Thursday, June 16, 2022

Not For Profit Board Governance

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Board And Committee Structure

Governance for not-for-profit board members | BDO Canada

For good information on sample board and committee structures, check out this page at Board Source. Here you can access Joan Garrys blog which includes a very robust toolkit of resources. With a free sign up using your email you can access Joans sample Board Committee Report Form, which can be used quarterly or annually for Board Committees to report out their accomplishments to the Board and Executive Director.

Best Practice : Board Members Dont Direct The Organization The Board Does

This principle goes to the heart of effective Boards. When governance is effective, Board members see their role as serving on the Board and participating actively in decisions of the Board. They understand the limits on their authority and role and that members do not have any individual authority to direct the organization.

Case Study: We worked with one Board where individual members frequently delved into the operations of the organization. They made suggestions about program details such as how to reach a particular group of people and assumed they would be implemented. Staff were left in limbo, uncertain who was in charge. As the problem worsened, the executive director asked the Board chair to do something about it. But the Board chair was not willing to step in and uphold this unity of control principle.

The executive director finally said at a Board meeting: Please know that we listen to all of the Boards ideas. Some have more merit than others. But unless the Board votes to adopt a specific idea, it is not incumbent upon me, or any member of our staff, to implement them. After repeating it several times over a period of weeks, the message got through and Board members began prefacing their remarks with: This is only a suggestion, but what if we tried?

What Is Nonprofit Board Governance

Nonprofit boards have a lot of responsibility. The biggest duties of a board are maintaining the fiduciary integrity of the organization, making sure the organization is achieving mission goals, and managing the employment of the CEO . We can think of nonprofit board governance as the guidelines the board uses to accomplish all these duties in a fair, effective, and responsible way. You can read more about best practices of board governance in our comprehensive article.

Nonprofit board governance is the combination of systems, guidelines, and processes used to make decisions, hold decision makers accountable, and take action. Good governance is crucial for a nonprofit to not only effective, but to attract the kind of board members, volunteers, and staff that make the organization stronger over time. The most impactful organizations have one thing in common: superior nonprofit board governance! Lets take a look at the different models you can choose from to help your board be the best it can be.

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The Advisory Board Model

An advisory board is the platform a president or CEO turns to for assistance and advice. The members of an advisory board are usually those who are known to the nonprofits management team, and are trusted by them. They bring professional skills and unique talents with them that are useful to the nonprofit, and that they offer at no charge. A good advisory board can increase the reputation and credibility of a nonprofit, and is an excellent model for those nonprofits that are concerned with achieving high fundraising and public relations goals. The advisory board may be the main governing board at an organization, or there could be additional advisory board models that offer special expertise such as development, young professional advisory board, etc.

The Policy Board Model

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This model was developed by author John Carver, who wrote the book, Boards that Make a Difference. Its effectiveness makes it a popular governance model with nonprofits. With this model, the board delegates much of their trust and confidence in operating the group to the CEO. Regular meetings are held between the board and the CEO, so the board can receive updates on the activities of the nonprofit.

There are few or no standing committees on the board in this model. In fact, the board is secondary to the CEO in overall power in the organization in this governance model. However, by working together as a team, the board and the CEO can make many wonderful things happen at the nonprofit. This is the most common type of board, but it can be combined with other types to create a more specialized advisory team.

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How Do Nonprofits Recruit Board Members

First and foremost, there are no legal guidelines in place determining who can serve on the board of a nonprofit. This means its entirely up to your organization who will be the best individual for the position. That said, there are a few things organizations should consider when recruiting board members.

The most important quality to look for in a good board member is a passion and dedication to your mission. When your board members are driven by your mission, theyll be more likely to make the decisions and have the motivation to continue pushing that mission forward.

With the foundation of your mission in mind, your organization can then start considering the four Cs of recruitment to find the best people to serve your nonprofit:

When looking for these individuals, we recommend avoiding recruiting paid employees within your organization. While they may fulfill all of our above recommendations, paid employees may experience a conflict of interest in serving both roles. Plus, they could bite off more than they could chew. If youre still unsure of who to choose, look for someone with some businesses in business affairs.

Mixed Nonprofit Governance Models

While it is not the most common method of governing a nonprofit, some choose a mixed model. Usually, this involves choosing a primary governance model among any of the first four models. Then, the board will add sub-boards as needed, to fit the needs of the nonprofit. These sub-boards are sometimes referred to as committees, and they operate the same way nonprofit committees do in the Management Team model.

Essentially, the mixed model is one that is mostly any one of the first four models, with a little bit of the fifth model thrown in as needed. As an example, religious nonprofits may form a committee to do fundraising for targeted, church-based initiatives or activities, while operating primarily under an Advisory Board governance model.

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Innovation In Nonprofit Governance Models

As communities, nonprofits, and everyday life evolve over time, so do the governance models needed to support organizations. A new offering from the Alliance for Nonprofit Management is the Community Engagement Governance Model. With this model, stakeholders and the community maintain responsibility for governance. The idea is that the board serves the community but may not be a part of it. Having community insight is essential for boards to serve a specific population. Without insight and a full understanding of the mission and needs of the community, the board simply cant function effectively. Giving the community a chance to be involved at a fundamental level yields better results for many small, local nonprofits. This symbiotic relationship between the community and the nonprofit means that the community can help inform the services of the nonprofit, while also sharing some responsibility for success.

Board 201 A Complete Look At Being On A Board Of Directors

Corporate Governance for Not for Profit Organisations Forum – Deloitte Private

Whether you are currently on a Board of Directors with a not-for-profit or charitable organization or youre seeking a position on a Board, this is the one must-take workshop for ensuring effective leadership and accountability. Effective governance is a crucial element of an organization’s success. During this full-day workshop, you will learn about governance and board structures, and practical ways to contribute effectively to your board.

Instructor: see individual workshops

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Board Composition And Development

oard is a diverse board one with the mix of skills, experiences and other characteristics needed to fulfill the mission of that particular organization. A tried-and-true tool for assessing your boards composition and future needs is the board matrix. Please feel free to change up the categories to suit your organizations needs. You can learn more from this article published by Board Effect.Another view of board composition from Blue Avocado includes three traps of the board composition matrix.

Avoid Working With Outdated Governance Documents

As time goes by, the mission for a nonprofit shifts and new practices will be implemented. In some cases, the board fails to update the actual governance documents to reflect the new priorities and practices. To prevent this, bylaws should be reviewed regularly and updated when changes are made. An annual review of governance documents to be sure the group remains in compliance is important. Verifying documents are up to date can prevent or correct this common issue.

Every time your board holds a meeting, follow the governance documents and rules for recording and reporting. If you have specific guidelines for recording minutes, record keeping, and order, follow them or amend them. Without accurate governance documents in place, your board could descend into chaos the first time you have a conflict that divides the members into more than one faction.

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Why Are Nonprofit Boards Important

As we mentioned earlier, your nonprofit board of directors is in charge of the governance of your organization while your executive director and team members handle the day-to-day operations. But what is the difference?

  • Governance: Governance of nonprofit organizations covers the oversight for organizations, large-scale planning, and overall direction of the nonprofit.
  • Management: Nonprofit management is what covers the day-to-day operations of the organization. Essentially, the executive director and team members take care of the regular activities that put the vision determined by the board of directors into operation.

Nonprofits need a board of directors for a variety of reasons. Not only is the members wealth of knowledge and experience invaluable to the organization, but they are also necessary for essential tasks like applying for bank accounts, filing annual reports, and making important purchases.

Additionally, they act as the guiding voice for large decisions like approving annual budgets, borrowing money, and setting plans for major growth or reorganization.

Of course, this explanation oversimplifies the concept of recruitment. In the next section, well take a deeper dive into the recruitment process for your organizations board members.

Measure Engagement And Maintain Healthy Levels

Not for Profit Accounting Services

Boards are designed to provide focus and direction, but not at the expense of engagement and connection. Boards that exist mainly for the annual meeting and to provide direction, but that dont get directly involved supporting the organization are missing out on valuable opportunities.

It is a common error. In most cases, the organization does need and benefit from direction, but taking things a step further and getting involved can help the group help its target population and meet its goals. Board members that assist with fundraising, make valuable connections, and are aware of events and operations are best able to help a nonprofit achieve its goals.

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Survey Your Board About Their Needs

You cant really know what your board members need to improve without asking them. What might seem like the best training or resource for them could be completely different from what they actually want. Oftentimes, board members want to do the right thing, but dont have the time to ask for help or may not want to feel needy. By regularly surveying and assessing board member needs, you can proactively help these busy individuals do their best work.

There are a number of ways to survey board or staff needs. It doesnt need to be a long questionnaire that takes forever to complete. Some of the best assessment methods are more frequent and take just a few minutes. Board governance expert Kim Donahue suggest the Plus Delta Method. At the end of every meeting, each attendee gets two post-it notes . On the plus paper they write something that is working well or that they want to keep doing. Each person writes something he or she things should change on the delta piece. Another option is to ask a quick poll question digitally at regular intervals and see how people feel about specific points of operation. This can be done anonymously or openly, depending on the nature of the topic. For more information on other assessment options, check out our blog articles.

Inducting New Board Members

The following fact sheet provides general information about the process for inducting people to the governing body of a community organisation. It covers what should happen before an appointment is made to the board, why a board induction is important, who is responsible and what should be covered in a board induction.

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What Are The Responsibilities Of A Nonprofit Board Of Directors

As a whole, when people become board members for nonprofits, they are expected to take on a number of responsibilities for the organization. Essentially, there are four different responsibilities of nonprofit boards of directors: legal and fiduciary responsibilities, board meeting attendance, executive compensation decisions, and committee service.

What Is The Meaning Of Board Governance

Short Course Not-for-Profit Regulatory Compliance Governance Institute

The definition of Board Governance is commonly misrepresented. People will either mistake the term to mean executive committee or will not be aware that there are different types of boards and therefore different types of board governance.

You probably know the basics of a boards organization. For instance, the President is the elected spokesperson and represents the board. However, you may not know the scope of responsibilities, or governance, associated with a board. Here is a basic outline of what exactly a board is and what it governs. We will focus on the non-profit sector only.

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Spotting And Fixing Dysfunctional Nonprofit Boards

Micromanaging, rubber stamp, and Balkanized nonprofit boards of directors are more common than not, and turning them into high-functioning governing bodies requires being on the alert for six warning signs.

I have served on several nonprofit boards of directors and written two books about those and other leadership experiences. I’ve learned that building and sustaining high-functioning governing bodies is arduous, time-consuming work, but it’s worth the effort. Run well, they can bolster an organization’s revenues, provide access to influential figures, inspire confidence in stakeholders, help manage risks, improve leaders’ performance, and contribute to the crafting of a compelling mission and strategy.

Sadly, many nonprofit boards miss out on these benefits and are more or less dysfunctional, based on a 2014 report by the Urban Institute and my three decades of work in the field. It’s a topic that management literature has little to say about. People usually dont like to draw attention to the fact that they were part of such a group. One of the rare case studies, Should It Survive? Charles Dunlap and the National Legal Foundation, focuses on an organization that no longer exists, which may have freed those involved to talk openly.

In my 30 years of experience, I have observed three main types of unsuccessful nonprofit governing bodies:

Nonprofit Governance Mistakes To Avoid

Now that we have covered some best practices, lets look at some governance mistakes to be vigilant about. From failing to fully understand the tax legislation and rules that a nonprofit must follow, to airing board grievances and divisions outside of the boardroom, there are major mistakes to avoid. Here are a few of the most common governance errors boards make .

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Best Practice : The Board Focuses On Long

A high-performing Board identifies the long-term results it wants the organization to achieve. These desired outcomes are documented and approved by the Board and form the basis of the organizations strategic plan.

We often hear Board members complain that they have no process for doing this. With 13 Board members, how are we supposed to come together and establish goals? Were simply rubber stamps for whatever goals the executive director and her team establish.

Tip: This is where a firm like ours can be helpful. We can design and facilitate planning meetings that enable the Board members and executive team to engage around questions such as:

  • What is our vision for the next three years? What would success look like?
  • How would we translate that into specific goals and objectives?
  • What are the major strategies or ways we envision achieving those goals?

When a non-profit Board takes the time to define the organizations direction, it builds ownership and helps align the entire organization around a set of clear priorities. Plus, it helps in attracting highly qualified Board members to serve on the Board.

Legal Duties Of Boards Committees And Office Holders

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The law recognises that committee members , as well as some office holders in not-for-profit groups, make important decisions about the strategic direction and activities of a group. Because committees have significant power, the law requires them to comply with legal duties like acting in good faith and in the best interests of the organisation. Where the standards set by legal duties are not met, penalties can apply . Sometimes conflicts arise between the personal interests of a committee member, and the interests of the group. The law also provides a framework on how to deal with this situation.

The Not-for-Profit Law Duties Guide covers the key legal duties of the people who hold a position on the governing body of an Australian not-for-profit community organisation, including incorporated associations, companies limited by guarantee, cooperatives and Indigenous corporations. It also covers the duties that apply to office holders, who may not hold an ‘official’ position, but based on their influence need to comply with the legal duties as well.

It is a plain-language guide which includes case studies based on common situations that arise in the not-for-profit sector, as well as tips to help committee and board members comply with their legal obligations. The Guide can be downloaded by clicking on the link below. It specifically includes information regarding:

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