Do you have effective nonprofit board members?
There can be no better feeling than serving the community for a good cause, but solely relying on the good intentions of volunteers is too risky, even for the noblest missions. Organizational structure, clear policies and procedures, well-trained board members who understand their role as a governing body, and board members who stay in their lane by not involving themselves in the agency's daily operations are all important factors in board success. Taking the time and energy to set the structure in place, learning from past mistakes, and investing in the onboarding of new members, as well as the continuing skill development of all board members, can make a difference in the longevity and impact of a nonprofit organization can have.
What can nonprofit boards do to make sure their board members are effective?
Nonprofit organizations (NPOs) have an enormous impact on communities around the world. For rural communities especially, the NPO can make a massive difference with local causes. Regardless of mission or cause, an effective NPO demands structure and strategic planning where board members clearly understand their roles and responsibilities. Typically, NPOs select board members based on their connections and access to capital or wealth within the community, assuming that those contacts and new money will allow the agency to advance its mission and do more.1
Another typical way NPO boards start is because of the passion and desire to solve a problem in their community. Hence individuals who share in that passion may not have the connections or the money, but they do have the desire to help. Although good intentions are admirable and desirable, they may not be enough to govern the agency’s mission effectively. Board member effectiveness must include other measures to assure the continued success and impact of the agency that founding members intended to have.
Important factors that lead to problems with board member effectiveness have to do with the participation expectations. In many cases, for rural communities, board members consist of volunteers with little time, and the agency has few resources, funds, and skills to provide the necessary structure. Moreover, the staff is being called to daily urgent matters that do not allow the leadership to focus on strategy and long-term planning.1
On top of the regular challenges of governing, the coronavirus did not help the NPOs get ahead. Many organizations struggled to keep up with mission-centric functions because fundraising events were canceled, leaving financial resources in balance.2 Despite the challenges, there is hope for NPOs by investing time and sweat equity to ensure these noble causes continue.
Purpose of the Nonprofit Board
The purpose of a NPO Board of Directors is about governance. Governance includes providing high-level strategic direction, careful and thoughtful oversight of how the agency is conducts business and ensuring accountability of the agency staff and administration.3 This should not be confused with managing the agency's daily operations. Those activities are not typically a responsibility of the NPO board member but that of the agency administration.
Why Boards Fail
Many reasons may come into play when boards flounder. From the very beginning of their appointment, each board member must understand what is expected of them as individuals and as a collective board. Lack of clarification is one of those issues overlooked or assumed in the interest of getting to business sooner. However, skipping that time where clarifications are explicitly reviewed can provide dire consequences and confusion because of a misunderstanding of roles.4
A study in 1989 showed stages of how boards experience their demise. Blindness to early signs of decline is the first. Secondly, the board may recognize the need to change, but they do not act on that need. Third, those who act may do so inappropriately, which causes a further downward spiral of effectiveness, leading to a crisis point that ultimately results in the board's dissolution.5
In an earlier study, NPOs were found to leave the market for other reasons, including experiencing internal political vulnerability coming from internal sources such as the size of the group, board members’ inexperience, and their inability to resist demands. Additionally, organizational atrophy may occur when there is a decline in performance. This may lead to the agency's greater shakiness, which would continue to decline. Of course, when the problem the organization was designed to address has been resolved, boards may simply permanently adjourn. Finally, there may be external factors such as the community and benefactors may wish to support the NPO financially no longer or for other reasons.6,7,8
An agency that spends time and effort on activities not central to its mission is known as “mission drift” and can further lead to agency decline.9 This may happen in a variety of ways, including seeking grants that are not mission-centric. Doing so pulls the board away from the mission into different business directions resulting in a weakened state where the agency is less knowledgeable.10
Structure, Policies, and Training
Leading and serving an NPO board is quickly becoming a necessity. Because of what seems like a continual uphill battle, the fatigue of having served for many years has long-standing board members ready to leave their positions. Sadly, if there is no succession plan in place, the board and agency could be faced with an even more difficult time in providing strategy, oversight, and accountability.11
NPOs who have had public scandals truly shake their respective communities.12 Improper governance of the board is where the public casts dispersion and blame.13 What should good governance practices be addressed? One measure the NPO boards should consider starts with a written conflict of interest policy. Other key elements include records retention policies, whistleblower protections, compensation review of key staff, and audits of the operations and financial documents.13 Depending on the law, understanding if the board is subject to the state’s Open Meetings laws should be addressed within the bylaws. Another study that examined IRS documents found that successful boards exhibited seven factors, including policies, audits, compensation analysis and review, having a well-trained board, capable management, accessibility, and well-documented and organized meeting minutes.12
A purposeful onboarding program that provides the new board member with the necessary tools cannot be underestimated. Executing a checklist of training for developing board members provides further structure.14 However, onboarding is more than a checklist. Just as the policies, procedures, the audit, and other vital decisions board members make, the agency surely needs to review the material with the new board members to provide in no uncertain terms what is expected of them legally and from the part of the community, they represent.
Starting the year’s first board meeting should be one that sets the tone and gets board members quickly engaged. One way to do that is to discuss lessons learned from previous board meetings. No one wishes to waste time, energy, effort, and money, so these discussions can motivate one to avoid mistakes in the future. Having the executive director or the board chair review how the meetings are conducted is a good reminder for everyone. This includes committee structure and how any board or committee proceedings will also take place. Hopefully, the board has engaged in complete strategic planning, with goals and objectives clearly outlined as well as the financial outlook for how the agency will execute the plan. During the strategic planning session is a good time to ask board members what they think makes a board effective. Including their ideas on how the process of governing happens will also create a psychological contract with the board members because they each now have skin in the game.15
Having a board member toolkit is a priceless piece of work that provides quick reference points, clarification of roles and committees, and a list of key contacts who are helpful in discovering information. Simply knowing who to contact for information is liberating because it allows even the newcomer to begin contributing to the decision-making process in pursuit of the agency’s mission.
Spending time with other individual board members outside of the board room helps to establish an informal mentoring relationship where the veterans have a chance to teach and develop their newcomers to the board. This connection also builds trust and a sense of continuity that will happen once the senior board member no longer serves in that capacity.
There can be no better feeling than serving the community for a good cause, but solely relying on the good intentions of volunteers is too risky, even for the noblest missions. Organizational structure, clear policies and procedures, well-trained board members who understand their role as a governing body, and board members who stay in their lane by not involving themselves in the agency's daily operations are all crucial factors in board success. Taking the time and energy to set the structure in place, learning from past mistakes, and investing in the onboarding of new members, as well as the continuing skill development of all board members, can make a difference in the longevity and impact of an NPO can have.
Author: Matthew Starr
Bibliography (standard format of citations according to international standards):
8 Arbogust, M. (2020). Why Do Nonprofits Fail? A Quantitative Study of Form 990 Information in the Years Preceding Closure (Doctoral dissertation, Old Dominion University).
4 Bauer, T. N. (2013). Onboarding: enhancing new employee clarity and confidence. Workforce.com. Retrieved from https://www.researchgate.net/profile/Talya-Bauer-2/publication/286447174_Onboarding_Maximizing_role_clarity_and_confidence/links/566995bf08ae1a797e375c5a/Onboarding-Maximizing-role-clarity-and-confidence.pdf
9 Bennett, R., & Savani, S. (2011). Surviving mission drift: How charities can turn dependence on government contract funding to their own advantage. Nonprofit Management and Leadership, 22(2), 217-231.
10 Cornforth, C. (2014). Understanding and combating mission drift in social enterprises. Social enterprise journal. Retrieved from http://dx.doi.org/doi:10.1108/SEJ-09-2013-0036
3 Crawford, A.C. (2019). A study of rural nonprofit board communication and collaboration. Walden University Dissertations and Doctoral Studies Collection. Retrieved from: https://scholarworks.waldenu.edu/dissertations?utm_source=scholarworks.waldenu.edu%2Fdissertations%2F7282&utm_medium=PDF&utm_campaign=PDFCoverPages
14 Grillo, M., & Kim, H. K. (2015). A strategic approach to onboarding design: Surveys, materials, & diverse hires.
7 Hager, M. A. (1999). Explaining demise among nonprofit organizations. University of Minnesota. Retrieved from https://www.researchgate.net/profile/Mark-Hager/publication/309353017_Explaining_Demise_Among_Nonprofit_Organizations/links/580aa76b08ae2cb3a5d30438/Explaining-Demise-Among-Nonprofit-Organizations.pdf
12 Harris, E., Petrovits, C., & Yetman, M. H. (2017). Why bad things happen to good organizations: The link between governance and asset diversions in public charities. Journal of Business Ethics, 146(1), 149-166.
3 Kindful: A Boomerang Project. Board of directors for nonprofits [Blog Post]. Retrieved from https://kindful.com/nonprofit-glossary/board-of-directors/
13 Lee, Y. J. (2016). What encourages nonprofits' adoption of good governance policies?. Nonprofit Management and Leadership, 27(1), 95-112.
6 Levine, C.H. (1978). Organizational decline and cutback management. Public Administration Review, 38, 316-25.
1 Levine Daniel, J., & Fyall, R. (2019). The intersection of nonprofit roles and public policy implementation. Public performance & management review, 42(6), 1351-1371.
2 Morris, B. (2020, May11). Nonprofits face bleak future as revenue dries up amid coronavirus. Wall Street Journal. Retrieved from https://www.wsj.com/articles/nonprofits-face-bleak-future-as-revenue-dries-up-amid-coronavirus-11589223487
15 Okarma, T. (January 27, 2016). The kickoff: 20 steps to better 1st board meeting. [Blog post]. Retrieved from: https://tomokarma.com/the-kickoff-20-critical-steps-to-a-better-first-board-meeting/
11 Putnam‐Walkerly, K. (2020). The next crisis: nonprofit leadership exodus. Nonprofit Business Advisor, 2020(373), 1-3.
5 Weitzel, W., & Jonsson, E. (1989). Decline in organizations: A literature integration and extension. Administrative science quarterly, 91-109.