"When I grow up, I want to be a BOARD MEMBER!"

Said no child. Ever.

Yet imagine the child who grows up loving their pets and the outdoors. As an adult, they may want to get involved with organizations that support animal welfare or the environment.

It's really not surprising that so many individuals join nonprofit boards because they have a passion for the cause.

It's also not surprising that a lot of people join boards without really understanding what a board really does (or is supposed to do).

And with more than 1.5 million registered nonprofits in the U.S., that's a lot of boards – and a whole lot of board members!

SO, WHAT, EXACTLY DO BOARDS DO?

Nonprofit boards are responsible for the governance of the organization. (The CEO or Executive Director is responsible for managing the nonprofit's daily operations.)

What is governance?

"Governance" comes from a Greek word meaning "to steer." When you think about it that way, it's easier to understand the role of a nonprofit board.

Governance is the process of providing strategic leadership to a nonprofit organization.

There are 10 essential responsibilities of boards, and they fall under 3 umbrellas:

  • setting organizational direction,
  • ensuring the organization has adequate resources, and
  • providing organizational oversight.

Who governs the organization?

The board – all of the collective board members, together – is responsible for governance.

This means no one person (e.g. the Board Chair) has any more authority than any other board member.

Individual board members and committees can do work and make recommendations. However, it is the board that makes final decisions and takes action – as one group.

What does good governance look like?

BoardSource is the leading authority on nonprofit board governance and leadership. They have defined these Essential Practices for good governance:

  • Meeting Attendance. Board service is a commitment, and meeting attendance is part of that commitment.

    Takeaway: Nonprofit boards should have (and enforce) an attendance policy.

  • Term Limits. Term limits allow regular rotation, which brings new people, new ideas and new energy to your board.

    Takeaway: Nonprofit boards should have (and enforce) term limits.

  • Strategic Board Recruitment. Boards should not be homogenous. It's important that board members have different backgrounds, experiences and demographics. It's important to consider individual talents and skill sets as well.

    Takeaway: Nonprofit boards should assess their current board and their future needs when recruiting new board members.

  • Strategic Planning. President Dwight D. Eisenhower said, "In preparing for battle, I have always found that plans are useless, but planning is indispensable."

    Takeaway: "Setting organizational direction" is a key responsibility of boards. Boards should always be looking ahead and regularly engage in the strategic planning process.

  • Budget Approval. Staff and the finance committee will prepare the annual budget and present it to the board for approval.

    Takeaway: "Ensuring adequate resources" is another key responsibility of boards. Although the budget may be developed by the staff and/or recommended by the finance committee, it's the board's responsibility to that it meets the needs of the organization.

  • Chief Executive Job Description and Evaluation. The board is responsible for defining the job itself as well as managing the nonprofit's top leader. In annual performance reviews, the board and CEO/Executive Director should set performance goals together.

    Takeaway: "Providing oversight" is another key responsibility of boards. This includes the nonprofit's top leader. Plus, CEOs who have clear expectations and regular performance evaluations are more satisfied with their jobs.

  • Audit, for nonprofits with annual revenue exceeding $1 million. The board is responsible for selecting the auditor as well as reviewing the findings

    Takeaway: Regular audits are another way that boards are "providing oversight" to the organizations they serve.


WHAT SHOULD YOU DO NEXT?

Assess how well your board is governing itself and the organization.

Use this list as a starting point to evaluate what your board is doing well and what it could be doing better.

  • Meeting attendance
  • Term limits
  • Strategic board recruitment
  • Strategic planning
  • Budget approval
  • Chief executive job description and evaluation
  • Audit

Bottom line: your board should be following all of these essential governance practices.

If you have gaps or shortcomings, bring it to the attention of your Board Chair or Governance Committee, so they can be reviewed and discussed with the board.


FINAL THOUGHTS

The best boards practice good governance.

These best practices here are not inclusive of all good governance practices; however, they are considered to be essential practices.

There are also a number of leading practices as well as compliance practices. The very best boards will be aware of all of these practices and adhere to them.

All in the name of good governance.


Laura Rhodes received a Certificate in Nonprofit Board Education from BoardSource in 2016. She conducts board education and engagement sessions, retreats and trainings for nonprofits across the U.S.

Send a message to start the conversation and learn how Laura can help you and your organization.

 

Photo thanks to Ryan McGuire at Gratisography