All nonprofits need an effective board of directors, though too many boards have structural problems that keep them from being truly effective. Though roles change as the size of the nonprofit increases, there are four key things all boards should do.
First have a real handle on the finances of the organization.
Board financial committees should meet AT LEAST quarterly with the executive director and the CFO. This meeting should be wide-ranging,discussing the financials for the year, the outlook for cash flow over the next year, the areas where fund raising has fallen off and what the plans are to address that. Finance Committees should never be surprised by a bad quarterly report,it they are, that surprise indicates the planning part of the committee work,and the meetings described above have not been done properly.
At its heart the finance committee has two jobs, oversight and planning for the future. Finance committees should help management develop the financial plan the keeps the nonprofit strong. If a board is just looking at the past and not helping management plan for the future, they’re failing atone of the crucial board missions, to advise and help focus management.
The primary responsibility for a board is fiscal oversight,so it would seem a no-brainier that finance committee rules and procedures would be in place to address both past performance and future assessments. However, I’d advise all boards to look into the question of how they provide financial oversight, and make sure the finance committee is as committed to the future as the past.
Second recruit a range of talent to the board.
Successful nonprofit boards recruit people with diverse talents. How many times have I seen an executive director copying her presentation for an evening function, then take a call from an elected official,before flying out the door to get to a meeting across town? Nonprofit management,especially for small and medium sized agencies, are required to do a multitude of tasks, stressing their time and ability to address all the agency’s needs. Rarely are board members specialized knowledge, be it legal, marketing or accounting,employed by the organization to help the executive director focus on their core tasks.
Part of every board’s process for recruiting and welcoming new members should be assess each new board members key skills and interests.Part of every board process should be to assess, with the agency’s management,what skills the board has that can be of help. Too often management realizes after the fact that a project could have benefited from the knowledge and expertise of a board member. When providing such direct help to management,board members must realize that they are no longer in a supervisory role, that they are co-equal or even in the subordinate position. But this use of expertise can both save money and provide critical help that can be the difference in a project succeeding.
Third, Assess and Evaluate.
All boards should assess and evaluate management. There should be a process in place for yearly evaluations, though, yes, this is hard to do. Boards rarely provide a yearly structured review of executive directors and management generally. As oversight is a boards primary responsibility this would seem to be something that would be codified with a plan for implementation of the review process.
Successful management review develops targets, goals and suggestions. Everyone does better with targets and goals (realistic ones) and with effective oversight. From my perspective oversight of an executive director should help provide insights for improving performance, should be framed positively because being an executive director is a demanding job and certain phases are bound to be done better than others.
This process should not be relegated to a yearned report,but should be ongoing. There should be at least a mid-year meeting with the committee involved to go over those goals and targets, to measure performance,to see where the board could help management, and perhaps to see where training would be useful.
Also, and importantly, boards must evaluate themselves. Every board should evaluate their performance in the same manner as they do board management.Board reviews should focus on: Fiduciary oversight, management oversight, board recruitment and board fund raising goals. Boards should assess themselves at mid-year just as they would do with management. There should be a yearly review that addresses key areas of board function along with any additional areas of interest – for example a board driven fundraiser. Careful thought should be given to these areas and how to improve processes.
Fourth treat fundraising seriously. Board members should always contribute something each year. Determining that level of commitment should be part of the board recruitment process. I know some boards that have activists with no access to funds sitting next to lawyers pulling down six figure incomes. Obviously not all members should be expected to contribute the same thing, but financial contribution should be understood to be part of aboard members responsibility. Gauging the financial commitment should be part of board recruiting, however awkward this kind of a discussion may seem. No executive director should ever have to go to a board asking the members to make contributions.
Besides individual contributions, boards should have a plan to reach their fundraising goal. Every board should raise money for the agency through some form of group fund raising activity, even if the actual nuts and bolts are part of a committees job, the board in its entirety must commit to making this fundraising happen.
The four pillars of successful boards
- Financial oversight/planning
- Recruiting Diversity
- Evaluating/Assessing management and boards
- Contribute and fund raise
Sounds simple but ask yourself if your board does all four well.