A 5-Step Cycle for Effective Non-Profit Board Governance

A 5-Step Cycle for Effective Non-Profit Board Governance

One of the questions we frequently get is: How do non-profit Boards provide effective oversight? What is their governance role and how do they execute it effectively. The diagram below shows a 5-step cycle that can help illuminate the important aspects of non-profit Board governance.

Step 1:

The cycle begins with the Board providing overall direction to the organization. It’s the Board’s role to ultimately set the long-range goals for the organization and related measures of success, to establish high-level policies, and determine the delegations to the executive director (and any other direct reports to the Board). To be clear, this is work that the Board performs in collaboration with the executive director and executive team.

The Board also makes decisions on items with sizable impact to the organization, such as large contracts, that are not delegated to the executive director. As it does these things, the Board is mindful of the “unity of control,” meaning that it is the Board, not any individual Board member, that directs the organization.

    Step 2:

    The next step in the cycle is staying informed about the workings of the organization. Individual Board members can do this by listening to presentations, noting industry-related trends, reading staff reports, and serving on committees, where members take deeper dives into relevant aspects of the organization’s work. Again, Board members need to stay mindful that

    Board committees are limited in their authority as well – their purpose is to develop recommendations for the Board or handle specific aspects of the Board’s work. They should not be focusing on or trying to make decisions in the areas delegated to the executive director. Much havoc results when they do!

    Step 3:

    The next step in the cycle is providing input and suggestions. Board members should be encouraged to bring their expertise and experience to the table, while again staying mindful of the unity of control. Board members should be careful to make sure their suggestions are construed as input, not direction. A helpful framing is to say: “My suggestion is that we….” Or “my advice would be to….but it’s only a suggestion.” This framing helps everyone appreciate that the member understands their lane and the limits on their authority. Board members also provide valuable connections and introductions, especially in the area of fund-raising.  It is typical for non-profit Board members to be expected to make significant donations as well as to make calls on potential donors.

    Step 4:

    Monitoring the performance of the organization is another critical Board activity. It is part of the Board’s fiduciary “duty of care.” The Board should hear regularly from the executive director and management about progress toward achieving the Board’s goals and objectives. It should receive regular financial reports; it should be informed of any legal, reputational, or significant operational risks. In addition, the Board should regularly monitor its own performance through a Board assessment. A useful tip is for the Board to adopt an annual workplan that spells out the schedule for these various reports.

    Step 5:

    The last step in this cycle is providing both formal and informal feedback about performance. Most importantly, the Board is responsible for a formal evaluation of the executive director (and any other direct reports). The Board should have an agreed-upon process for gathering information and assembling the executive director’s performance evaluation – and communicating it.

    In the category of informal feedback, Board members should always keep in mind that their comments reverberate across the organization and have a powerful effect on staff and stakeholders. Feedback from individual Board members should always be positive in tone and content. If Board members want to offer constructive suggestions, they should find ways to state it positively and refrain from any negative or critical feedback of staff or of their colleagues in any public setting, including social media. If a Board member feels strongly that their critical feedback is important to communicate, they should share it with the Board president and ask for guidance.

    Want to learn more?

    If you’re looking to learn more about Board governance or if you’re ready to take your organization to the next level, contact us to speak with a consultant.

    Eric Douglas

    Eric Douglas is the senior partner and founder of Leading Resources Inc., a consulting firm that focuses on developing high-performing organizations. For more than 20 years, Eric has successfully helped a wide array of government agencies, nonprofit organizations, and corporations achieve breakthroughs in performance. His new book The Leadership Equation helps leaders achieve strategic clarity, manage change effectively, and build a leadership culture.

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