@BOARD FUNDAMENTALS GUIDANCE

@BOARD FUNDAMENTALS GUIDANCE

WHAT IS GOVERNANCE? WHAT IS THE ROLE OF THE BOARD? WHAT IS EXPECTED OF BOARD MEMBERS? HOW DOES AN EFFECTIVE BOARD OPERATE?

The need for effective board leadership and governance knows no geographic  boundaries. WE do not focus on legal matters but  rather on good governance practices. Serving on the board of a nonprofit organization involves serious obligations but also potentially significant personal satisfaction. On the one hand, it demands time, attention, and teamwork; on the other hand, it provides opportunities to contribute time and talent to a meaningful cause. To be effective and make a difference, board service requires knowledge and commitment. More than ever, it also requires accountability.

Nonprofit governance has a dual focus: achieving the organization’s social mission and the ensuring the organization is viable. Both responsibilities relate to fiduciary responsibility that a board of trustees (sometimes called directors, or Board, or Management Committee—the terms are interchangeable) has with respect to the exercise of authority over the explicit actions the organization takes. Public trust and accountability is an essential aspect of organizational viability, so it achieves the social mission in a way that is respected by those whom the organization serves and the society in which it is located.

Our approach is designed to serve as an overview of effective nonprofit governance practices and seeks to answer four basic questions: What is governance? What is the role of the board? What is expected of board members? How does an effective board operate? Our answers are designed to introduce new board members to principles of nonprofit governance as well as to provide a refresher and new ideas for those with more experience.

DEFINITIONS

  • Governance is the process whereby a group of individuals works as a collective to assure the  legal and moral health of an organization.
  • Governance is the process of due diligence whereby the board, as a collective, assures the legal and moral health of an organization.
  • A board is the body that carries out the governance process to assure that an organization fulfills its legal and moral obligations to its constituencies.
  • A board is legally and morally accountable for the health of the organization and the fulfillment of the organization’s mission. 

BASIC PRINCIPLES

  1. The board is a collective and only has authority as a group. The board is responsible for governance.
  2. The board exists to gather together, talk about information vital to organizational health, and take action. This all happens together, as a group, through group dialogue, at board meetings.
  3. An effective board understands this and so it establishes  policies and procedures for conducting effective board meetings.
  4. An effective board focuses on strategic issues rather than routine matters. 
  5. The board focuses on ends (e.g., results) and management focuses on the means to achieve the ends established by the board. (And of course the board establishes these ends through dialogue with management, as staff are the experts in the work of the organization.)
  6. There is a different between governance and management – but there are also similarities and overlaps. The distinction is one of judgment and organizational evolution.
  7. A board is responsible for various functions – and the board should be composed of individuals who have the skills and experience to help the board carry out these functions.
  8. There is a difference between a board and an individual board member – and this difference must be made clear prior to nominating an individual for board service.
  9. The board has a written job description for itself, accompanied by written performance expectations common to all board members. The board enforces both.
  10. An effective board regularly monitors its own performance in governance – and assures that individual board member performance is evaluated annually.

It takes a lot of work and time and attention to develop a board. The executive director of the organization is principally responsible for providing the leadership and the knowledge. And if you are fortunate, you will recruit a few board members who are experienced in not-for-profit governance.