“Boards will be the death of nonprofits,” a leading nonprofit attorney told me with a sigh. “Nothing causes nonprofits more problems, more pain and suffering, than their boards.” She had spent nearly her entire career in a prestigious law firm’s nonprofit department. My hope is to teach you to prove her wrong, at least at your organization.
If you’re on a nonprofit board, knowing and fulfilling your role are your first and second priorities. Knowing what is not your role and refraining from becoming involved in it are your third and fourth priorities, but we’ll discuss this elsewhere. Nothing will make your service more effective and enjoyable than “staying in your lane.” Nothing will undermine you and hurt the organization more than veering out of your lane.
Of course, the first step is to admit that you don’t know. It’s not easy, even to admit it to yourself. The facts are that few organizations do a good job at new board member orientation or ongoing board education, and even fewer people outside the nonprofit profession understand the board role. So, regardless of the number of academic degrees behind your name, regardless of the number of dollars in your portfolio, and regardless of the number of committees or boards you’ve served on, you don’t know. There is no shame in it, and owning it is vital. It opens your mind to learning. (And being honest with ourselves is always good.)
The board’s role can vary depending on the age and maturity of the organization. For instance, new nonprofits are often formed without sufficient funding or financial backing and lack the resources to hire actual nonprofit professional staff to run it, so board members temporarily serve both as governing board and volunteer amateur staff. This is less than ideal, of course, and should be remedied as soon as possible. Here, we’ll assume these birth pains have passed and the board is performing only its role, and not the professional staff’s.
Strategic leadership
Strategic leadership–the heart of the board’s role–encompasses the tasks of: setting, reviewing and revising (if needed) the mission, vision and values to ensure relevance; creating a strategic plan; setting governing policies; supporting the staff chief executive; serving as liaisons to sources of support; and providing collaborative oversight.
Board’s are about the “what”
The board is about governance and policy—the “what to accomplish” for the organization. The board governs the organization as a group and has a partnership with the executive to whom they have delegated the authority to manage the organization so that it achieves the ends defined by the organization’s mission, strategic plan, and goals and policies established by the board. It is these ends and policy compliance, in the context of real life as it unfolds, that the board has the responsibility to monitor.
Matters are often brought to boards that are not appropriate. You can find a guide to whether an issue is right for board consideration here.
It’s important for directors to understand the board must always act as a group according to its governing documents. Only the board, as a whole, has authority; individual board members and committees have none, except as delegated by the board.
Three basic legal duties
1. Duty of care: Ensuring prudent use of all assets, including facility, people, and good will/
2. Duty of loyalty: Ensuring the nonprofit’s activities and transactions are, first and foremost, advancing its mission; recognizing and disclosing conflicts of interest; making decisions that are in the best interest of the nonprofit (not in the best interest of the individual board member or any other individual or for-profit entity).
3. Duty of obedience: Ensuring the nonprofit obeys applicable laws and regulations, follows its own bylaws, and adheres to its stated purposes and mission.
Governance
Specific duties of the board:
• selecting and evaluating* the chief executive;
• setting compensation for the chief executive;
• approving the annual budget;
• approving long-term strategic plans;
• amending governing documents;
• overseeing financial and legal compliance;
• protecting the organization’s assets;
• ensuring the organization has sufficient resources; and
• selecting new board members.
The board may delegate some tasks to committees but may not delegate oversight.
The board should receive regular reports from staff, committees, and others to whom various tasks have been delegated to monitor progress toward organizational objectives and compliance with their policies. Further, the board should carefully review financial reports, Form 990, financial statements, satisfaction surveys, and other indicia of performance to evaluate the organization’s programs and financial well-being.
*More here on evaluating the executive’s performance.
King Consulting 