Fast Company

Investing in Nonprofits: What Funders Need to Know About Boards

 

A big lesson learned from the past year’s corporate meltdowns is the role of governing boards in leading and minding the business. Funders who seek to invest their dollars in nonprofits will be wise to choose organizations whose boards are governing well.

After all, it is the nonprofit boards who have the authority and responsibility to guide and shape the mission - the organization’s compelling value; the vision - the organization’s greater potential; and most significantly, the organization’s financial health and vitality to carry out its work.

Here are the 11 indicators of an effective board that is engaged, responsible, and focused on advancing an organization for success:

  1. A board chair who can personally articulate a compelling case for the organization, attends and leads board meetings (with collaborative preparation with the CEO), and contributes financially and meaningfully
  2. A core group of board officers in addition to the chair - vice chair, treasurer, and secretary - who also demonstrate their commitment in meaningful ways, including financially
  3. Board members, all of whom contribute financially – 100% without any exception (although there can be a range based on personal capacity), and with at least 70% in-person attendance at board meetings
  4. Board members from a diverse mix of perspectives and backgrounds so that the board’s vision, expertise, and relationships are rich and broad, not limited and narrow
  5. No more than 6 board meetings annually…usually 4 is plenty for local boards, and 2-3 longer sessions for national and global boards (too many board meetings means a lack of efficiency and focus)
  6. Active board committees – a few to make board work efficient (possibly executive, governance, development, finance, audit), but not an over-abundance of committees (which becomes cumbersome and overly time-consuming)
  7. Board meeting agendas focused on larger governance, strategic, fundraising, and financial matters, rather than operational matters
  8. A board that assesses and iteratively plans organizational advancement with the CEO based on measurable results - quantitative and qualitative
  9. Leadership succession planning for board officers as an ongoing process so that people are identified, groomed, and readied in a pipeline
  10. An outstanding chief executive officer working in partnership with the board chair and the board
  11. A thoughtful process for evaluating and compensating the chief executive officer

Not only will information about such matters help funders to better assess the health and vitality of nonprofit organizations, but funders’ interest in board effectiveness will motivate nonprofits to upgrade their board practices.

Through investments in nonprofits with true governance, funders can help drive nonprofits to be more ambitious and successful in advancing their important work in our communities and around the world.

 

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