How Does Nonprofit Board Governance Impact Success?

Operational Board Governance

We don’t recommend any nonprofit organizations adopt this model as it is the least effective and has the most disadvantages.

When a nonprofit board of directors operates from an operational governance model, it is because it doesn’t have a strategic plan. This board is created in a response to a crisis situation and it is, therefore, always in survival mode. It is crisis management without a plan—simply trying to keep operations up and running.

An operational board is involved in the day-to-day operations of the nonprofit instead of focusing on the big picture. Its board members are involved in management-level decisions such as making purchases and hiring/firing employees.

DISADVANTAGES

• It is dysfunctional by design.
• It creates frustration by hogging control and power—not allowing other leaders and management to do their job.
• It is inefficient because of the breakdown in hierarchy and chain of command, which can also create a shift in the organization’s culture. Employees don’t know who is in charge and who they should go to with important information.
• It leaves room for a hero/victim mentality where blame and excuses are acceptable (with board members and staff).

Policy Board Governance

The policy board governance model is a step ahead of the operational model. Nonprofit board members come together to create policies, procedures, and rules for the organization to follow. As long as none of the rules and policies in place are broken, board members are happy.

DISADVANTAGES

• Not strategic: There’s no “How to” or plans to achieve anything more than exist. There’s no connection to the nonprofit’s mission statement.
• Distant: Creates what we call “Ivory Tower Syndrome.” Board meetings become a time where instead of creating plans to build a sustainable future, board members prioritize policy over people and put an instruction manual over the organization’s mission.
• Rigid: Places rules over relationships—everyone becomes subject to the tyranny of the manual instead of giving people grace.
• Leaves room for blind spots: board members don’t recognize what their fiduciary duties and legal duties are to the organization, other members, and staff. Instead of stepping up to lead, directors lag behind and are reactionary
• Negative: The only measurement for success for this board governance model is whether or not any rules were broken, and that’s just not how the nonprofit world should work.

Strategic Nonprofit Board Governance

The strategic model is a collaborative effort of the entire board and leaders of the organization. Nonprofit boards are meant to help create and manifest the vision, mission, and strategic direction—the Why—of the organization. The strategic model helps do that.

A strategic board of directors does not concern itself with daily operations or financial management, but more so the organization’s ethical standards, advising key decisions, approving plans and budgets, etc.

A strategic nonprofit board focuses on building up leaders, setting strategic objectives and policy, approving budgets that advance the non-profit’s mission, and being spiritual leaders who lead by example.

Strategic Board Members’ Roles

Each strategic nonprofit board member may have different responsibilities and titles depending on their occupation, previous experience, professional skills, and other factors. These titles may include board chair or chief executive director with responsibilities to determine who’s in charge of what, to ensure certain tasks get done, and to evenly distribute duties.

Strategic Board Meeting Agenda

When the board of directors comes together for a meeting (usually quarterly), they’ll have an agenda of what to go over. This agenda will be comprised of varying topics pertaining to the nonprofit such as the organization’s assets, the addition of new board members or a board member’s exit, quarterly financials for the nonprofit, fundraising and capital campaigns, etc.

Strategic vs. nonstrategic

So what do the goals, plans, and policies of a strategic nonprofit board of directors look like? They focus on manpower over meddling. When they hire the right leaders and program directors, they trust them to do their job competently and support, encourage, and protect them. The strategic nonprofit board holds its leaders and directors accountable by evaluating and incentivizing them. And they show their appreciation for all of their hard work by fairly compensating them and investing in them. They don’t micromanage the responsibilities they’ve given the leader by involving themselves in the day-to-day affairs of the nonprofit.

Instead of focusing on narrow impact, situational issues that can cause division, the strategic nonprofit board of directors stewards the vision and mission of the nonprofit, sets annual strategic objectives, reviews recommended operating plans, and makes sure the budget is aligned with the operating plan.

To be successful, a strategic nonprofit board knows it must lead as one and create a culture of trust while managing conflict as well as focusing on advancing the mission and vision of the nonprofit.

ADVANTAGES

• There are many benefits for nonprofits that follow the strategic board governance model. But the most important advantage is it helps garner more support. People are more likely to support a nonprofit that is organized, strategic, moving, effective, engaging, transparent, receptive, dynamic, innovative, and healthy. So how do you get there?