts, one needs to mistrust anyone, but that one needs to, I think, sometimes recognize that there may not be the skills. Whether it's at the board or the management or the supervisory level or the volunteer level, there may not be that full understanding of what is necessary for good governance. So it's both a great asset in terms of the passion, but that same passion can be a drawback.
Matt
So, I'm personally ambivalent about the volunteer nature of charitable boards I could take or leave it. That's my personal opinion. I don't see it as as inherently good or bad. But I'm curious about your perspective about to what extent is the requirement to be volunteers on the board, is that helping or hurting or neither?
Robin Cardozo
I will say, this is a great question and one that my perspective has actually shifted over the years. Certainly, for a long, long time, decades and decades, in this country, and in perhaps the Western world, that there is a feeling that charitable boards need to be comprised of volunteers. That they shouldn't essentially, they should not be paid by the organization, they should not be taking scarce resources from the organization. One thing that we've come to realize, in part from the research that you and I did, Matt, in the areas of diversity and inclusion, is that that very requirement can work against diversity. That there are lots and lots of people who would make great board members, but because of childcare, because of their job situation, because of their family responsibilities, perhaps looking after an elder senior, they simply would not have the time to volunteer in any extensive way. And so charities and not for profits are in a sense, cutting themselves off from many people who would be qualified and fantastic board members, in many cases really understand the service being provided, but can't serve on the board because of their restrictions. And if only they could be compensated even in nominal ways so that they could pay for childcare for the duration, they could pay for someone to come and look after the elderly senior, or they could take a couple of hours off from work. So I would say that the issue is not as cut and dried as it used to be. And I think each organization needs to ask itself. Having said that, there are still laws that in Ontario, particularly in relation to charities, I think this does not apply to not for profits. But in Ontario, charities are not allowed to pay board members. I think this is an area that the sector needs to look at and consider whether there's some advocacy that is necessarily to try to change some of those regulations
Matt F
So to what, and I love what you're saying, to what extent does this same line of reasoning maybe extend in a different way to senior leadership beyond the board? Where I kind of feel like I'm getting in conversations with charities especially, where... I'm going to make up an example. If we're recruiting a CEO, and we found the perfect person, they are the we could never find anybody better. And their expectation salary-wise is double what we expected. Usually, in my experience, the conversation ends there because of the misalignment on money. And I find myself thinking "but it's probably easier to find money than it is to find the perfect CEO!" There's just this sort of over emphasis or obsession with money sometimes. So to what extent does this, this thinking of "well, you know, what, maybe our unwillingness to spend money on boards or unwillingness to spend more money on CEOs. Is this working against charities?" Or is it really just sort of an unavoidable element or feature or bug of the system?
Robin Cardozo
I would say that the unwillingness to spend money on staff in general, and I'll come back to the CEO question in a minute, but in staff in general, that there's no question that staff in the not for profit and charitable sectors earn less than counterparts do in other sectors, I can say that from my own my own career. Many of the jobs that that doing involve life and death work or caring for very vulnerable seniors, they've got the most difficult jobs that people have. And yet there's a there's been a some sort of a lore, if I could use that word that they that they're not really in it for the money. Well, maybe they're not primarily in it for the money but they need it. They need an honest, an honest, fair wage. Coming back to your question of the CEO. That is a tricky one, particularly for organizations that, for example, depend heavily on donors on donations, and donors will sometimes look at that. So I would say two things. And I apologize that this might sound a bit simplistic, but I think they are that two important principles. I think one is that you, you don't want to be far away from peer organizations in the community so that you're not totally out of line. That isn't to say you should not should not be at the top of that there may be a business case to be to be at the head of the line. But you don't want to be totally out of the range. Number two, I've I come back to an earlier point I made about what is in the best long term interests of the organization. And if it is in the best long term and having done your analysis, the board believes that it is in the best long term interests of the organization to have a highly qualified CEO who is way head and shoulders above any of the other candidates, where you have good reason to believe that the CEO can take the organization to whole new levels of revenue generation, service delivery, making an impact on the community and all those things. Then there's reason to at least not let the conversation end right there. But to do that analysis and to have that have those conversations,
Matt
And is that confidence, or courage or whatever the right word is to do what you just described is that common in your experience?
Robin Cardozo
It is not common, but it is not unheard of. Ultimately, of course, as we all know, the board is ultimately responsible for the running of the organization, but the board doesn't do it on on its own. And typically the board will hire excellent management staff to run the organization. So, there is a good argument to be made that good governance means hiring the best possible management. Maybe doesn't happen overnight. Maybe it's knowing you want to get there in three years and figuring out how to raise the money to get there.
Matt
One of the things that I sometimes will say and I know this is really annoying, but it does help people sometimes to get out of their conventional thinking is I'll say, you know, look, and especially using your definition, Robin of good governance, "what's good governance worth to this organization?" It's a rhetorical question, of course, because I would like to think that the value of good decision making in the long term interests of the organization is worth whatever money it costs. And it's probably worth tracking down whatever money we need to make it happen. Even if it takes years like you're saying. Do you have a reaction to this question, "what is good governance worth, in dollars?"
Robin Cardozo
I think it's a good question. I'm not sure I can answer it in relation to dollars. But I think it does, in some way lead into a discussion that you and I have had over the last year or two about where are the areas where governance does not work well? So I think there's a segue to that discussion. You and I have had some conversations about the phrase that sometimes gets bandied about that "governance is broken, and governance is broken in the not for profit sector." And as you know, I have a few reactions to that.
Matt
And it won't surprise you to learn that I have some reactions, too, but all that we'll have to wait until next time when we'll pick up right where we left off in this awesome conversation with Robin Cardozo. Thanks as always for listening to Sound-Up Governance. I hope you're learning as much as I am, and I hope you'll tune in again next week. In the meantime, please feel free to send an email or voice memo to soundup@groundupgovernance.com if you have any questions or suggestions or any reactions that you'd like to share about this or any other episode. Until next time.
Sound-Up Governance (Ep8) - Quirks in the governance of not-for-profit organizations (feat. Robin Cardozo)