Why Effective Boards Are Essential for the Organizational Success of Nonprofits

Meeting of board members
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Think of the last time you were really successful with a habit change, whether it was a new diet, exercise routine, or lifestyle change of some sort. If you think back about what made it successful, a large part of it was probably due to having someone who held you accountable and/or encouraged you in your efforts. Alternatively, think about the last major life decision you made. Chances are, you probably also asked other people for advice – people you trusted and knew had your best interest at heart.

This is no different than the function of a board of directors in many organizations. Particularly in nonprofit organizations, they serve the critical role of providing strategic direction, wise counsel, and holding executives accountable. They can also be great resources for fundraising and serve as high-visibility champions for the organization.

However, the flip side is that ineffective boards end up costing the organization wasted time and effort if they’re embroiled in internal conflict. Ineffective boards increase the risk of poor financial management and financial instability, as well as increased chances of fraud and mismanagement. This uncertainty and instability can often trickle down to staff and volunteers, leading to increased turnover.

This post will go through the three major ways in which an effective board of directors is vital for nonprofits to thrive as well as basic ideas to build this capacity.

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1. Boards Can Help with Organizational Accountability and Growth

Similar to habit changes or personal growth goals, boards serve an important role in holding executive leaders accountable for performance and growth measures. They serve as the manager of the executive director/CEO and hold direct authority to hire, fire, and discipline this person if necessary. Having a well-functioning board that is able and willing to do this can support the organization in ensuring commitments are met, both in the short-term as well as the long-term (i.e., in a strategic plan).

In order to achieve this, the board itself must have clear governance structures and bylaws in place. These rules of process and decorum dictate what’s allowed and what’s not allowed, but more importantly, ensure that things get done. Understanding these bylaws and potential conflicts of interest can help reduce the occurrence of unproductive conflict and mismanagement. However, knowing the process is only part of the solution. Having the right people is also important.

2. Having the Right Board Members Can Help with Governance and Credibility

Over the past decade, there’s been a larger shift for boards to be more diverse and representative of the communities the organization serves. While this is important for a multitude of reasons (diversity of thought, credibility of experience, etc.), a board with diverse skill sets can be even more effective. Being able to look at the structure and direction of an organization from the lens of different functional lenses can make sure nothing is missed. For example, viewing a potential growth strategy from the lens of a lawyer, an executive, a CPA, and an economist can help ensure nothing is overlooked and/or plan for any potential barriers.

To achieve this, board recruitment should be intentional in identifying the skills and knowledge gaps in addition to any ethnic/gender considerations. Once these folks are identified, having a strong onboarding and alignment process will give them the tools to truly act as stewards of these elements. Often, they come with their own networks, and being able to tap into them can exponentially increase the organization’s impact.

3. Boards Can Help Plan and Build for the Future

While it’s not their role, executives at nonprofits often have to play the role of firefighter and focus on day-to-day emergencies. At times, this is crucial, as there can be situations that require a higher level of oversight and intervention. A well-functioning and effective board of directors can help support the CEO/ED in keeping their focus on the big picture and thinking towards the future. This includes encouraging/guiding the leader to start thinking about succession planning and building a bench of future leaders. The sooner organizations begin this process, the stronger the skill sets of leaders and employees at all levels.

To achieve this, boards should have mechanisms in place to objectively rate the performance of the CEO/ED, as well as a process to obtain objective data. It’s encouraged that boards should look beyond organizational metrics such as growth and revenue, but include data around leadership ability and culture setting. While harder to track, this has a profound impact on the organization’s ability to achieve its goals. An organization with high turnover will constantly be in crisis mode and have difficulty setting its sights on the future.

Where to Go from Here

Success is a team effort – meaning that high-performing organizations have boards that are not just providing oversight, but rather give appropriate support, accountability, and diverse perspectives. Similar to the analogy at the beginning around habit change, effective boards of directors have a powerful capacity and responsibility to steer nonprofits towards growth and stability.

Two questions for you to consider in your work:

  • How can your organization enhance Board effectiveness for greater impact?
  • In what ways can you contribute to or learn from the strategic vision provided by Boards?

 

The strength of nonprofits is not just their mission but in the strategic guidance, accountability, and vision provided by the board.

Author
Chris Wong
Chris Wong

Chris Wong is a certified executive coach, licensed therapist, and seasoned leadership development professional with a proven track record in the nonprofit sector. He specializes in guiding leaders through strategic prioritization, confident navigation of difficult conversations, and fostering high-performing cultures. As a facilitator and public speaker, Chris has trained hundreds of leaders and spearheaded successful organizational projects. His extensive experience spans nonprofit, health insurance, and government systems and encompasses leadership development, strategic planning, change management, and diversity, equity, and inclusion.

Currently, he partners with human service nonprofit executives to execute strategic plans, addressing challenges such as conflict resolution, culture enhancement, productivity improvement, and fostering inclusive work environments.

Connect with Chris on LinkedIn and at www.myleadershippotential.com

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