The Business of Nonprofit Governance

Too often a nonprofit’s board members are relegated to a secondary role – help raise some money, add name value to the letterhead, conduct an obligatory meeting now and then. They generally approve of what the nonprofit is doing and hope that things will go forward as planned.

“Hope is not a strategy,” said Lisa Allison, a former board member of several nonprofits in Florida and Utah and currently the Bitterroot Humane Association in Montana. “Good governance allows everyone to know their roles and assists with proper communication both internally and externally. It assists a Board in serving the stakeholders fully, properly, and in a transparent manner.”

Serving stakeholders is the linchpin of responsible nonprofit governance. Since nonprofits are created to deliver public benefits, the public is a key stakeholder and board members are the watchpersons for the public interest. Board members have a fiduciary obligation. They oversee the annual budget, monitor revenue and expenses, call for external audits and see to it that the organization follows the law.

Nonprofits follow different models of governance: a policy board, with the CEO or executive director doing the lion’s share of decision-making; a managing board, with several functional committees doing a lot of work; or, a collaborative or coop board, with members who share authority equally. No matter the form, Allison reminds that “all have a focus on achieving the organization’s mission and ensuring the organization is stable.” Foundation grants for programs are important but a board is the steward of the nonprofit’s long-term thriving and service to community needs. 

What can be done to keep a nonprofit board from going off the rails? Allison, a retired veterinary professional, has a useful prescription. “Revisiting governance and training for the board on a regular basis keeps the organization healthy, like an annual physical.  It makes sure everything is functioning properly and hopefully finds and addresses any problems before they spiral out of control.” 

Slippage occurs when boards lose sight of the mission, depend on old data or records, ignore tax and legal changes, shrug off serious mistakes by the senior executive or become partisans in internal squabbles. Being alert to all these considerations might sound like drudgery, but Allison affirms that “sitting on a volunteer Board is a reinvestment in my community.  It’s a gift, being able to serve, being able to help.” © Copyright 2021 The Grantsmanship Center