Effective Not-for-Profit Board Governance: Ten Responsibilities of the Board

By Laurie De Armond

The board of directors of a not-for-profit organization plays a very important role in the ongoing strength and stability of an organization. Ineffective board governance can often lead to an organization’s downfall. It is critical that every member of the board understand the role the board plays and the important part they each individually play in the organization’s success.

In a broad sense, a not-for-profit’s board is responsible for:

  • establishing the strategic direction of the organization, providing senior management an understanding of where the organization is trying to go;
  • approving policies that help staff leaders advance the organization, make better collective decisions and guide individual actions and behaviors; and
  • providing connections to resources and information, assisting in the connection of people and resources to advance the purpose and mission of the organization.

These broad areas can be narrowed down into ten basic responsibilities of a not-for-profit board:

  1. Determine mission, purpose and strategy: It is very important for the board of directors to clearly articulate the organization’s mission, purpose and strategy. These items should be well defined in order for the strategy to be effective and to send a unified message to all stakeholders. Some thought provoking questions that a board of directors may want to ask itself are:
    • Who are we as an organization, and where are we going?
    • Whom do we serve, with what programs and services?
    • What impact are we having or do we hope to have on our constituents?
    • What are the issues and challenges that the organization is facing?
  2. Select the chief executive officer (CEO): It is important that the board reach consensus on the CEO’s responsibilities and undertake a careful search to find the most qualified individual for the position.
  3. Support and evaluate the CEO: The board should ensure that the CEO has the moral and professional support he or she needs to further the purpose, mission and goals of the organization; however, the board should be careful to not overstep its bounds. Effective boards govern and allow senior management to manage the daily operations of the organization.
  4. Ensure effective planning: Boards must actively participate in an overall strategic planning process and assist in implementing and monitoring the plan’s goals.
  5. Monitor the organization’s programs and services: The board should ensure that the organization’s programs and services are effective and consistent with the organization’s mission. This evaluation should be done annually to ensure that the organization’s resources are being utilized effectively toward the achievement of the mission.
  6. Ensure adequate financial resources: The board has an obligation to help secure adequate resources for the organization to fulfill its mission. However, this does not mean that board members should only be selected based upon their willingness or ability to contribute financially to the organization.
  7. Protect assets and provide proper financial oversight: The board must assist in reviewing the annual budget and ensure that proper financial controls are in place.
  8. Build a competent board: All boards have a responsibility to articulate qualifications for candidates, orient new members and periodically evaluate their effectiveness.  A few questions the board might want to ask itself are 1) given where we are going, who else do we need on the board, and why? and 2) Why would a potential board member want to be on our board?
  9. Ensure the legal and ethical integrity of the organization: The board is ultimately responsible for adherence to legal standards and ethical norms of society and ensuring policies and procedures are in place to provide monitoring and oversight.
  10. Be the voice of the organization to the community and other stakeholders: The board should clearly articulate the organization’s mission, accomplishments and goals to the public and garner support from the community.

In order to accomplish these tasks, nonprofit board members should be willing to actively participate in the board by supporting the mission of the organization, attend regular meetings and special events, come prepared for board meetings and participate fully in those meetings, serve on board committees, speak knowledgeably and as one voice for the organization, and understand their governance, oversight and fiduciary responsibilities.

 

This article originally appeared in BDO USA, LLP’s “Nonprofit Standard” blog (February 23, 2016). Copyright © 2016 BDO USA, LLP. All rights reserved. www.bdo.com

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