Board Work: Five Ideas to Make Your Nonprofit’s Board Effective
A BOARD IS A GROUP OF PEOPLE CHARGED with the ultimate responsibility for the health, preservation, and progress of an organization. It does not run anything. It works with the people who do.
A board’s principal obligation is to serve the organization’s cause, its donors, and its recipients. To carry out its obligation, the board receives and digests information. The board observes, evaluates, and consults with the paid professional who runs the organization day to day. The board asks questions in order to understand more fully what is going on in the organization. The board develops an interaction among its members to achieve that wonderful condition known as synergy. And the board makes the most of its individual and group intuitive powers.
In short, a board does anything and everything that is moral and legal to assist the organization. Here are five ideas that will help make your board effective.
1. Keep the Board Informed
The trustees of a nonprofit organization can function well only with full and correct information. Most of the information comes in the form of materials prepared for each board meeting and from the meetings themselves. Detailed information, plus the meeting agenda, should be received by each trustee at least five full working days in advance of the session. There is a distinct tendency of nonprofit organizations to ignore this basic rule and to hand out materials at the meetings themselves. That conduct is both rude and unacceptable.
Information should be sent to the board on the following topics:
Finances. Quarterly financial reports are needed, including investment and endowment portfolio analyses. Monthly statements are more detailed than the board needs. Of course, if the board meets once every two months, use bimonthly financials. Knowledge of the current financial status is especially critical with nonprofit organizations because their purpose is not to produce a profit, so they may pay insufficient attention to finances. Nonprofit organizations can make huge mistakes in money matters unless there is a clear and broad perspective—and oversight—by the board.
The Cause. A nonprofit board should learn new facts or developments about the cause it supports—not just in its own backyard but regionally, nationally, and internationally if its reach is wide.
Recipients. The board needs to know what the recipients of the organization’s money, services, or other largesse really think. Recipients might include symphony or ballet audiences, school children and parents, or people helped by foundation grants. How is this information collected? One family foundation I know is run by a top-flight professional who visits the recipients of its funds and discusses the gifts and their uses, gaining firsthand insight into the people and their points of view. This person travels a lot!
Donors. The board needs to learn about the principal donors to the organization. Some of the trustees should develop personal relationships with major donors, getting to know them face-to-face as human beings.
Management. The board needs to develop knowledge and understanding of the professionals running the operation. What kind of people are they? What motivates them? What do they really think?
Physical Assets. The board should be conversant, in a general way, with the properties and equipment of the organization as well as technologies used.
Insurance. The board should receive a complete insurance report once a year and examine it broadly for an understanding of the coverage and the costs.
Legal Issues. A quick annual review of the legal issues by the organization’s general counsel is a good idea. The general counsel should not be a member of the board, but that individual should frequently be invited to sit at board meetings.
2. Create Committees to Do the Work
Most of the work of big and mature or sophisticated nonprofit boards is performed at the committee level. The reasons for this practice are the time constraints on board meetings, frequently caused by the large size of the board and the need for someone—not the entire board—to bore into enough detail to get the job done.
Some basic committees for boards of almost any size are as follows:
Nominating. The nominating committee is the most important committee because the continuation of the quality of the board is in its hand. Managers of the nonprofit organization are not normally involved in selection of new board members.
The nominating committee must constantly seek out fresh, generally younger, more interested, and interesting board members who will, in turn, attract similar people.
Maintaining the quality of a nonprofit board reminds me of caring for apple trees. You must prune regularly, fertilize (with interest by the existing members), and cultivate the new growth. Three years of neglect on any of these processes and you can lose the fruit-bearing quality of the tree. You get small, gnarled, uninteresting apples.
Executive. The executive committee is empowered to act when the full board cannot. It can also assist in setting the agenda for board meetings to make them more productive. It is most often composed of the board’s current officers.
This committee may not be important for years at a time in a nonprofit organization, but all of a sudden it can become the lifeline to sanity and good judgment in a crisis. Membership on the executive committee reminds me of military service: months and even years of tedium, broken by occasional moments of stark terror.
Development. Show me a nonprofit organization without a development committee to seek funding, and I will show you one without a sense of its own direction. Exceptions include private family foundations, which by design receive all their money from the family, and boards that are publicly funded. The development committee provides leadership for securing financial support for the organization, taking charge of the activities that bring contributions. Every board member should serve on the development committee for at least two years to gain an understanding of what the tough job of fundraising is like.
Finance. Some trustees must pay special attention to the money side of the organization. The functions of the finance committee are clear: oversee and plan the budget, be familiar with the accounting and control systems of the organization, follow financial activities on a regular basis, and keep the board fully informed.
Special. There are a number of committees with names and charges that may relate only to a particular organization and the cause it serves. Examples are buildings and grounds for a school or college, membership for a church or synagogue, and human resources or any other special area that concerns a board. Fit the committees to the size and special functions of your board.
A Final Word. Too many committees, like too many cooks, can spoil things. Create only a few. A trustee should serve on one committee only. That’s the best way; though in rare cases a trustee could take on two committees. Be aware that you can wear out a trustee with too much committee work in addition to board meetings. Please watch out for yourself. Learn to say: “No, thank you.”
3. Choose a Structure that Fits Your Nonprofit
Standing committees are permanent and members are appointed for designated terms. These committees are responsible for a range of issues such as finance, development, and programs. The characteristics of work, wisdom, wealth, and wallop are all important ingredients to ensure a highly functioning board and committee structure. Organizations should be looking for team players, individuals who have intellectual firepower, street smarts, a tolerance for ambiguity, and the courage to ask tough questions, and who delight in the interchange of ideas.
The board committee (often the executive committee) responsible for trustee recruitment is increasingly considered by many organizations to be the most important committee of all. It’s where you want your most experienced, supportive, and respected trustees.
Ad hoc committees and task forces allow the board to focus attention on narrower matters of importance that the full board cannot take the time to address. They have a specific charge from the board or executive committee and sunset when they have completed their work.
The typical board size is 15 to 21. There is a strong argument for a smaller board—six to nine—which allows for more active engagement and greater sense of ownership and accountability for ensuring that the organization achieves its mission and objectives. On a large board, often an executive committee will be appointed and will meet more frequently in between full board meetings.
Boards should engage in a thorough review annually, ensuring that their size, structure and composition are designed to maximize effective governance and transparency.
There is no one size that fits all. The most important point to evaluate is whether the organization has been able to fulfill its goals and expectations and keep the active and passionate engagement of trustees.
4. Deploy Your Assets
Make sure that you as a trustee take the time to think about how your organization can have the biggest impact on achieving the mission. Too often, trustees fail to apply the wisdom, experience, and skill they bring to the board. It works best when the chief executive comes to the board for counsel and advice well before any formal request for board action. This is where trustees and executive staff, working together, can frame the important questions and consider multiple solutions. It’s often the time when the most creative and dynamic thinking takes place.
This way of working is not familiar ground for many chief executives and boards. You will need to discover and practice new ways of working together. Change is rarely comfortable. Stress, ambiguity, disagreement, and resistance are predictable. However, confronting complex institutional challenges can enrich the work of the chief executive and board. In short, the board has greater impact and value when it deploys all its assets—the intellectual, financial, and social—in helping the organization achieve its highest potential.
So, be prepared to get out and stay out of your comfort zone. You’ll find that real benefits occur for the institution.
5. Measure Progress
Establish clear performance indicators, sometimes called dashboards, of success for your chief executive and board linked to your strategic plan. This enables board members to get a snapshot of your organization to see how it’s doing and where the holes might be. Dashboards might include hits on a Web site compared to last year or contributions year-to-date compared with last year at the same time. A single-page dashboard could be included in the board materials prior to every board meeting. Review progress at every meeting. The development of these key indicators will keep you focused on what matters most.
Mr. Golding was a trustee for 10 different nonprofits, including a major symphony orchestra, a small day-care center, a church, two schools, and a big-city library foundation. Mr. Stewart is president and trustee of The Bruce & Jolene McCaw Family Foundation. This article is adapted from Golding and Stewart’s book Inside the Nonprofit Boardroom: What You Need to Know for Satisfaction and Success, published by The Apex Foundation.