Moving Boards to the Head of the Class
The ABCs and 123s of Sound Stewardship

By Jay Dismukes

Editor’s Note: The following article is an extension of a story on nonprofit board service that ran on page 4 of the February 1, 2004, issue of The Trusted Professional.

Waves upon waves of financial scandals have given some credence to the proverbial image of boards of directors as rubber-stampers for the organizations they represent. Of course, this image, as with the scandals themselves, holds true for a very small minority. But in the face of a skeptical public, experts in both the for-profit and nonprofit sectors agree that it is imperative that boards of all statures and sizes understand and live up to their responsibilities. As recent events illustrate, a few bad apples are all it takes to rattle the trust of investors and put charitable giving at risk.

Established in 1999, the Alliance for Nonprofit Governance (ANG) works to minimize the number of ineffectual boards by educating board members and others about boards’ obligations and the means by which they can be met. The 140-member alliance is composed of New York-based organizations that are committed to raising the standards of nonprofit governance.

Step by Step

As ANG chair, Carolyn Patterson says there is no magic formula or “right” way to achieving satisfactory board oversight, but there are a number of basic steps that can and should be taken. First among those is the development of a clear mission for the organization or company that the board serves. This should be followed by the creation and careful monitoring of a strategic plan to realize the mission. As part of this function, the board must make certain that there are adequate resources in place to execute the plan. These resources can include money space, specialty expertise or additional staff.

The board also has a responsibility for assuring that all legal obligations are met and all regulatory and reporting requirements are fulfilled. The board has critical personnel functions, too, including putting staff policies in place, hiring, regularly reviewing and, in unfortunate cases, firing the executive director. Compatible goals and a productive working relationship between the board and the executive director can sometimes mean the difference between success and failure in accomplishing an organization’s mission and strategic plan, Patterson notes.

Also critical to the success of nonprofits, in particular, is the vital community-relations role that board members can play.
“Board members are the best ambassadors of the organizations. But they need to have a passion for the mission,” Patterson says. “If they do, then they will speak with excitement and conviction, and find ways to help the organization.”

Equally significant, the board is also responsible for its own development. That entails recruiting new board members and educating the members about their responsibilities and the nonprofit’s programs.

The Little Things That Matter Most

The more a board understands its duties, the more active it is likely to be, but adhering to a step-by-step guide is not by itself a guarantee that a board will be a model of good governance. Effective stewardship also is dependent upon a number of intangible elements, such as the passion for the organization’s mission that Patterson refers to.

“Board members need to feel that they are accomplishing something,” she says.

If members don’t feel they are contributing to the achievement of the organization’s mission, they are apt to resign. To prevent this from happening and to keep board service interesting, Patterson says it’s a good idea to encourage creative thinking and planning among the members.

Also critical to the creation of a participatory, forward-thinking board is the composition of its membership. Patterson notes that the ideal board is diverse, composed of members who vary in their skill sets, ages, backgrounds and contacts.

“When people bring a variety of experience to the table, they are more likely to come up with innovative solutions that are appropriate to the beneficiaries of the nonprofit services,” Patterson says.

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