Best Practices for Nonprofit Board Governance: A Report from the Field
Most nonprofit boards do their job well. But forward-looking, productive boards know there is always room for improvement. At a Nonprofit Directors’ College sponsored by the National Association of Corporate Directors (NACD), leaders from a broad array of disciplines and enterprises explored a range of issues related to nonprofit board governance. Here are a few of the best practices they discussed.
Best practices for board meetings
Nonprofit directors have a lot going on, so it can be difficult to get everyone on the same page during board meetings. These practices can be effective and efficient ways to focus attention and keep meetings running smoothly.
It is important to remember that the board is in charge of your organization, but only when acting “as a whole” in an appropriate session.
Send a standard consent agenda — Distribute a package of information to board members a week prior to the scheduled meeting.
- Include minutes from prior meetings for comment or correction. This will save time at the meeting by minimizing discussion and favoring consent approval.
- To encourage members to be prepared, provide relevant documents in advance with the expectation that they will be reviewed.
- Tell your directors in advance what will be discussed, the expected duration, and the time allocated for each item.
Create a standard yearly meeting cycle template — Incorporate current agenda items into an organized, annual plan that cyclically addresses all governance and fiscal matters.
Include a “mission moment” early in the meeting — A real-life reminder of why your organization exists will focus the attention of the board on mission-critical issues.
Operational best practices
It is important to remember that the board is in charge of your organization, but only when acting “as a whole” in an appropriate session. First and foremost, nonprofit boards are responsible to their donors and contributors. With this in mind, it is of the utmost importance that the board operates in the best interest of supporters of the organization’s mission and in a way that serves other stakeholders.
Committees allow the board to use the power of delegation for specific activities to shepherd functional oversight. This brings deliberated proposals back to the full board to create efficiency in governance.
- Executive, development (fundraising), finance and audit, personnel, nominating, and board development are examples of standard committees that will facilitate board success.
- At the committee level, it may be beneficial to include people with unique skills who are not board members.
- Set limits and objectives to prevent committees from usurping duties appropriate to the board.
- Hold executive committee meetings prior to the full board meeting as a means of rehearsal and preparation.
- Create a separation of powers. Clearly establish and follow the responsibilities and duties of the board, management, and committees. Put it in writing so everyone can agree to abide by the guidelines. This also serves as a valuable tool to recruit and educate new members because it illustrates a governance tone.
- Create a board member skills and experience template. The document can define what the board should include, and indicate when to add or replace directors according to the entity’s needs.
Ask “wisdom questions”
Knowledge can be bought, but wisdom focuses where knowledge is needed.
- Which stakeholder is most likely to be positively or adversely affected by a decision, policy, or change?
- What is the worst-case scenario from our actions or inaction?
- Who should be making this decision? Do we have or need a policy for this? If not, maybe we should not be making the decision.
- Do the pieces fit together in a logical way? Always beware of information asymmetry.
- Your organization’s management should engage subject matter experts as needed to provide specific knowledge.
Establish clear expectations for organizational behavior
- Develop and adopt a code of conduct that applies to everyone from board members to management, employees, and even volunteers.
- Establish a conflict of interest policy and require everyone, top to bottom, to acknowledge their understanding and acceptance of the policy
How we can help
Decades of deep experience have prepared the CLA nonprofit team to address your challenges and help your board function efficiently and effectively. When we get to know you, we can provide nonprofit tax and audit services, outsourcing, strategic and financial consulting, operational improvement consulting, and other services to help you create opportunities and fulfill your mission.