Not-for-profit (NFP) boards offer critical support to their organizations. Their multifaceted roles integrate management, financial oversight and strategic direction, all while generating operational cash flow from charitable fundraising efforts. In many cases, the effectiveness of these boards correlates directly to the success of the organization, so it is crucial to ensure that each member’s time and talents are used efficiently to make a positive impact. After working with hundreds of not-for-profits, we have recognized several common qualities that highly effective boards possess:
1) Clear understanding of roles and responsibilities
At the foundation of every successful board is mutual agreement and acceptance of the members’ roles and responsibilities. Three of the most important activities that an NFP board is charged with are: determining and upholding the organization’s mission, drawing a line between governing and managing, and diligently monitoring financial operations.
- People join NFP boards because they have a passion and vested interest in an organization’s mission and objectives. To help fulfill these, boards must provide active leadership and strategic direction for the organization. They must also provide oversight to ensure that the organization’s actions are legal and ethical.
- According to the Minnesota Council of Non Profits, boards need to govern more and manage less, Having a well-defined strategic plan that is supplemented with regular progress reports will help the board focus on the big picture goals of the organization, while trusting the staff to handle the day-to-day activities.
- According to Bridgespan, a nonprofit consulting group, providing financial oversight is an important responsibility of the board, so members should have a basic understanding of the organization’s financials.
2) Accountability and transparency
Executive boards for NFPs are equally responsible for ensuring transparency and accountability. This involves evaluating the organization’s performance as well as that of its CEO and Executive Director, addressing issues within the organization, and ensuring the authenticity of the board.
- The CEO or executive director is not only the most important member of the organization, he or she is also the only employee on the board. So while it is important for boards to provide appropriate oversight of the organization, it is equally crucial for boards to evaluate the performance of its leaders. These reviews also ensure that the goals and actions of the CEO or executive director are in line with the organization’s mission statement, priorities and long-term goals.
- The strength of organizational leadership is defined by how it identifies and handles potentially tough situations. Documented policies should be in place for managing crises and addressing complaints. In addition, boards are obligated to ensure that they recognize and avoid conflicts of interest to establish a culture of transparency.
- A board’s actions reflect on an organization and its ideals. According to a GuideStar report, it is important that while organizations raise money in support of their missions, each board member should make a personal donation in support of their goals. Boards need to also commit to diversity and inclusion, and reflect that in its composition, policies and practices.
3) Active interest in recruiting and training new board members
An NFP board is only as good as its members. Succession planning and actively identifying and recruiting suitable members helps ensure that the work and momentum of the current board continues even after members rotate off.
- Board members should be visible ambassadors for the organization. Sharing the organization’s mission, vision and values as well as being active in the community are important ways to attract individuals who share those same goals and ideals.
- Ensuring that new board members know the organization’s history and understand their individual roles, obligations and time commitments are critical during the orientation process.
- New members should understand how the organization’s basic finances work, where the funds come from and its current financial status.
4) Personal investment in fundraising
Fundraising is obviously vital to organizational health and status. According to Grant Space, understanding fundraising strategies and how the funds are being used, identifying donors and making personal investments are all key aspects of the board’s position.
- Board members are expected to make personally meaningful contributions to demonstrate their support for the organization and to serve as an incentive for donors.
- It’s expected that board members solicit individual donations, matching donations and pro-bono services.
- Board members can also add value to the organization by tapping into their networks, and bringing in people with needed resources and skills.
5) Strategic, forward-thinking mindset and willingness to act
For an NFP to grow and thrive, its board members not only need to contribute financially, but also offer innovative strategic decisions. According to nonprofit strategic planning consultant Frank Martinelli, boards need to be future-focused, with the desire and capability to generate ideas and help develop the plans to carry them out.
- Successful boards need to be open to using a wide a range of approaches and resources as they build their strategic plan.
- Know the trends in the community and prepare to take advantage of them. The not-for-profit sector is as fast-moving as the for-profit sector, so boards need to tailor their strategic plans to meet the needs of their recipients and donors.
- Once a strong plan is in place, board members—individually and as a group—must actively ensure that the plan is carried out, and continually review its relevance and effectiveness.
Not-for-profit organizations rely heavily on their board members. While many boards function without having the qualities listed above, the boards that make a positive and meaningful impact on their organizations do exhibit these traits. Clark Schaefer Hackett has significant experience consulting for not-for-profits. Contact us to learn more about how we can help your organization—and your board—achieve results.