Not-for-profit does not mean no profit – an improved governance model for non-profits

Could an improved governance model help deal with these issues? Directors often direct these types of questions to the lawyers on the board.

Gary Goodwin

Not-for-profit organizations aspire to be the best in their field. These mission-driven organizations differ from standard for-profit corporations, and directors understand the pivotal role a high-performing board can play in such an ambitious mission-driven venture. Directors often ask what approach they could follow to foster this need for a high-performance organization. Other directors express concern that board and committee meetings do not deal with important and strategic issues facing the organization. In addition, board and committee meetings can take too long for time-constrained directors. Could an improved governance model help deal with these issues? Directors often direct these types of questions to the lawyers on the board.

 

Board criteria

The form of the board should follow its function. If you have a fully formed board wondering about expanding its function and looking for something to do, then you may have an issue.

 

The board needs its own terms of reference and this end dictates the form of the board. The existing terms of reference for a board should fall within three main objectives: setting direction through the mission and the strategic plan, obtaining resources through fundraising and investing, and monitoring performance by objective setting.  

 

All organizations need a mission statement. The board should have a major role in ensuring that the strategic plan fulfills the mission of the organization. Various important and strategic issues constantly arise that can facilitate or impair the accomplishment of the strategic plan. Addressing these issues should be a major focus of the board.

 

Fundraising itself provides means to enhance capacity for the organization to increase mission impact. The organization’s mission and goals clearly convey what the organization strives to accomplish. Modern organizations use additional means to increase their impact; for example, through strategic partnerships with other organizations, and collectively through coalitions and networks. The most substantial contribution a director can make is not necessarily through financial giving. This broadened focus on other skills, expertise, connections and innovative ideas would increase the board's effectiveness in advancing the organization’s objectives.

 

Finally, objective setting and achievement of these objectives should be monitored by the board. This monitoring and reporting should be at level allowing the board to see how the organization moves toward achieving the strategic plan. Highly detailed reports are more appropriate for management purposes to facilitate day-to-day operational changes.

 

Director criteria

Achieving the organization’s goals depends on the engagement of diverse sectors of society. This requires expansion of the partnerships that share your organization’s mission to leverage resources and to achieve shared goals. Such engagement and expansion requires the broadest possible vision for the organization’s future growth, new linkages to emerging networks and innovative ideas for connecting with diverse communities.

 

Achieving a high performing board requires adding diversity. The organization must ensure the board of directors comprises members who have the time, talent and resources to help the organization reach its objectives. Making board and committee attendance as effective as possible would facilitate this board makeup.

 

Board meeting agenda optimization

Meetings should be focused directly on the board's top strategic and policy priorities. Agendas should focus on high-priority issues at each meeting with discussions led by those groups responsible for the preparation of background and supporting information.

 

The board agenda comprises the mindset of the directors. Agenda items illustrate what the board considers to be strategic and important. Engaging agendas reduce time spent on passive reports and more time spent on discussion of strategic matters.

 

Committees should continue to report on important matters and other recommendations requiring board approval. In addition, Committee chairs have the option to move their various reports to a consent agenda if no important matters or recommendations are being brought to the full board. Directors can review the reports at a later time and any questions collected as they arise. Directors could simply speak to the staff liaison if the matter is somewhat simple. In addition, the questions could be reviewed at the board level or perhaps answered in a directors mailing if the question was seen as relevant to the entire board. Other matters to be addressed by the board come up on an irregular basis. This could be standardized somewhat by clearly stating in advance what items will be addressed:

 

Important board and committee issues could include topics that cannot be fully addressed in a report and that should have the input from the full board. For example, questions on a campaign may require fuller explanation on logistics, director involvement, project management concerns and synergy with the board.

 

Committees

Committees should be designed to facilitate the operations of the board and not act as another level of management. Other committees such as Personnel Policy, Governance, Audit and Nominations could meet in person or by conference call prior to the traditional board meetings. Reports from these various committees can be provided during the board meeting. To facilitate greater attendance, the directors should be able to attend by conference call. This would also have the benefit of allowing other new directors from diverse backgrounds the ability to attend meetings. Committees can add other stakeholders to act in an advisory role and to enlarge the framework. Adding stakeholders acts as a mentoring process for eventual nomination to the board.

 

Change management and implementation

A new board structure focuses on how directors should deal with new emergent issues and how the board should refocus its energy. To facilitate this refocusing, directors must start a gradual transition in the board’s structure and processes.

 

Innovations require a change management process prior to proceeding with any implementation. Those impacted by any potential changes can act as barriers to change or as blocks of inertia. Directors must provide opportunities for input and instill a sense of urgency for the changes. Directors acting as change agents and champions should also be looking for some early wins and a way to celebrate those wins.

Potential change issues to be discussed at board meetings

Should the board’s main objectives be setting direction through the mission and the strategic plan, obtaining resources through fundraising and investing, and monitoring performance by objective setting?

 

Should there be fewer committees with directors operating at a higher level?

 

Should the Board meeting agenda be structured for mainly discussing strategic and important issues?

 

Should directors apply themselves to their areas of expertise without necessarily be expected to fundraise?

 

New board structures and processes can help maximize a not-for-profit’s impact on its mission. New governance models require careful planning and even more careful implementation.

 

 

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