How to be an Effective Board Member

Introduction

Becoming a Board Member is a big responsibility and a big accomplishment. This is doubly so if you are young, given that less than 2% of Board Members are under 30 in the United States! The benefits of Board Membership are numerous, including giving you new professional and personal networking opportunities, professional skill development and spiritually – knowing that you are supporting an organization’s growth and development, especially if you are a nonprofit Board Member.

On the other hand, the skills that make someone an effective Board Member do not come naturally. While some organizations have formal Board of Directors training programs, not all do. Read on to learn about the skills required of effective Board Members.

Understand the Role of the Board

The role of the Board of Directors is to set the organization’s strategic direction, assess risks and threats to the organization, plan for the future and to make corrections in order to keep the organization on track. Additionally, the Board of Directors hires the Chief Executive (either the CEO or the Executive Director, occasionally the President) and sets the metrics that are used to evaluate that individual.

The Board is responsible for governance and leadership, but not for the day-to-day operational activities of the organization. This is something new Board Members sometimes struggle with. Your role is to make sure that the Executive Director has the tools they need to achieve the metrics, but they will ultimately decide how best to carry out these goals.

For instance, your strategic plan might include increasing your revenue by 10%. The Executive will be responsible for carrying this out (though the Board is an important contributor to fundraising and finance.) So, you might help by setting up meetings with people in your network or by participating in fundraising events but it would be inappropriate to tell the Executive Director to plan a certain event or direct the way in which they raise the revenue by 10%.

The organizational flow is from customers or clients, to the staff, to the Executive Director or CEO, and finally the Board. If this chain of command gets disrupted, you will have issues. It is important to strike a balance between minimizing risks and maximizing opportunities – because these concepts are in constant conflict.

Perform Strategic Planning

Strategic planning is the process of setting the strategic priorities of the organization. This involves figuring out where you want the organization to go and then to set in place concrete strategies, goals, and ideas in order to decide the future of the organization.

Strategic planning models can be used to help you identify where the organization is right now and where you would like to be. One example is the model presented by OnStrategy, that includes 4 phases:

  1. Determine Position
  2. Develop Strategy
  3. Build the Plan
  4. Manage Performance

You can see my article on Basic Strategic Planning for Nonprofits to help you learn more about the nuts-and-bolts of strategic planning.

 

Hire and Evaluate the Executive Director

Hiring the Executive Director is one of the most challenging aspects of a Board of Directors. The Executive makes a huge impact on the overall success of the organization and choosing the wrong Executive can seriously impede progress to your goals.

One barrier that makes choosing Executives difficult is that many Board Members are mid-level or senior members of their own organizations but have not held that role themselves. This makes sense, given the number of organizations out there – only one Executive can exist at each one. If you’re hiring for a role you’ve never held yourself, the possibility exists that you will select someone based on the wrong criteria.

To avoid this, make sure that you ask behaviorally-based questions that get at the heart of the activities you need your Executive to do, and captures the essence of the job. For example,

  • Tell me about a time when you had to manage a large fundraising project
  • What would you change about our organization over the next 12 months?
  • What is your approach to handling conflict?

You should also share the Key Performance Indicators and the Strategic Plan (if it is public) with potential Executive Directors because these are the metrics you will be evaluating your Executive Director on. Their goals should align with your Board’s goals.

Manage Organizational Risks

Risk management means identifying the potential threats to the organization and then taking steps in order to mitigate their risks. This will be different depending on what your organization does, but some common threads will run through all nonprofit organizations.

For example:

  • Your funding comes from one primary funder. What happens if the funder winds up or stops funding you?
  • One staff member has critical competencies that if you lost, would affect the missing. How do you respond?
  • One of your most important programs has no competitors. What happens if a competing organization starts working in the same space as you?

Identifying these risks on a regular basis will help your organization to respond to them. As the Board, you will not direct the Executive Director how to respond to these risks, but together a collaborative plan can be put in place to make sure an effective response is developed.

Board Members are legally responsible, with a fiduciary duty, for the success of the organization. This means that if the organization gets sued, the Board Members (if they don’t have Errors & Omissions insurance) could be held personally liable for the debts of the organization.

Approve the Budget

Determining the budget of the organization is one of the most important jobs the Board has. In addition to creating the budget (usually based on the previous year’s budget, expected revenues and other data), the Board must also ensure the organization is staying within the budget.

Each meeting, you will review the financial statements in order to discuss where you are above or below the budget. This will help avoid a sudden cash crisis.

Participate in Fundraising

Board Members should be participating in fundraising to help the organization succeed. This can include helping to run fundraising events, providing access to a network of contacts (especially if you are a mid-level or senior-level member of your industry) or otherwise helping the organization to bring in some revenue.

Perform Effective Governance

Governance is the “command and control” or “checks and balances” part of the Board Member role. Good governance includes both the role of the Board of Directors and the organization at large. You’ll perform good governance by making sure the strategic plan is up to date and being reviewed regularly, approving and discussing the budget, and also by creating and enforcing policies and procedures.

Policies and procedures are the rules that set the conduct of both the Board Members themselves, but also of the volunteers, staff, and others in the organization. Examples of policies and procedures that are important for good governance include:

Meeting Attendance. Your Board Members should be required to regularly attend meetings. If they are unable to meet this requirement, they should resign from the Board in order to allow that spot to be filled by someone who is more available to commit to the Board’s requirements.

Term Limits. Most Boards have one or two-year terms, which ensures regular turnover and assessment of who is an effective and high-performer on the Board and who is not. This helps keep the organization fresh and energetic, while also benefiting from the experience and expertise of long-term Board Members.

  • Budget Approval. There should be a formal policy about how often and when the budget is approved. It should be approved at least on a yearly basis, and then reviewed more regularly than that to ensure that the organization is staying within their financial means.
  • Conflict of Interest. A Conflict of Interest policy helps ensure that Board Members do not let their personal interests interfere with those of the organization. For example, if a nonprofit is seeking a facilities management contract, a Board Member who owns a facilities management company should not vote on (or potentially even be present during the session) where the picking of a company is decided on.
  • Auditing. It’s important that organizations receive regular audits, and a policy may be written to ensure the organization seeks regular audits based on the size of the organization. Larger organizations may be required to receive an audit yearly, while smaller organizations may want to get one in order to ensure they are eligible to apply for grants and other forms of fundraising.
  • Board Evaluation. A self-assessment of the Board can help Board Members identify their strengths and weaknesses so they can make changes in the future. Every year or two may be a good frequency for this activity.
  • Board Orientation. Like a Board Evaluation policy, a Board Orientation policy should set out the procedure for orienting new Board Members to the organization so that they can hit the ground running.
  • Review and Writing of Bylaws. Bylaws are the policies and procedures that govern the organization, including things like what are the names, terms, and appointment process for the Officers (President, Vice President, Secretary and Treasurer) and other elements. These bylaws should be reviewed regularly.
  • Personal Giving. Finally, some organizations choose to have a Personal Giving policy that expresses the organization’s wish that nonprofit Board Members participate in fundraising for the organization or make their own annual gift to the organization.

Conclusion

These are a few of the many elements that go into an effective Board Member. Are there elements you think I’ve missed? Do you weigh technical skills or interpersonal skills more strongly in an effective Board Member? Let me know in the comments.

Cite this article as: MacDonald, D.K., (2019), "How to be an Effective Board Member," retrieved on May 24, 2019 from http://dustinkmacdonald.com/effective-board-member/.
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