Nonprofits More Confident With Governance

May 20, 2014       Zach Halper      

A growing number of nonprofit leaders are becoming more confident with their organizations’ governance policies, according to a new survey by accounting firm CohnReznick.

The 2014 Not-for-Profit Governance Survey Results, authored by Kelly Frank, CPA and John Alfonso, CPA, included responses from 260 organizations to 27 questions. One of the key findings from the survey was the number of nonprofit leaders that were experiencing growing confidence about governance procedures. The survey revealed that 84 percent of respondents indicated they are either “very confident” or “fairly confident” about current governance procedures at their organizations. An additional 14 percent were “somewhat confident” while only 2 percent were “not confident” or “not very confident.”

Alfonso said that one of the driving forces behind the increase in confidence has to do with the fact that many nonprofits have been adjusting there governance policies over the last few years. This is has been accelerated due to the emergence of new governance laws throughout the country, especially the Nonprofit Revitalization Act in New York. Passed last year, the law reformed many of the regulations that governed organizations in the state, including a streamlining of the processes governing mergers.

“We are seeing a renewed interest in enhancing governance practices, especially among executives and boards of NYS registered not-for-profit organizations that will soon be subject to the Nonprofit Revitalization Act,” said Alfonso.

Alfonso and Frank also found that the makeup of boards are changing. While boards of 20+ members are still very common, the results of the survey indicated organizations are shifting towards smaller boards. Almost 80 percent of respondents reported their boards had 20 or more members, while around 48 percent had boards that included 15 or more members. Meanwhile, boards with 5-10 or 10-15 members made up 87 percent of the respondents. Boards with 1-5 members still represented a minority, with just close to 10 percent.

“Maintaining a small board makes an organization more nimble, streamlines the decision making, process, cuts down on the time needed to make programmatic changes, makes it easier to redirect dollars where needed, and cuts down on the reaction time needed to assess risks and develop contingencies,” wrote Alfonso and Kelly.

Other key findings from the report include:

  • 58 percent of respondent organizations stated that they have an audit committee that is separate and apart from their finance committee.
  • 54 percent stated that their audit committees have between four and six members.
  • 27 percent stated that their organizations have a whistleblower hotline.
  • 68 percent stated that their annual board meetings contain an educational component.

The 2014 Not-for-Profit Governance Survey is the first in what Alfonso says he hopes will be an annual survey going forward. You can download the Survey Results for free by visiting http://www.cohnreznick.com/insights/2014-not-profit-governance-survey-results