The Top 4 Governance Mistakes that Nonprofit Boards Make
An effective board of directors plays a critical role in helping your nonprofit strive toward its mission. They provide much-needed guidance and insight for strategic planning and fundraising that helps to keep your team on the right track. But all too often, nonprofit boards underperform—even those that are strong-willed and have a passion for your mission. While mistakes are only human nature, there are some situations that can be detrimental to your mission.
Nonprofits commonly experience several governance mistakes made by their boards but aren’t quite sure how to avoid them. From failing to understand basic responsibilities to poor documentation that opens the organization up to legal issues, there are major missteps to avoid. Otherwise, you’ll spend time rectifying these problems that could be spent on making progress with your mission.
On the other hand, when governance is done right from the beginning, your board’s performance can be drastically enhanced by ensuring they’re efficient and well-informed. Making sure they’re backed by sufficient resources and knowledge can convey that you value their experience and this consideration can motivate them to make informed decisions, putting them (and your organization) on the path to success.
To help you identify these challenges within your own organization, we’ll review four leading governance issues and uncover suggestions for resolving them:
- Selecting board members without sufficient care
- Neglecting to educate and inform directors
- Failing to embrace board diversity
- Poor documentation of decisions and actions
Understanding these challenges upfront can help you create a plan for avoiding them in the first place, rather than rectifying them after they’ve occurred. Let’s dive in.
Mistake #1: Selecting Board Members without Sufficient Care
Good governance starts with selecting board members who are passionate about your mission and possess admirable qualities, such as knowledge about your community backed by a strong desire for service. Often, we select friends, relatives, and business associates, because we believe they’ll share our same vision, support our views, and make meetings bearable (maybe even enjoyable). And sometimes it’s just because we can’t find anyone else to fill the position.
Other times, we select board members who are wealthy and influential, because we believe they’ll contribute substantial amounts to our mission and connect us to other influential and wealthy people. While this may seem like a good idea, you’ll want to be certain that your board of directors is composed of individuals who are going to attend meetings, provide real oversight, and govern using their own independent and well-informed judgment.
The board recruitment process is a heavy but necessary process. After all, these individuals are responsible for putting your nonprofit on the right path, so taking care in selecting the right board members is crucial. You’ll want to look for individuals who possess the following qualities:
- Proactivity: The greatest board members readily react to challenges and aren’t afraid to ask the hard questions. They proactively strive toward positive change and stay on task to see it through.
- Passion: Board members must possess a passion for your cause in order to be true change agents and to fuel your work.
- Knowledge: Board members must be well-acquainted with your organization and mission. Look for those who have previously served on a similar board or who have been employed at a similar organization.
- Time-Oriented: Board members should have sufficient time to fulfill the role’s duties. Ambitious individuals have the tendency to overcommit, and the best intentions won’t go very far if they simply don’t have the time to contribute.
Just as understanding your potential donors and ambassadors helps to strengthen your fundraising strategies, defining your ideal board member will help locate and appeal to the right individuals for the job.
Keeping the pipeline full of exceptional candidates is a never-ending job. So long as you remain persistent and specific with your preferred qualifications, you’ll locate passionate leaders who possess sufficient qualities for putting your nonprofit on the path to success.
Mistake #2: Neglecting to Educate and Inform Directors
Nonprofits often run into the issue of board members not fully understanding their responsibilities. Directors who regularly fail to meet their legal duties of care and responsibility can hinder progress and prevent the organization from reaching its goals.
It’s up to the president, chair, executive director, and really each individual board member to hold one another accountable and correct this lack of understanding. While education and accountability are ongoing commitments, there are a few practices you can implement in your existing processes:
- Set up an orientation process. When bringing aboard new directors, consider hosting an orientation meeting where you walk through each role’s responsibilities and open the floor for questions. You might also choose to disperse a binder full of information they need like board agreements, organization bylaws, contact information, past budgets, previous meeting minutes, and a list of committees. This will allow new members to get acclimated quickly.
- Delegate tasks in a clear manner. Have a system in place for assigning tasks as soon as they’re delegated. That way, everyone knows who should be doing what and by when. Ensure your board software allows you to create, assign, and manage action items during and between meetings. Individual board members and administrators should be able to track the status of various tasks and projects to make sure they don’t fall through the cracks.
- Keep in regular contact with the board. Productivity should occur outside of the boardroom to make steady progress as an organization. Your board portal will aid greatly in the communication process, keeping you in direct contact with board members and helping to steward strong, collaborative relationships. This way, you can keep them fully informed and quickly solicit feedback and direction to resolve any issues that arise.
Ineffective directors can pose major problems for nonprofits. Rectifying the situation as quickly as possible allows the board to fill knowledge gaps and make more informed decisions. If you’re unsure of where your board currently stands, have the board conduct a SWOT (strengths, weaknesses, opportunities, and threats) analysis. This will help identify those gaps and create an action plan for moving forward.
Mistake #3: Failing to Embrace Board Diversity
Typically, an organization’s initial board is made up of friends and trusted advisors of the nonprofit’s founder. Over time, these individuals may reach out to their networks to fill vacancies as they arise. While this is certainly a smart move for brand new nonprofits, it becomes a problem when your board consists solely of people who went to the same schools, belong to the same clubs, and live in the same neighborhoods.
Think of it this way: if your board is chock-full of CFO-level executives, your finances may be in order, but other operational areas may fall by the wayside, like marketing and volunteer management. Instead, you need a group of individuals who possess varying skills to cover each area of your organization.
Boards greatly benefit from a diverse mix of leadership. A variety of valuable perspectives and experiences in the boardroom can help your team think outside the box and arrive at conclusions they might not otherwise reach.
Here are a few facets of board diversity to consider:
- Race, ethnicity, and religion
- Gender and sexual orientation
- Geographic location
- Professional skills and experience
- Education level
- Socioeconomic status
- Physical and cognitive abilities
A diverse board is a thriving board! If all board members come from similar backgrounds, it’s time to diversify your pool of participants. Keep your eyes peeled for varying skills, experiences, and backgrounds that would add valuable perspectives to the board.
While law, accounting, and fundraising skills are obvious necessities, mission-related skills are also important. For instance, a domestic violence shelter may recruit a social worker or a policy expert, whereas an educational organization might recruit a retired school administrator or teacher.
Mistake #4: Poor Documentation of Decisions and Actions
In its meetings, your board has highly-focused conversations where it makes decisions that impact the health and vitality of your organization. Accurately documenting these discussions and actions in your meeting minutes is crucial—especially since your board has legal liability.
Some organizations adopt minutes that are complete and lengthy virtual transcriptions of their meetings. Conversely, some organizations only document actions without any mention of the process or deliberations, or worse, they don’t document anything. Instead of going with one of these extremes, work to find a more appropriate balance.
Documenting every discussion verbatim could create even greater exposure for liability and can make it very unlikely that anyone on your team will take the time to review the minutes for inaccuracies. On the other hand, only documenting actions (or nothing at all) can leave individuals confused later as to why certain decisions were made.
When developing your approach to minute-taking, we suggest the following best practices:
- Use a template. By creating an outline in advance, taking minutes becomes incredibly straightforward and ensures notes are taken on every discussion item. The easiest strategy is to use your board meeting agenda as a template.
- Designate a minute-taker. Usually part of the secretary’s duties, the same person should take minutes at every meeting. This allows them to familiarize themselves with the process and produce stronger, clearer minutes over time.
- Write objectively. Especially with controversial issues or contentious votes, your minutes-taker should summarize debates and stick to the facts. To reinforce this, ask a third-party who isn’t privy to any confidential information (like a staff member) to read the minutes.
- Include pertinent information. Your minutes should be detailed enough that someone can decipher key decisions a few months down the line. When recording these decisions, be sure to include who attended and when the meeting took place. Plus, make note of any important discussions regarding the decision and a record of motions, seconds, and whether or not the motion passed.
- Proofread and share. Once you’ve wrapped up your meeting and put the final touches on your minutes, take one last pass at it and review for any errors. Once ready, use your board software to disperse them so that board members can quickly reference them and follow up appropriately.
Remember, your minutes serve as an official record of your meetings. Both overly-detailed and scant board minutes can open up the board to liability issues.
According to this resource, you should “aim to create board meeting minutes that are specific enough to capture the board’s focus and decisions, but not so sparse that you can’t decipher what actually occurred during the meeting a few months down the line.” In turn, you’ll develop engaging minutes with the right amount of detail.
Quality governance can truly accelerate your team’s impact on the community. Keep your eyes peeled for these common mistakes and pitfalls within your own organization. Otherwise, failing to address these governance issues early on can prevent major issues later.
It all starts with selecting the right board members and continues through effective communication and documentation. By setting the groundwork early, every task your board takes on will be more efficient and well-informed. Your nonprofit and community will see and experience the benefits of your healthy nonprofit board governance practices. Good luck!
