A Strategy for Building Governance
Capacity
by Nathan Garber
reprinted with permission of Nonprofit Boards &
Governance Review
http://charitychannel.com/article_3194.shtml
hile many board members express
dissatisfaction with their board’s performance, they are at a loss about what to
do about it. There seem to
be so many problems, some of which seem so formidable that they are simply
ignored. Amazingly enough, even with poorly performing boards, most nonprofit
organizations still manage to deliver their programs and services pretty well.
This suggests to me that, contrary to the fears of some board members, the
organization will not fall apart if the board redirects its time to building its
own capacity to provide effective governance and leadership. On the contrary,
the act of self-reflection might produce an immediate benefit in terms of a
reduction in micromanagement and freeing up the executive director to
concentrate on the organization’s programs and services.
In this
article, I suggest that building the Board’s capacity for effective governance
can be made more manageable by thinking of the Board’s responsibilities as
falling into three broad areas and devoting a year to improving the board’s
policies and practices in each area.. The three categories are: assuring
integrity and accountability, planning and evaluation, and acquisition and
management of financial resources.
Assurance of Integrity &
Accountability
The Board has a duty to ensure that
all its activities, its decision-making processes and structures conform to
legal standards and ethical norms as defined in its articles of incorporation,
bylaws, policies and applicable laws. Moreover, it must ensure that those in
positions of authority are accountable for their performance.
Planning & Evaluation of Programs &
Services.
The Board is responsible for
ensuring that the organization has a useful purpose, a reasonable plan for
achieving its goals, and that programs, services, and delivery methods are
evaluated periodically.
Acquisition
& Management of Resources
The Board of Directors is
responsible for ensuring that the organization has the resources and reserves it
needs to operate and that those resources are managed attentively and properly.
Few, if any
boards can claim to be fulfilling all these responsibilities at an ideal level.
There is likely to be considerable room for improvement in each of these areas,
but for most board members, the prospect of changing existing practices is
pretty daunting. If you share that view, don’t be discouraged. Long-term
planning is just as important for the board of directors as it is for the
organization as a whole. Think about this as a long term project, with the goal
of making some progress in each area over a three year cycle. Long before you
get to year four, you should be able to notice some significant improvements.
Year One:
Improving integrity and accountability
In this
three-year program of board development, the first year is devoted to the
board’s decision-making processes and structures. This provides the foundation
for the second and third stages. The board’s recruitment, employment, and
accountability practices, are the first focus for action. To enhance integrity
and accountability the board should start with a review of its policies and
practices in the following areas:
·
how it selects,
trains and evaluates directors and officers and how it deals with unsatisfactory
performance;
·
how it selects,
supports, evaluates, and, terminates the Executive Director;
·
how it accounts to
members and the community through its Annual General Meetings and Annual Report;
·
how it ensures that
the reports and payments required by government are accurate and on-time.
Year Two:
Improving planning and evaluation
In the second
year, the main board task is to review the organization’s mission, vision,
values and strategies, paying special attention to how to assess progress. While
there are many ways to fulfill this responsibility, the process used by many
organizations is called “strategic planning”. Through the strategic planning
process, the board periodically reconsiders:
·
the organization’s
fundamental values and reason for being;
·
changes in the
environment in which it the organization operates;
·
the strategies it
will use to achieve its goals;
·
the resources it
requires to carry out its strategies; and
·
indicators of
progress and how to measure them .
If the plan is
developed on a three-year planning horizon, it will automatically be reviewed
and revised every three years.
Year Three:
Increasing capacity to acquire and manage resources
In the third
year, concentrate on improving the board’s ability to acquire and manage the
organization’s financial resources. Building the board’s capacity to acquire
funds will require the board to consider how to ensure that directors
·
make “personally
significant” donations;
·
commit to an annual
fundraising plan; and
·
participate in
fundraising activities.
For some
organizations, this is already a part of their corporate culture. For others, it
may take the whole year. Improving the board’s ability to ensure management of
financial resources may likewise be more difficult for some organizations. It
will require the board:
·
to acquaint itself
with organizational practices for recording and accounting of income &
expenditures, handling cash, and management of investment
·
to consider whether
current policies and practices are prudent and reasonable.
·
to consider how it
will monitor the organization’s financial condition in the future;
·
to review its
practices for engaging a competent auditor and what it does with the auditor’s
reports.
Year Four:
The cycle begins again
In the fourth
year, it will be time to revisit the board’s policies and practices related to
integrity and accountability. By this time, the board will have had at least two
years experience with the policies and practices introduced in year one. There
will have been some changes in how new directors are recruited, how the
executive director is evaluated, and the board's financial practices. Year four
is the opportunity to celebrate the achievements and consider what to do next.
Conclusion
The
environment in which the board operates is never static. There are continual and
unpredictable changes in directors, staff, and volunteers, government policies,
liability concerns, client needs and donor interests, to name but a few.
Building the board’s capacity to address issues, demonstrate leadership, and
govern effectively is a never-ending element of the board’s job. This job is
made more difficult if the board is less than effective in the first place.
I offer this
suggestion for board capacity-building in the hope that putting some stability
and predictability in the process will make it easier for the board to accept
and implement. Keeping this cycle going will help to focus the board on
governance issues, provide direction to its work and lead to continuous
improvement in the Board’s performance.
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