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Nonprofit Board Governance

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Have you heard these statements?

  • “Nonprofit Boards of Directors must practice good governance.”
  • “The nonprofit is governed by its Board of Directors.”

The topic of nonprofit Board governance can be confusing, mostly because this important concept may not be fully understood. In general, governance brings together policies, systems and structures that provide support to Board members in making good decisions for the nonprofit according to expectations of the public trust.

Right there, you see that the topic can get confusing. It might help to know that governing a nonprofit is different from governing a for-profit organization. Nonprofits serve a public purpose without benefiting any particular individual. Therefore, the basic goal in governance for nonprofits focuses on protecting and furthering the mission of the nonprofit. However, the goal of a for-profit company is to generate income for the company, employee and shareholders.

Nonprofit boards are considered “Stewards of the Public Trust”, which signifies the general public trusts that a nonprofit is fulfilling its mission as stated to the IRS when it was granted exemption status as a nonprofit organization. The Board has three primary responsibilities: Duty of Care, Duty of Loyalty, and Duty of Obedience.

Duty of Care means the Board will make decisions with the same level of care as each member would for their own personal assets (even though board members have no personal assets in the nonprofit).

Duty of Loyalty means the Board puts the needs of the organization and the population that it serves above all other needs, especially the individual’s or group’s personal agenda.

Duty of Obedience means the Board will maintain compliance with all legal standards and regulations required for the exempt organization, including annual filings with state and federal agencies.  

A 2017 study on Boards of Directors showed that 56 percent of nonprofit Boards struggle with weak Board governance. As a result, approximately 52 percent of nonprofits are unable to expand their impact because of a weakness in strategic thinking such as developing a mission, strategy, impact evaluation, or insight by their Board.

What should be noted, however, is that these limitations are most likely not the fault of the Board members. Instead it’s more a matter of “you don’t know what you don’t know!” Without a doubt, those serving on a nonprofit Board have every intention of doing the right thing, making the right decisions, and being a good steward of the organization. But like coming into anything for the first time, Board members need to learn how to effectively govern a nonprofit and serve as a productive Board member. That takes information, training and dedication.

Spokes is always here to assist nonprofit Boards with the development of policies and procedures as well as providing an understanding of the legal and ethical responsibilities of the Board. Visit our website at https://www.spokesfornonprofits.org/services/just-for-board-members/ to learn more about the resources we have available to provide local nonprofit Boards with the management training, consulting and resources they need to better serve our community.

Resources about Nonprofit Board Governance:

Good Governance Policies for Nonprofits: https://www.councilofnonprofits.org/tools-resources/good-governance-policies-nonprofits

Study: Most Nonprofits Lacking in Leadership, Management http://www.thenonprofittimes.com/news-articles/study-nonprofits-lacking-leadership-management/

How to be an Excellent Board Member

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Register Now!

Local nonprofits need and want trained Board members who understand their responsibilities in nonprofit governance and how to support their nonprofit Executive Director. Our annual survey of nonprofit member organizations shows how paramount the desire for effective and well-informed board members truly is. Every nonprofit organization needs a Board of Directors and with the large amount of nonprofits in San Luis Obispo County, that means many community volunteers are needed to serve on nonprofit boards.

A 2018 Nonprofit Board Leaderships Study by Korngold Consulting, LLC and IMPACT 2040 found that business professionals that serve on a nonprofit board of directors “listen more carefully to different viewpoints, create more inclusive teams, and make more inclusive hiring and promotion decisions.” Comments from participants in the research noted that working with people from diverse backgrounds helped participants learn to solve problems by working together through healthy debate. Additional benefits are the board participants become more confident, better leaders, who are able to accept more responsibility and feel better qualified for promotion (McClimon, 2019). 
 
Serving on a board is important, but being a board member that brings excellence to the position is another step. In 2018, Spokes created a new signature program to respond to the need of San Luis Obispo County nonprofits for more trained Board members. The Board Academy is the first intensive board training for nonprofits on in San Luis Obispo County. The first academy was held in October, 2018 with 17 participants representing 12 different nonprofits.

The next Board Academy will be held on Saturday, March 23 from 9:00 am to 5:00 pm at Spokes. Lunch and snacks will be served and each participant will receive a binder of materials to take back and share with their board. You can expand your knowledge and be a board member of excellence by participating in the Board Academy. Register here.

Seven topics pertinent to the education of all nonprofit board members will be covered including an overview of the nonprofit sector nationally to locally, financial management and fiduciary responsibilities, insurance and risk management, legal and ethical responsibility of the Board, governance issues, board and executive Director interactions and fundamentals of fundraising. 
 
Resources: 

Beacon Economics (2013) Central Coast Economic Forecast. McClimon, T.J. (2019) Nonprofit Board Service Builds More Effective Business Leaders https://www.forbes.com/sites/timothyjmcclimon/2019/01/14/nonprofit-board-service-builds-more-effective-business-leaders/#22b7384c31a9

 
Takagi, G. (2009) Number of Directors – What’s the Best Practice? Nonprofit Law Blog.  http://www.nonprofitlawblog.com/number-of-directors-whats-the-best-practice/

Does Your Board Work or Govern?

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Do you know if your board is a working board or a governing board? Although we use these terms all the time, this is a trick question! All boards are governing boards. Their first and foremost responsibility is managing the organization: making policy and strategy decisions, overseeing and monitoring organizational performance, and ensuring accountability. Volunteer-run or small-staffed organizations’ board members may also have working responsibilities in addition to governance responsibilities, such as program delivery. Because program delivery is often the most fun part of the job, it’s natural to want to focus your time and energy on direct service.

However, things get sticky when procedures, policies, and roles aren’t clearly defined. When board members disagree on the difference between the “must do” responsibilities and the “nice to do” activities, it can cause friction or result in compliance issues.

It may be time to review your activities and ensure that governance comes first if:
• your board meetings continually go off topic,
• committee updates take more than ten minutes of a board meeting, or
• your board spends more time discussing details than big picture items.

Spokes’ Board Academy provides the perfect opportunity to explore:

• Board Member roles and responsibilities
• Governance to achieve your mission
• Legal responsibilities of board service

Whether you’ve served on your board for one year or ten years, this training will give you new tools and knowledge to make your board function more effectively.

Want to learn more about working versus governing boards? Compass Point has more to say on the subject here: https://www.compasspoint.org/board-cafe/working-board-vs-governing-board

Finding Success with a Succession Plan!

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There is change afoot in the nonprofit sector; in San Luis Obispo County and across the country, boards are seeking new presidents, and nonprofit executives are transitioning to new jobs. Even in our Spokes microcosm, the search for new leadership is on. CEO Lesley Santos Dierks is moving to a volunteer role as a board of director and consultant. Using Spokes’ carefully crafted succession plan, Spokes board and staff are reorganizing, facilitating great potential in this next phase of Spokes evolution.

Why does your organization need a succession plan? Succession planning is a discipline that enables organizations to reduce reliance on any one person or small group for critical functions, thereby building sustainability. Infusing an organization with new individuals is a healthy opportunity to expand viewpoints, diversify, and clarify the organizational vision. Considering that only 27% of organizations surveyed by the 2017 National Index of Nonprofit Board Practices reported that they had a written succession plan in place, it’s clearly something that needs to be added to the agenda.

Organizations experience leadership transition for a variety of reasons. At a minimum, best practices require regular turnover at the board level with term limits. Sometimes there is an unanticipated opening on the board or staff or a natural transition of a long-time leader. And, maybe your volunteer-run organization is hiring its first executive staff person. In each case, a succession plan is key to keeping stakeholders confident and preventing service recipients from experiencing delays. Here are tips to ensure your organization’s future transitions are as smooth as possible.

  • Create clear job descriptions and roles for all volunteer, board of director, and staff roles; monitor and evaluate successes (and failures).
  • Put policies and procedures on paper so any new volunteer and/or staff can get up and running quickly and efficiently. Start with a simple checklist, and imagine walking someone else through each step. Developing an operations manual for your processes will ensure consistency and uniformity. For details on creating these policies for your organization, click here.
  • Continually train and cross-train all volunteers and/or current staff to minimize disruption from unexpected changes. Job shadow or utilize Lynda.com to help staff and volunteers learn the new skills and technologies they need to succeed one another. Spokes consulting services can also be a huge assist!
  • Spread the wealth: make sure donors have relationships with more than one person in the organization. At your next event, make it a priority to introduce your donors to more members of your leadership team.
  • Spokes offers classes and resources to help your board and staff learn the best practices of nonprofit management. Allow us to train them on the basics while you focus on teaching them the more nuanced functions of your operations.
  • Take advantage of member benefits like Executive Director Roundtables and Board President Roundtables. At your next board or staff meeting, play Spokes Best Practices in Nonprofit Management video series.
  • And, when an unexpected transition occurs despite great succession planning efforts, remember that Spokes offers Executive Search services through its consulting program. Learn more here.

Getting Board Members to Agree

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Consensus. Harmony. Unity. These are the goals of every nonprofit board. Unfortunately, they are rarely part of their reality. So, how does a board leader honor every individual around the table while encouraging them all to move forward in agreement?

In his recent article for Fast Company, “This Is Why Your Passive-Aggressive Office Note Didn’t Work,” Shane Snow suggests that understanding each individual’s outer and inner expectations is the key to creating group agreement. Snow cites a framework presented in author Gretchen Rubin’s latest book, The Four Tendencies, that identifies different personalities and how best to empathize with and appeal to those personalities–rather than avoid them or fight them.

• Upholders will do anything to meet a work deadline (an outer expectation) and also their New Year’s resolution (an inner expectation). They’re self-starters and highly reliable, but they can be defensive and rigid.
• Questioners tend to be good at meeting their inner expectations, but they need to be convinced why to do something before doing it, this way they can decide for themselves whether it’s worth doing. They’re comfortable bucking the system but can suffer from analysis paralysis and get impatient with people who just accept things as they are.
• Obligers are motivated above all else by helping others and by following rules. They can be counted on as responsible but can have trouble imposing limits or saying “no.”
• Rebels are motivated by freedom of choice and self-expression. They don’t want to be told what to do; they want to decide what to do. They’re great at being independent, spontaneous, and creative but not at being disciplined.

Read his entire article here to learn more about your own personality type, better identify the personalities of your peers, and gain strategies to use this framework to create more true consensus in the board room, with your colleagues, and in your personal relationships, too!

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