Boards Matter

Non-profit organizations can run into trouble when the staff and board do not understand their respective roles. Misunderstandings can lead to miscommunication and recriminations and ultimately hurt the mission of the organization. Here are some basic rules of thumb about the role of a non-profit board.

The board of trustees (sometimes referred to as trustees, directors, or the board) is a group of qualified volunteers who provide governance and oversight for the organization. The structure of the board is determined by a set of by-laws. The by-laws should reflect the size and character of the board, director term limits and other matters, and should be amended and updated as necessary.

A board has 5 principal areas of responsibility:

1) Fiduciary oversight. The trustees are responsible for making sure that the organization is fiscally sound, that its budgeting is being handled responsibly, ethically, and legally, and that there are adequate financial reserves to serve the organization’s mission. In addition, depending on the size of the organization and its assets, the board may oversee investment accounts and the stability and safety of other assets (which may include real property). Trustees should be proactive in performing their due diligence on the financial systems, results, and position of the organization they serve.

2) Hiring and firing the Executive Director. The chief executive of a non-profit reports to the organization’s board. In the best of all possible worlds, this is a collaborative relationship that propels mission success. In a healthy non-profit, the board supports the chief executive and the senior management team, and they in turn maintain good communications with the board. However, it is the board’s responsibility to terminate a chief executive if that person is not adequately managing the institution. In that case, or if the chief executive resigns, the board is responsible for organizing a search process to find a new chief executive, selecting the new executive, setting compensation for the new executive (and reviewing that compensation annually), and participates in the onboarding of the new executive.

3) Giving or getting financial support for the institution. Board members should be prepared to give significant financial support to the organization.The size of the donation depends on the size of the institution. Some board members are able to fulfill this duty by helping to secure individual, foundation, and corporate grants for the organization. Other board members who cannot “give or get” may contribute to the organization through their knowledge or expertise (for example, a lawyer can provide selected pro bono legal advice), by managing critical connections in the community or by chairing a significant fundraising event.

4) Monitoring mission success and reputation. The board seeks to ensure that the organization is fulfilling its mission and monitors the organization’s reputation in the community. Board members are brand ambassadors and represent the organization’s best interests in public. They should be ready to identify and help defuse any public relations crisis and speak on behalf of the institution with appropriate guidance. Board members should aim to provide an objective and dispassionate assessment of the organization’s mission success and the community’s perceptions of that success. On the flip side, board members must be sure to keep internal organizational matters confidential.

5) Helping set and maintain strategic direction. Every few years a non-profit board should work with the staff to confirm or amend the direction of institution. Together, the board leadership and senior staff should study and address mission success and reaffirm or modify the organization’s goals and vision. This process can be time-consuming and intense, but it is critical to the future health of the organization.

This is not an exhaustive survey of important board issues. There are many books and online references on board roles and responsibilities that can expand on this description and are worth a read. In future posts I will address particular challenges and solutions in building a strong and diverse board, establishing effective board committees, and training board members. If you need help in working on board responibilities, board structure or board-staff relations, please reach out to me so that we can have a conversation about how I can help.