A Guide to Nonprofit Board Governance
Although nonprofit leadership and governance are often used interchangeably, they are not cut from the same cloth. While leadership sets the direction, governance ensures the direction set by the leader(s) is followed. In other words, governance is a process whereby strategic leadership is realized.
Governance in nonprofits occurs at the level of the board of directors, often referred to as either Board of Directors, Board of Trustees, or Governing Board. The nonprofit board is responsible for the strategic development, planning, and decision-making of the organization.
To achieve this, the board can be structured in one of four governance models. This article discusses these nonprofit governance models, highlights the duties of a nonprofit board, and recommends factors to consider when choosing your board members.
Nonprofit Governance Models
1. Advisory model
In this model, board members with the right expertise are assembled to advise the founders and employees of the nonprofit organization. Their high societal status also boosts the public image of the nonprofit and establishes the organization’s credibility when soliciting grants. Lastly, the members of the board not only manage the affairs of the nonprofit but are also held accountable for actions carried out in the organization. So, it is important they hold a superior position to the CEO.
2. Patron model
Board members with influence and wealth are assembled to facilitate fundraising by providing personal donations to support the cause of the nonprofit. The nonprofit board members can also leverage their network to help the organization raise even more funds. They may also activate fundraising on behalf of the nonprofit.
3. Corporative model
In the cooperative model, the board members have an equal stake; there is no hierarchical structure like the board chair, secretary, treasurer, and floor members. Members work as a team with equal power, voting rights, and privileges. In this model, the nonprofit organization has no chief executive.
4. Community engagement governance model
This model requires a nonprofit board composed of members and leaders of the community that the nonprofit serves. These community leaders will provide insights and input from the beneficiaries and help ensure the organization is working in the best interest of the community.
What are the Duties and Responsibilities of a Nonprofit Board?
The nonprofit board is the governing body of the organization; it consists of individuals who are responsible for charting the course of the nonprofit by providing strategic direction, oversight, and accountability. In other words, they make key decisions to advance the mission, vision, and goals of the nonprofit.
The core duties of a nonprofit board include:
1. Duty of care
Board members have to commit to the cause of the nonprofit by attending meetings, participating in committees, and supporting fundraising campaigns and programs. The duty of care also involves liaising with the executive director and other board members to ensure the goals and objectives of the nonprofit are met.
2. Duty of loyalty
Board members have to be ambassadors of the nonprofit’s brand and programs. The duty of loyalty requires that all activities and decisions of the board are carried out in the best interest of the nonprofit; they can’t make decisions based on personal motives or interests.
3. Duty of obedience
Board members are also expected to abide by the relevant laws and regulations that govern the nonprofit’s operations and program development. To do this, they must be familiar with the bylaws and operational guidelines of the nonprofit organization as well as any fundraising compliance laws.
These three duties can be summarized into nine responsibilities of a nonprofit board: –
- Determination and articulation of the organization’s mission, vision, and core values.
- Hiring, setting up a compensation plan, evaluating employees’ performance, and firing unproductive ones.
- Developing and designing programs that will deliver the expected goals of the nonprofit organization.
- Monitoring the performance of current programs to determine their effectiveness and efficiency.
- Ensuring the availability of adequate financial and other resources required by the nonprofit.
- Ensuring responsible, appropriate, accountable, and legitimate generation and utilization of resources in the nonprofit.
- Ensure that the legal requirements of the nonprofit are being observed, i.e., payment of taxes, especially payroll taxes
- Avoidance of inappropriate contract deals, including conflict of interest.
- Ensuring maximum protection of lives and property of the nonprofit organization.
4 Factors to Consider When Choosing Your Nonprofit Board of Directors
The factors to consider when considering your nonprofit’s board members depend on the governance model that you’ve chosen to implement. The advisory model requires enlisting industry experts, the patron board structure calls for board members who are affluent, and so on. Additionally, you have to consider your nonprofit’s core values and how the candidate aligns with them.
Outside of these two factors, here are four main factors to consider when choosing a board member:
Choose someone with the appropriate degree of expertise that is most likely to add value to the nonprofit operations. Consider working with people with specialized experience in different aspects of your nonprofit’s work. For instance, a lawyer or a chartered accountant can have much-need input on contracts, negotiations, and financial transactions.
Even if you’re not using the community engagement governance model, it is still recommended that you enlist board members who have been involved in the community your nonprofit serves. This means they are already actively committed to the cause of the nonprofit and care about the advancement of its mission.
Your board members ought to be enthusiastic about their duties and responsibility. Choosing someone who is qualified yet nonchalant about the cause of the nonprofit will hamper the progress of the board. It is important to choose board members who are able and willing to serve.
4. Critical and strategic thinking skills
Strategic and critical thinkers who have been exposed to a standard business environment and organizational practices will serve well on nonprofit boards. This is because their experience would have equipped them with needed critical, innovative, and strategic thinking skills relevant to driving the nonprofit organization in the right direction.
Nonprofit board governance involves a range of activities, from ensuring financial viability to achieving the mission of the organization. The composition of the nonprofit board is vital to having clear, strategic leadership. To set themselves up for success, nonprofits need to consider the willingness, expertise, strategic thinking skills, and exposure of candidates when choosing their board members.
Additional Resources on Nonprofit Boards
Check out these articles for more tips on nonprofit boards:
- From Apathy to Zeal: Nonprofit Board Engagement Strategies
- Why Nonprofit Board Meeting Minutes Matter (& 4 Helpful Hints)
- How to Lead Effective Hybrid Nonprofit Board Meetings
- The Diversity Deficit in the Boardrooms of Canada’s Charities
- Nonprofit Boards & Governance Resources
- Nonprofit Glossary
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