Serving on a nonprofit board is, in my opinion, one of the most important things you can do for your community. It can also be one of the most challenging. I do not want to scare people off with these words because every nonprofit organization needs committed volunteers to lead them into the future. On the other hand, I hope to help board members understand the substance of their role so they can do a better job.
Many people want to learn more about what it means to be on a nonprofit board. Below is a short quiz that may help. It is based directly on the “Ten Basic Responsibilities of Nonprofit Boards” developed by BoardSource.
We call this the “Healthy Board Checklist” and here are some of the indicators. Ask yourself if these are true statements for your board.
- All board members regularly prepare for, attend and participate in meetings.
- The mission is clearly defined, and board members can state it without looking it up.
- The board regularly spends time learning about trends in the field of service.
- The board exercises diligent financial oversight.
- The board is involved with policies and issues rather than day-to-day management (except with grassroots organizations).
- Each member of the board makes a personal financial contribution each year.
- All board members are actively involved in raising money for the agency.
- Board members set aside personal considerations for the common good and act ethically.
- Working relationships among board members and with staff are harmonious.
If 7 to 9 of these statements are true for your board, give yourselves a gold star. Would you like to become mentors for members of other boards? If so, give us a call at The Nonprofit Center.
If 5 or 6 of these statements accurately describe your board, you’re ok. You need to do a little work, but you’re on the right track.
If only 1 to 4 statements are true for your board, it’s time to take a hard look at setting some development goals for your board. Involving everyone on the board in some training and planning would be a very good first step.
Best practices for the nonprofit organization begin at the top – with the Board of Directors. Whether the organization is just getting started or has matured into an institution, the volunteers who lead the organization are the ones who set the standard.
It is my experience that nearly every nonprofit board member is a person of good will who is sincere in their desire to serve the organization. It is also my experience that definitions of the roles of board members is amazingly wide ranging.
Board members have ten basic responsibilities (as defined by the BoardSource). They include such items as determining the organization’s mission and purpose, ensuring adequate resources, and selecting and supporting the Executive Director/CEO.
Too often board members think they must do things like debating whether or not office supplies should be purchased from the store down the street or from the box store at the mall. This level of puttering with the details leads a board down the path of minutia and far away from their overall governance role.
Isn’t it better for the board to leave the day-to-day operations to the staff (paid or volunteer) and focus on those decisions that are critical to the future of the organization? Yes. A friend of mine who heads up a school tells his board that their job is to make sure the school is still there for the children who will need it in 25 years.
That’s a significant best practice for every board to employ. When the focus is on the future, the organization will thrive, both today and tomorrow.
Two events happened this week which point up critical issues for new and young nonprofits.
The first was a call from a woman who wanted to turn her business into a nonprofit. The work she does has a significant human service focus, so it made sense, especially since she wanted to seek grants to fund a building expansion.
When I pointed out to her that she would need to form a board of directors, she hesitated. I went on to clarify that, in a nonprofit organization, it is the board of directors that has the ultimate and legal responsibility for policy, management and financial oversight. That’s all she needed to hear. She was not at all interested in having others determine how the business would be run. It is a good thing that we had this conversation, because the proprietary nature of her approach simply would not work in the nonprofit sector.
There’s an agency in another part of the state that might be doing better if the founders had had this same conversation a few years ago. Their programs are very successful but there is a great deal of tension between the Executive Director (who founded the agency) and the board of directors. They, rightly so, are working to fulfill their responsibilities, but unfortunately the director views their work as undermining his control.
Even more unfortunately, this happens often in the nonprofit world. The alternative is for board and staff to share the vision and the commitment to make the agency a success. Both have their roles, and both are absolutely essential. Together they are the team that can make the vision reality.
The other event is that the board chair of a small, grassroots organization called The Nonprofit Center to ask some questions about how they should be operating. She had recently attended one of our board training sessions as a guest and had realized that her group was facing some big challenges.
Started several years ago, the group organizes social activities for people with disabilities. These events are run on a shoestring and the cost to attend is extremely low. The board members – there are ten – do all the work, and they happily make sure the events continue. They do this because they know how very important this social activity is for the people who attend.
Here is a nonprofit providing a much-needed service and doing so with the passion of real caring for the people they serve. That’s the ultimate best practice – it is this passion that fuels everything else a nonprofit does.
But the passion isn’t enough. All nonprofits are given a public trust. In exchange for certain exemptions (paying no taxes, for example) each nonprofit has a responsibility to assure that it is worthy of that trust by operating ethically, legally and effectively.
At the very least, nonprofits must have organizing documents and approvals. In this state that means incorporating as a nonprofit through the Secretary of State’s office, registering with the Charitable Solicitations Department of the Secretary of State’s office, registering (if required) with the local city or county office, and obtaining tax-exempt determination from the IRS, either independently or under the umbrella of another exempt organization.
These are the most basic best practices, yet there are many groups which consider themselves to be nonprofits who have not completed even these elementary steps. There are more. Financial records must be responsibly maintained and required reports submitted in a timely way. Each member of the board must fulfill their responsibilities of informed oversight and guidance while acting in an ethical way.
The organization mentioned above has taken the first steps, but where do they – and others like –them go from here? Should they raise lots of money to hire staff and become a more formal organization? Or continue as they are? Those answers will only come over time. But the answers will be the right ones if they look at the standards for nonprofits and work to meet them. Then everyone benefits –people served, donors, and all of us.
For just shy of eight years, I wrote a column for The News Tribune on nonprofit topics. Many of the columns focused on governance, so we’ll be reprinting selected ones from time to time.
Much of the time on this website you find comments about nonprofit boards. That’s because the board has ultimate responsibility for the health and future of the organization. All too often board members don’t take that responsibility seriously, or they bend it to serve their personal interests.
Now is not the time to let that happen. Now, more than ever, it is absolutely essential that board members remember their primary duty – the Duty of Care. This is a legal concept and it means that a nonprofit board member must take care to do their job well.
When a board member is fulfilling their Duty of Care, they are preparing for meetings, they are attending meetings and they are actively participating in the discussions of the issues before them. Furthermore, they are not afraid to say “no,” and, even more important, they are not afraid to say “I don’t have enough information.”
A passion for the mission is absolutely essential to leading a nonprofit organization. But that passion must be balanced with an objective analysis of the decisions to be made. Here’s an example – a hypothetical one, so don’t try to guess who it is.
The ABC agency provides an essential service to the community meeting people’s basic needs. Everyone on the board and the staff care deeply about they people they serve, so they often overlook warning signs of financial trouble. The Director comes to them and says, “The downturn in the economy has more people coming to us every day. We have to open a new center, and I think I can get the money from several places.”
Because everyone on the board wants to make sure their clients get the help they need, the plan is approved with little discussion of the financial ramifications. A year later, the agency has to close its doors because it can’t pay its bills or meet its payroll.
Yes, this is a hypothetical example, but it happens over and over again. So, my request of all you board members is to keep your passion alive while you balance it with some hardheaded thinking. After all, you can’t help anyone if you’re no longer around.
A number of years ago I got to know Dick Chait, one of the authors of Governance as Leadership. But this was before that important work was done, and Dick was describing the relationship between a Board and its Executive Director. Two analogies have stayed with me (these are not direct quotes but you’ll get the drift):
The relationship between the Executive Director and the board is like having multiple dance partners. Someone’s toes will get stepped on.
It’s an arranged marriage – the partners often have never met when they get together.
I would add that the relationship is one in which people of good will struggle to find out how they can be partners and often fail at the task.
Consider this: The Board is in charge. The buck stops with them, and they are legally responsible for the organization. On the other hand, the Executive Director/CEO is significantly more knowledgeable about the nonprofit’s field of service than the Board ever will be, simply by virtue of the time spent learning.
This disparity can be, and often is, a barrier to an effective working relationship between the ED and the Board, more often in small and mid-size nonprofits. All too often one of the following scenarios plays out:
Deferential: Board members become overawed by their ED’s command of information about their field of service. They believe they can never know enough about the organization, so they simply opt out. They may still show up for meetings, but they abdicate all their legal responsibilities. They might also be called a “Go Along to Get Along” board, because they never ask questions. Interestingly, this type of Board is often highly supportive of the ED, creating a pleasant but unbalanced relationship.
Wrongly focused: This is the kind of Board in which the members focus on what they know best – management and operations. They regularly direct the ED in the details of his or her work, and they fail to address their legal and functional responsibilities of assuring a future for the organization. This becomes highly frustrating for the ED because, unless they are not qualified for the job, they know the management piece and, frankly, don’t need a board member telling them how to do their daily tasks.
Business-like: We’ve all heard the cry – “Why can’t nonprofits be more business-like?” In one very important sense, this is a good question to ask. Nonprofits must be well run and must utilize good financial and management practices. What the business-like board fails to acknowledge is that the nonprofit sector is very different than the for-profit sector, and there are different requirements and approaches.
Then there are the individual board member challenges. Consider these true stories:
- A board member has been given early retirement from his job, so he mounts a campaign to discredit the highly competent ED on whose board he sits. He wants her job, and he’s not shy about letting people know it.
- The ED of another organization who is chair of the board and who meets with that ED on a weekly basis to talk about the tasks she will be doing that week and how she should do them.
- The ED whose preference is for a rubber-stamp board and who demeans, openly in board meetings, any members who dare to ask questions.
Every Executive Director knows that he or she will never have an ideal board. We would all be delighted with a board that focused on their work and developed a good partnership with the ED. So what does that relationship look like? Here are a few thoughts:
- It is based on mutual, expressed respect.
- Everyone has a commitment to constructive, respectful and healthy questioning and to open, thoughtful communication.
- All the team members have clearly defined roles which, when combined, result in a balanced relationship.
- The Board and ED view themselves as partners in achieving mission. Each partner brings something to the “table” and is valued for what they bring.
Building this relationship is a lot of work, but the result can be a vibrant, productive group that is successful in making the world a better place.
