Thursday, January 28, 2010

How Effective is Your Board of Directors?

Thursday, January 28, 2010
We've all heard about fraud and embezzlement in the nonprofit sector, especially over the last several years. It's been in the newspapers, on the radio, television and on the web. And one of the prevailing questions on our minds when we hear these stories is, “Where was the Board?”

The Board of Directors of a nonprofit organization has a fiduciary responsibility to protect the assets of the organization it serves, by being informed and actively overseeing the organization’s operations and finances. This means attending regularly scheduled board meetings and being prepared to actively engage in carrying out the mission of the organization.

What are the qualities of a good board member? A good board shares a passion for and a commitment to the nonprofit’s mission; a good board member is willing to “roll up his sleeves” when necessary to get the work done. A good board member is willing and able to help raise money for the organization. A board member is expected to contribute at some level, in order for the organization to communicate to funders that the board members are committed to the organization and its mission. A good board member has a strong connection and is influential in his or her community.

What are some useful skills to look for in a prospective board member?

• Fundraising and grant writing skills
• Accounting and bookkeeping skills (a CPA who specializes in NFP’s would be most valuable)
• Banking/financing and investment skills
• Database, website or other technical skills
• Employee and volunteer management skills
• Public speaking skills
• Marketing skills
• Legal skills (an attorney who specializes in NFP’s would be most valuable!)

What is the optimum number of board members and what should the terms be?

• Most states establish a minimum (usually one to three members)
• Odd number of members avoids tie votes
• A size range is better than a firm number (members tend to come and go)
  • Small to medium sized nonprofits – five to nine board members recommended
  •  Larger nonprofits – a range of nine to 15 board members is recommended
  • Very large nonprofits can typically accommodate more than 15 board members
• Two to three years is a common term length
• Stagger terms, and consider limiting consecutive terms
• Number of board members (size range) and term limits should be included in the organization’s bylaws

What constitutes an effective board meeting?

• Meet regularly – at least quarterly, and keep meetings to no more than two hours
• Give notice of meetings – set the meeting dates for the entire year in advance
• Provide an agenda – send agenda and minutes of the previous board meeting to the board in advance of the meeting, so board members come to the meeting prepared
• Begin the meetings on time!
• Invite staff and outsiders, when appropriate, to keep the board informed and engaged
• Know the decision making methods – should be included in the organization’s bylaws

If your organization follows the above board related guidelines, it will be able to create a Board capable of effectively overseeing the organization’s operations and finances and be in a position to prevent or detect the widely publicized improprieties. Further, the Board has the legal duty and authority to set policies, and monitor compliance with those policies. Over the next several months, we will discuss the various governance policies that your organization should implement in order for your organization to improve transparency and accountability at a time when governance issues are being widely scrutinized by Congress, the IRS, the exempt organization sector (your constituents), Attorneys general, and the media.


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