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Board governance: How to mean business

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Question:

What are three tips nonprofits should borrow from the business world to achieve best practices in board governance?

Answer:

* Distinguish between governance and operations.

There is a tendency among nonprofit board members, because they are often more highly engaged than for-profit boards, to drift into management and operational issues.

To fight this tendency, nonprofits should draw a clear line between staff management-and-operations responsibility and the board’s duties, which should be limited chiefly to governance, strategy and policy.

It helps to have a simple “dashboard” that can be used for regular reporting of the most critical success measures.

In business, the bottom line is financial, but for nonprofits, there are also mission- and stakeholder-related imperatives. It’s a challenge to come up with these key metrics, but they magically focus activity.

A portion of the executive director’s compensation should be a bonus that links directly to these key measures.

* Insist on great leadership.

Nonprofits deserve outstanding leadership at the CEO/executive director level.

When a nonprofit has this kind of leader, the board needs to empower and trust her.  If you’re constantly second guessing your executive director, either you’re too deep into management or you may need a change.

Staff members need to see the executive director as a strong, empowered leader, which is difficult if the board is constantly questioning things.

Boards shouldn’t replicate, but rather augment, the duties and leadership of staff.

* Prioritize the longer view.

One thing nonprofit boards can fail to do is to have a clear view of the future and prioritize the important over the urgent.

Boards should constantly be asking: Where is the organization going? How can we do more in relation to its mission? How do we create the conditions necessary to better realize our mission over the long term?

Similarly, nonprofit boards can fall into the “we-need-money-now” track, instead of thinking about how they can enable sustainability.

Keep in mind that this applies to human and other resources, not just funds.

Earned revenue, human resources and succession planning all should be organized with a long-haul perspective. How do you ensure ongoing progress and sustainability for the organization?

These bigger issues are the ones that should most engage nonprofit boards.

Though nonprofits certainly can borrow management concepts from the business world, for-profit boards have just as much to learn from their nonprofit counterparts.

Nonprofits are generally more complex and have more stakeholders, as well as a greater range of support services to balance. In a way they have a higher bar.

Yet even with this greater challenge, nonprofits quite simply do some things better.

Their boards tend to be more engaged and have more insight into the work of the institutions they govern.

Most do a good job of keeping their thinking and energy fresh, either through term limits or rotations.

And I think that sometimes nonprofits have a sense that all the learning is one way. Ultimately, that is far from the truth.

–Compiled by Elizabeth Floyd


Kathy Bremer is director of BoardWalk Consulting, an Atlanta-based firm that assists nonprofits in executive searches, board enrichment and strategic planning.

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