Board governance

# Board governance

**September 22, 2022**

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# Plan for today

.box-4.medium.sp-after[What do boards do?]

.box-7.medium[What makes a good board?]

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# What do boards do?

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# Typical nonprofit structure

.center[
<figure>
 <img src="img/04/nonprofit-structure.png" alt="Nonprofit structure" title="Nonprofit structure" width="70%">
</figure>
]

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# What is a board?

.box-inv-4.medium.sp-after[A group of volunteers who help direct the nonprofit]

.box-inv-4.medium[The board sets the strategic vision for the nonprofit]

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# Requirements

.box-inv-4.medium[Legal requirements for being a nonprofit board member:]

.box-4.large[Be 18+ years old]

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# Board member legal duties

.float-left.center[.box-4.small[Due diligence]&emsp;.box-4.small[Monitor finances]&emsp;.box-4.small[Supervise management]]

.float-left.center[.box-4.small[Put nonprofit's interests above own]&emsp;.box-4.small[Avoid conflicts of interest]]

.float-left.center[.box-4.small[Keep nonprofit in line with law and mission]&emsp;.box-4.small[Avoid mission drift]]

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# Board responsibilities

.box-4.small[Select new board members]

.box-4.small[Appoint, advise, evaluate, dismiss the CEO/executive director]

.float-left.center[.box-4.small[Approve policies and programs]&emsp;.box-4.small[Maintain clear mission and purpose]]

.box-4.small[Establish standards for performance and hold the organization accountable]

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# Board responsibilities

.float-left.center[.box-4.small[Ensure sound financial management and transparency]&emsp;.box-4.small[Approve budget]]

.float-left.center[.box-4.small[Approve plans for fundraising events]&emsp;.box-4.small[Contribute and participate]]

.box-4.small[Encourage outside participation in the organization.]

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# Where does management fit?

.center[
<figure>
 <img src="img/04/nonprofit-structure.png" alt="Nonprofit structure" title="Nonprofit structure" width="35%">
</figure>
]

.box-4.smaller[Executive director/CEO and staff]

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# Where do boards come from?

.box-inv-4.medium[Elected]

.box-inv-4.medium[Self-perpetuating]

.box-inv-4.medium[Hybrid]

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# Elected boards

.box-inv-4.small[Nonprofit more responsive to members' needs and priorities]
]

.box-inv-4.small[Membership divisions reflected in board]

.box-inv-4.small[High turnover makes it hard to sustain long-term strategies]

.box-inv-4.small[Board skills may be uneven because of popularity contest]
]

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# Self-perpetuating boards

.box-inv-4.small[Continuity of culture, goals, and priorities]

.box-inv-4.small[Can target members with specific skills]
]

.box-inv-4.small[May become unrepresentative of the community]

.box-inv-4.small[Too stable to respond to changes]

.box-inv-4.small[Often give too much authority to the CEO/ED]
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# Hybrid boards

.box-inv-4.small[Combines the advantages of elected and self-perpetuating boards]
]

.box-inv-4.small[Different interests and loyalties may lead to a stalemate]
]

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# Executive committee

.float-left.center[.box-4.small[Chair]&emsp;.box-4.small[Vice chair]&emsp;.box-4.small[Secretary]&emsp;.box-4.small[Treasurer]]

.box-inv-4.small[Executive board can have the power of the full board for lots of decisions]

.box-inv-4.small[Other committees are useful too, depending on size and needs]

.float-left.center[.box-4.smaller[Finance committee]&emsp;.box-4.smaller[Marketing committee]&emsp;.box-4.smaller[Strategy committee]]

???

Can have the power of the full board to make decisions with the exceptions that it cannot:

- Fill vacancies on the board
- Adopt, amend, or repeal bylaws
- Have powers inconsistent with those established when it was created by the board.

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# Special kinds of boards

.box-inv-4.less-medium[Advisory boards]

.box-4.small[Famous, rich, well-connected, or expert people who want to be affiliated with the nonprofit but don't have time for actual governance]

.box-inv-4.less-medium[Client boards]

.box-4.small[Members of the community the nonprofit serves who consult with the governing board and executive team]

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# Decisions to be made

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.box-4.medium[Find the board for a nonprofit you're interested in. Who's on it? What expertise do they bring?]

.box-4.medium[Find a nonprofit with an advisory board. Who's on it? Why do you think the nonprofit sought them out?]

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# What makes a good board?

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.box-7.large["Effective governance by the board of a nonprofit organization is a rare and unnatural act."]

.box-inv-7.medium["Nonprofit boards are often little more than a collection of high-powered people engaged in low-level activities."]

???

<https://hbr.org/1996/09/the-new-work-of-the-nonprofit-board>

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.center[
<figure>
 <img src="img/05/taylor-chait-holland.jpg" alt="The New Work of the Nonprofit Board" title="The New Work of the Nonprofit Board" width="75%">
</figure>
]

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# What should board members bring?

.box-inv-7.large[Wealth, wisdom, work?]

???

This can omit critical voices though

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# Board recruitment and diversity

.box-inv-7.sp-after[Why care about board diversity?]

.box-7.small[Expertise (legal, fundraising, fiscal, personnel management)]

.float-left.center[.box-7.small[Ages]&emsp;.box-7.small[Races and Religions]]

.box-7.small[Backgrounds (government, business, nonprofit)]

.box-7.small[Experiences (clients of the nonprofit, advocacy work, volunteering)]

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# Best practices

.center[
<figure>
 <img src="img/05/best-practices.png" alt="Board best practices" title="Board best practices" width="55%">
</figure>
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# Best practices

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.pull-right[
<img src="05-slides_files/figure-html/board-practices-diffs-1.png" width="432" style="display: block; margin: auto;" />
]

???

> The top 10 organizations reported using 86% of the correct procedures, whereas the bottom 10 use 70% (a difference significant at the .001 level, with a t value of 3.7). The correlation between reported use of prescribed board practices and correct procedures is r = .32 in the restricted sample; the same correlation in the full sample is r = .24. The relation is stronger in the sample of the most and least effective organizations, although the increase is not as great as expected. (p. 157)

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.box-7.large[Your most important things]