Role of Board of Directors Within a Nonprofit Essay

At first glance, one might think that the role of a Board of Directors (“Board”) would be based upon a standard set of criteria that would ultimately make the formation and function of a Board more straightforward - Role of Board of Directors Within a Nonprofit Essay introduction. As I researched into the special role a Board would have within a non-profit, I discovered that the role is also determined by the functionality of that same Board.

Functionality of a non-profit’s Board is clearly dependent upon several factors that include the selection and formation of the Board, the individual roles of each Board Officer, the Life Cycle of the Board, the selection and role of your Executive Director, tensions between the Board and the Executive Director and whether that same Executive Director would have to be replaced. Furthermore, if the Non-profit begins to experience “Founder’s Syndrome” or has a retiring founder also plays a pivotal part in determining the role of the Board.

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A typical Board includes a Board Chair, Chairperson, or President, a Vice Chair, a Secretary and a Treasurer. The Board may also include a Committee Chair and a Board Member. The actual selection of each member AND their acceptance of the Board position, as well as the size of the Board are key pieces that helps define the direction of the Board. “It is a critically important function for non-profit organizations to find and retain qualified, experienced Board members and officers. (Grobman/Sand 2008) Finding suitable Board members is an actual process dependent upon the needs of the non-profit. A founding Board is very important to the non-profit organization because the Board’s success at governing and leading the organization is dependent upon several characteristics. These include the need for a Board with a diverse array of skills from financial, marketing, technical, entrepreneurial, legal and social service.

Parents of children serviced by your non-profit and other volunteers who work diligently for your organization are also potential Board members. Outside of actual skills to govern and lead the non-profit, having a passion for the non-profit’s mission and a commitment to the work it wishes to accomplish are just as important to the life and sustainability of the organization. A Board should also be responsible for “inspiring the organization, the other board members, and volunteers to do good work. ” (netplaces, 2012)

Although serving on a Board may look glamorous or read well on one’s resume, there are several factors that every potential member should know prior to considering and accepting a Board position. “Serving on a non-profit board has serious fiduciary, legal, and ethical responsibilities. Board members can be held accountable for dereliction of their duties. ” (Fritz, 2012). Jill and Daniel Welytok, authors of Nonprofit Law & Governance for Dummies, recommend obtaining answers to questions that will help you uncover pertinent information regarding the nonprofit seeking you to fulfill a Board position.

Questions to consider would be who is on the current board and how did they get there? How long do board members serve? How many board members are needed to take action? What committees are part of the board? Can you see the books and records of the non-profit? How large is the overall budget? What are the responsibilities of directors? Are payroll taxes of the organization up to date and/or is it being sued? “If you and the organization are not well matched, you may be bored at best and appalled at worst.

But when both volunteer board member and organization are in tune with one another, the experience can be both personally and professionally rewarding. ” (Fritz, 2012) Responses to questions such as those previously stated will help give you clarity regarding the non-profit and whether your service on that Board would be a good fit for you. A wonderful source for someone considering a Board position is a book written by Doreen Pendgracs, Before You Say Yes…A Guide to the Pleasures and Pitfalls of Volunteer Boards (Dundurn Press, 2010).

Of particular interest would be the chapter entitled “Are We Compatible” whereby “Pendgracs says we should think about why we are being recruited for a board and then make sure that the reasons match what we can or want to provide to a Board. ” (Fritz, 2012) The book is full of information that helps guide the recruited member to a more informed decision. Once members have been selected and have subsequently accepted their roles, moving on to the official/legal formation of the Board and the first meeting would be the next phase in ensuring the functionality of the Board.

However, it should also be noted that having a strategy in place for keeping Board members is as vital as recruiting them. Formation of the Board is really dependent upon the needs of the Non-Profit and determining those needs is also a vital piece that will help to determine not only the direction and success or failure of the organization, but also of the Board. Smaller Boards can govern if their role is strictly setting policy that is subsequently implemented by designated staff. Larger Boards should be formed if the non-profit has extensive programming, fundraising or other needs.

Committees can also be formed to further alleviate the need for the Board to be a part of work that can be easily delegated as the non-profit grows. Either way, “the most important and lasting legacy the initial Board of Directors can pass on is the recognition that the work they do on behalf of the organization is held to a higher level than anything else. ” (Goettler, 2012) Further, “Many states have laws governing the responsibilities of the Board of Directors. “ (Fritz, 2012) These guiding principles can be found within Non-Profit Corporate Law and they include the Duty of Care, Duty of Loyalty, and the Duty of Obedience.

These three principles simply state that each Board member must exercise reasonable care when making decisions on behalf of the organization, they must always act in the best interest of the organization they are serving, and they must always honor and be faithful to the organization’s mission. Once basic Board member responsibilities are understood, setting a first meeting to roll out the Non-Profit’s By-Laws, to formally accept corporate documents, elect officers, delegate responsibilities and factor in other housekeeping duties is a significant piece to forming a solid base to your Board.

Types of housekeeping items to include within the formation of the by-laws would be setting the “titles, duties, length of term, and process for the election of offers” (Grobman/Sand, 2008), minimum and maximum number of Board members, terms of service that would be staggered so members will not be rotating at the same time, setting a limit to the number of terms a member can serve, and developing a conflict of interest policy that all Board members must sign. Unlike the first meeting of the organization, which can be an opportunity for brainstorming and general planning, the first meeting of the Board of Directors represents the beginning of your organization as a legal entity. ” (netplaces, 2012) The special role of the Board of Directors of a Non-Profit organization is to govern and control the operations of the Non-Profit. The Board’s first and most important responsibility, after determining the non-profit’s mission and purpose, is to hire the Executive Director. It is also their duty to support and evaluate the Executive Director.

The Board must also set policy that dictates the manner in which the Non-Profit will function, determine and monitor the programs and outcomes they wish the Non-Profit to achieve, financial matters related to budget, investments and fundraising, and carrying out their mission. A Board must remember that their job is to set policy and their Executive Director’s job is to implement those policies and delegate to staff through daily operations. Having the Board develop standard operating procedures will help to ensure that desired outcomes are met favorably. Brown/Ruhl, 2003) The Board is also responsible for setting short and long-term plans, ongoing Board development which includes selecting new members, participation in appropriate community activities and ongoing advisement with the Executive Director. A competent Board will also help to ensure “legal and ethical integrity…and is ultimately responsible for adherence to legal standards and ethical norms”. (BoardSource, 2012) An excellent article found at the BoardSource website is called “The Ten Basic Responsibilities of Non-Profit Boards”.

It lists and describes each responsibility in an easy to read, easy to follow manner and can be found at www. boardsource. org/Knowledge. asp? ID=3. 368. In addition to the Board’s responsibilities as one governing body, the roles of each “Organizational Officer” (Grobman/Sand, 2008) of the Board are standard, but also vary dependent upon the life cycle of the Board and the Non-Profit. The changing role of the Board as seen through the existence of a life cycle stage-based approach will be discussed later in this essay.

However, as previously mentioned, individual roles of each Board Officer are important to the operation of the Board as a whole. The Chairperson, Chair, or President is in charge of leading the Board meetings and appointing committee chairs. “Make no mistake: this is not a role that should be allowed to stay cast in stone…It will vary over the years…the person must have a sense of vision for the organization and a strong sense of its mission…and the ability to see that vision translated into action. ” (Brown/Ruhl, 2003) The Vice-Chair takes on the duties of the President or Chair when they are absent or if they should resign or pass away.

The Vice-Chair’s duties are often listed in the By-Laws or by vote. They may also automatically become the next President. (Grobman/Sand, 2008) The Secretary is a member of the Board who takes all “minutes” for the Board meetings, distributes the minutes, maintains and manages the organization’s records and is familiar with legal documents. The Treasurer manages the Non-Profits finances, issues financial reports to the Board, administrates fiscal matters of the organization, provides an annual budget to the board for members’ approval, and ensures the development and board review of financial policies and procedures.

Depending upon the Non-Profit’s needs, the Board may also consist of a Committee Chair and one or more Board Members. Following the role of the Board and each of its organizational officers, it is my opinion that the role of the Executive Director is the next crucial element to the life of the Board and of the Non-Profit. The Executive Director reports to the Board of Directors, and is responsible for the organization’s consistent achievement of its mission and financial objectives, and should possess specific core competencies and operational skills.

An ideal candidate for an Executive Director position has a passion for mission, has strategic planning and decision making skills, is involved with resource generation, financial management, talent management, operational proficiency, communication, and problem-solving. The director also possesses cultural competence, and is involved in outreach/community interface activities and demonstrates a variety of personal traits along with an executive demeanor. (Alphonse, 2012) Ideally, the Board of Directors and the Executive Director will form a relationship that is conducive to the success of the organization.

Although ideal, there are occasions when conflict between the Board and its Director can arise. As previously stated, the Board’s role within the organization is to set policy and govern the Non-profit. The Director’s role is to implement those policies. Confusion and conflict arise when those duties are not understood or there is ambiguity between the two. “There are no firm guidelines about where board oversight leaves off and executive management begins. In this grey area, struggles for power and authority often emerge. (Governance Matters, 2012) Those grey areas involve things like lack of information or clarity regarding the difference between governance and management, when there is a change or shift in the roles of the Board or Director, or there is a transition from one executive director to another, the organization’s needs have changed or are no longer clear, Board members lack focus, lack of appropriate evaluation procedures of the Executive Director, ineffective communication stream between the Board and the Executive Director, incompatible assumptions, business styles and personality conflict.

Once the area of conflict is identified, “the solution is to get people talking and listening to one another” which “requires the Board and the Director to come to an understanding of the issues at hand, and to design a series of conversations around the real issues. ” (Governance Matters, 2012) Communication is the key to finding resolutions and the content of what is discussed is the factor that determines whether or not that key will work! One communication strategy would be to clarify board oversight roles and develop mechanisms, such as a Board self-assessment that is completed by the Board AND the Director.

This allows for a comparison between the two viewpoints and identifies areas in need of improvement. Outside of Board assessment, it is also important to set aside the meetings that are full of reports centered on management and focus on having discussions relating to vision, strategy and policy. It is also extremely important to revisit and discuss Board roles during a period of transition. Finding common ground about the future direction of the organization and the type of management required will help to air out any conflict or gray area surrounding the abilities of the Director to move the organization forward.

Having procedures in place on how the Director will be evaluated and held accountable leaves little room for that gray area to lead to conflict. Establishing annual goals, designating who will evaluate the Director’s performance and offering informal, regular feedback will help the Director have a more solid understanding relevant to his performance. When conflict ensues and discussion have taken place, the Director will either choose to leave, rise to the challenge by improving performance, or the Director will be asked to resign.

In some instances, the problem is not the Executive Director, but a member or officer of the Board of Directors. In situations such as this, “your organization’s bylaws should include standards of conduct for the board and term limits. Board member duties and expectations in terms of attendance, and contributions… financial and workload… should be explicitly stated. If these expectations are in place, it is easier to point out a member’s deficiencies and to defend the decision to remove a board member. ” (Fritz, 2012) Nonprofit Charitable Orgs has a wonderful, detailed article entitled “How to Boot a Problem Board Member”.

Just as the non-profit organization has life-cycles, as described in “Nonprofit Lifecycles” by Susan Kenny Stevens, Ph. D. , the Board of Directors has stages as well. According to Karl Mathiasen, III, in his article “Board Passages: Three Key Stages in a Nonprofit Board’s Life Cycle”, Mathiasen describes The Organizing Board, The Governing Board and The Institutional Board. Stage One, or the Organizing Board, he describes as being either a board that follows a leader/founder or a board that leads or governs an organization.

He also illustrates this type of Board as being “small with a membership that shares a commitment to the mission or purpose of the organization and a willingness to do what needs to be done. ” During, Stage two, which is The Governing Board, there is an assumption of “greater responsibility for the organization’s well- being and longevity through planning, oversight and general accountability for the performance of the organization. ” Board and staff relations are better balanced and many utilize committees to organize the Board’s work. Most Boards stay within this stage throughout the organization’s lifetime and remain successful.

Stage Three, The Institutional Board, consists of very large Boards who are often “movers and shakers” within the community. The size of the Board allows for more delegation of responsibilities and Board membership is more prestigious. An interesting concept to also consider is the “Founder’s Syndrome”. The author coins this phrase as that period of time between the organizing board and the governing board where unresolved, recurring problems and experiencing one crisis after another without Board intervention causes friction and hard feelings with the founder.

This syndrome can either cause the organization to fold or the founder will be forced out unless some form of mediation is engaged. A final, crucial factor to reflect upon while pondering your own theory relevant to the key role of a Board of Directors is that their role changes. According to Stevens, in her book, Nonprofit Lifescycles, several different areas within a non-profit organization are impacted by her theory that there are seven lifecycles of a non-profit organization.

For the purpose of this paper, I will merely be discussing the evolving role of governance within an organization as it transitions from one lifecycle to another. Stevens’ book includes a chart called the Nonprofit Lifecyles Reference Guide, which includes diagnostic characteristics and performance outcomes of the governing Board within each lifecycle. The seven lifecycle stages of a non-profit are: idea, start-up, growth, maturity, decline, turnaround, and terminal. “The lifecycle approach to organizational growth and maturation is grounded in at least a century of developmental and organizational theory.

It is an eminently practical model that takes a holistic view of the entire organization and captures stage-related growing pains that generally accompany each phase of development. ” (Stevens, 2008) Interestingly enough, the types of qualifications a Board may be seeking from its officers, directors and staff are also impacted by the lifecycle theory as those qualifications must evolve as well. Beginning with the idea stage where no Board exists, only the people with a personal connection to the mission, it evolves to the start-up stage where they operate as a committee.

Moving on to the growth stage, the stage where many organizations stall or exist for a long period of time, Board structure actually starts to form. During the mature stage, the Board is organized for “maximum effectiveness” through setting direction and leaving the management to the executive director. If the organization should reach the decline stage, it is generally because the Board is unaware that there is anything wrong until money runs out. This is the point at which having a Director with the skills to reach the turnaround stage is imperative.

A strong leader who is willing to step outside of the organization’s comfort zone to design and implement a turnaround strategy is a critical key. The Board must be ready, willing and able to support the Director and trust that he/she has the skills necessary to pull the organization out of decline. The Director must also be open to “objectivity, support and advice” from its Board during the turnaround stage. It is my opinion that this is the stage, more than any other, where the importance of an Executive Director and its Board working collectively to reach its goals, is the most critical.

The life of the Non-Profit is dependent upon this more than ever. Finally, if turnaround isn’t successful, the obvious ending stage would be the decline stage. At this point, the Board has typically lost its initiative and at some point may move forward in conducting the final closing responsibilities for the Non-Profit. Many factors contribute to the role or functionality of the Board of Directors for a Non-Profit organization. Each is a crucial piece to a larger puzzle, without which the organization could potentially flounder or fail.

Carefully selecting board members, clear identification of individual roles within the Non-Profit, understanding your organizations life cycle, working effectively through issues as they arise and continuously committing to effective communication are all strategic elements to building a successful Non-Profit Board of Directors.

Bibliography

Grobman, Gary M. , The Nonprofit Handbook, Harrisburg, PA: White Hat Communications, 2008. Print. Brown, Howard H. , and Donald L. Ruhl, Breakthrough Management for Not-for-Profit Organizations, Westport, CT: Praeger Publishers, 2003.

Print. Mathiasen, Karl III, Board Passages: Three Key Stages in a Nonprofit Board’s Life Cycle, Washington, DC: National Center for Nonprofit Boards, 2009. Web. VCG Governance Matters. “Executive Director Conflict: Board/Executive Director Tensions”. Governance Matters to Nonprofits that Protect Our Environment. 2006-2011. VCG Governance Matters. November 2012. Web. Boardsource. “Ten Basic Responsibilities of Nonprofit Boards. ” Boardsource: Building Effective Nonprofit Boards. 2010. Boardsource. November 2012. Web. Murray, Jean. What Should a Conflict of Interest Policy for My Corporate Board Include? ” About. com Nonprofit Charitable Orgs. 2012. New York Times Company. November 2012. Web. Fritz, Joanne. “Responsibilities of Your Nonprofit Board of Directors. ” About. com Nonprofit Charitable Orgs. 2012. New York Times Company. November 2012. Web. Fritz, Joanne. “A Guide to Volunteer Board Service – A Review. ”

About. com Nonprofit Charitable Orgs. 2012. New York Times Company. November 2012. Web. Fritz, Joanne. “Your Nonprofit’s First Board of Directors. ” About. com Nonprofit Charitable Orgs. 012. New York Times Company. November 2012. Web. Fritz, Joanne. “Before You Serve on A Nonprofit Board. ” About. com Nonprofit Charitable Orgs. 2012. New York Times Company. November 2012. Web Goettler, Jim. “Fiduciary Responsibility fo the Board. ” Netplaces. 2012. New York Times Company. 2012. November 2012. Web. Goettler, Jim. “Acceptance of Corporate Documents. ” Netplaces. 2012. New York Times Company. 2012. November 2012. Web. Goettler, Jim. “Choosing the Initial Officers. ” Netplaces. 2012. New York Times Company. 2012. November 2012. Web.

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