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Better governance starts with better ED and board relationship

January 16, 2012

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Most not-for-profits are led by an executive director (ED) and a board of directors — separate parties that, nevertheless, rely on one another to be effective. For example, if an ED fails to keep her board apprised of a developing financial crisis, the board can’t develop strategies to address it. Or, if a board fails to provide its ED with performance feedback, he may not know how he needs to improve — and, by extension, how the organization as a whole could be doing better.

Many boards and EDs do work well together, of course. Nevertheless, a recent study by CompassPoint Nonprofit Services and the Meyer Foundation found that there’s plenty of room for improvement.

Survey says

The study, Daring to Lead 2011, revealed that, of the more than 3,000 EDs surveyed, only 20% were “very satisfied” with their boards’ performance. Almost 50% of respondents were “somewhat satisfied” with their board, leaving 32% who were “a little dissatisfied” or “very dissatisfied.”

Blame for less-than-stellar board performance shouldn’t fall to the board alone, though. The majority of survey respondents admitted to spending 10 hours or less per month working with or supporting their board. Despite frustration with issues ranging from board members’ low fundraising participation rates to receiving little to no job performance feedback, the typical ED devoted only 6% of his or her working hours to board business.

Wherever your not-for-profits falls on the spectrum, it can probably benefit from improving the board’s effectiveness. This starts by opening the lines of communication between the executive office and the boardroom — and committing to keeping them open.

Rules of engagement

Boards can’t do their job if they don’t know what that job is. Not surprisingly, the most common source of conflict between boards and EDs is confusion about roles and responsibilities.

Make sure your board understands that it has specific duties that are distinct from the ED’s. In effect, the board governs and the ED manages. The board makes policy and maintains the organization’s financial integrity and the ED implements policy and ensures that the not-fpr-profits runs efficiently and effectively.

Consider writing a job description for your board as well as lists of expectations for individual board members. (For examples of specific duties, see the sidebar “Board member to-do list.”) And be sure to provide all new board members with a thorough orientation to your not-for-profit’s mission, goals, policies and operations. The orientation process should include mentorship by an experienced board member who has a good working relationship with your ED.

Overlapping spheres

Although not-for-profits have separate spheres for executives and boards, in reality the jobs often overlap. Your board members, for example, may be expected to court big donors and assume such operational responsibilities as organizing fundraisers and contacting grant-making organizations about funding.

Similarly, your ED doesn’t determine your board’s meeting agendas, but his or her input is essential if the board is to focus on your organization’s critical issues. While your board members should never act as an ED’s rubber stamp, they must recognize that the ED is probably better acquainted with your organization’s most pressing needs. What’s more, your board needs to create an environment that invites your ED to seek its assistance when he or she doesn’t have time to solve a problem or simply can’t solve it alone.

Multiple surveys have found that the board is a key factor in how satisfied not-fpr-profits EDs are with their positions — as well as how long they stay in them. By seeking the ED’s opinion often, boards foster a partnership, rather than a subordinate relationship.

Recognize roles

If your board and ED don’t work well together, your not-fpr-profits may suffer the consequences. To help improve communication, boards must ensure that their members know their responsibilities — and how they differ from the ED’s. Likewise, EDs must recognize the role they play in improving board performance. This means they should try to increase the amount of time they devote to board business.

Board member to-do list

Depending on their mission and size, different not-for-profits may expect their boards of directors to assume different responsibilities. But for governance to be effective, your not-for-profit’s board should consider the following duties essential to the job:

•    Perform financial oversight and essential fiduciary duties of care, loyalty and confidentiality.
•    Create and maintain a strategic plan.
•    Hire the executive director and regularly evaluate his or her performance.
•    Ensure that executive compensation is reasonable.
•    Write policies, including whistleblower, conflict-of-interest, gift acceptance, related-party transaction, and document retention and destruction policies.
•    Maintain an audit committee of financially knowledgeable board members to oversee internal and external audits.
•    Regularly review risk exposure, ensuring that insurance policies are in force, internal controls are enforced and investment policies are followed.
•    Develop a leadership succession plan, as well as other emergency procedures.

For additional information contact Michael Borowitz at [email protected]

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a Clark Schaefer Hackett professional. Clark Schaefer Hackett will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.

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