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 June 26, 2019 from http://dustinkmacdonald.com/effective-board-member/.
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Basic Strategic Planning for Nonprofits

Introduction

Strategic planning is the process used to make a plan for a nonprofit or other organization over the next few years. It is a living document that helps steer the ship and ensure the organization continues to carry out its mission.

Strategic planning models and phases abound, this is just one example of a model of strategic planning that your Board can use. The OnStrategy model includes 4 components:

  • Determine Position
  • Develop Strategy
  • Build the Plan
  • Manage Performance

Determine Position

Determine the Position includes identifying the issues that you need to focus on. What are the risks and opportunities your organization is facing right now? You also need to collect information about your clients, the state of the market and other relevant information that will help you plan.

Develop Strategy

Next, developing strategy involves reviewing the organization’s mission, vision and values. What is the purpose of the organization, has it changed since your last strategic plan? What are your core beliefs (your values), and what would the world look like if your organization succeeded in its goal (its vision)? These all help you set the strategy your organization will follow.

It is important to identify your competitive advantages. What makes your organization different from the others in your industry, in your sector, in your area? This will help you later when it comes time to determine your organization’s messaging. If you don’t know your value proposition, your messaging will be muddied and this will make it more difficult for your organization to be successful.

Once you have done these things, you will develop objectives and set out strategies to help you meet those. Financial forecasting may also be part of this process.

Building the Plan

Building your strategic plan involves taking the big and long-term goals and setting smaller objectives and goals to help you on the road-map. For example, your major objectives will be set out over the next 3 years (in many strategic plans), but you need to identify goals for the next 3, 6, and 12 months – and then for the 12, 18, 24 and 36 months on the way to the next strategic plan.

You may select Key Performance Indicators that you can refer to on a regular basis (perhaps even at each monthly meeting) to know if you are on track. These could include:

  • Monthly Donations
  • Number of Service Users
  • Retention Rate of Volunteers

You will also need to create or review the budget in order to make sure the organization has the money they need to work on these goals.

Manage Performance

Finally, the last item in the strategic planning process is Manage Performance. This involves setting a schedule so that you understand when key events will be taking place and when milestones will be met. Your KPIs might be added to each agenda. You may wish to implement a quarterly review to make sure the Executive Director is still on track to meet these goals.

Finally, a one-year review will let you see what goals you have achieved and what goals remain to be completed.

Conclusion

Have you ever facilitated a strategic planning session, what was it like?

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Carver Model of Policy Governance

Introduction

Nonprofits and registered charities, like other incorporated entities, are required to have a Board of Directors to perform governance and oversight. Boards review the financial situation of the organization, write policies and perform risk management, among other duties.

There are a number of theories on the most effective form of Board Governance. Boards are generally separated into 3 types, with some overlap:

  • Working Board: This is a Board that participates heavily in the day-to-day operations of the organization. This might be the case at a very small or very new organization where a “Steering Committee” who helped build the organization moves into the role of the Board
  • Hybrid Board: This is a Board that performs some operational work (such as writing grants) but ideally spends the majority of their time performing governance and policy tasks
  • Policy (or Governance) Board: A Policy Board or a Governance Board is one that spends no time performing operational duties and strictly works on Governance and Policy

There are pros and cons to each approach, but most large organizations have Policy Boards to ensure that the operational tasks are appropriately handled by the paid staff, while the Board acts as the stewards of the organization. One model of policy governance (arguably the model that popularized policy governance) is nicknamed the Carver Model, after its creator John Carver.

The Policy Governance Model is a registered trademark of John Carver, all rights reserved.

John Carver

John Carver earned a Bachelor’s degree in Business and Economics, a Masters in Educational Psychology and a PhD in Clinical Psychology from Emory University in 1968. (Carver, 2006) He has published five books and 13 monographs and authored over 200 journal articles. (Policy Governance Model, 2016)

10 Principles of Policy Governance

The ten principles of policy governance are as follows (BoardWorks, 2005):

  1. The Trust in Trusteeship. This means the Board should be a steward or trustee of the organization – not just financially or for those who have a legal stake in the organization but all stakeholders, including clients or others to whom the Board has a moral responsibility to.
  2. The Board speaks with ‘one voice’ or not at all. A Board should never be fragmented. Reaching a collective decision ensures that the Board will be able to carry out their mission effectively and consistently. A single voice provides true leadership and avoids politics.
  3. Board Decisions should predominantly be policy decisions. Rather than intervening in operational or day-to-day decisions, the Board should restrict itself to making decisions in the form of written policies. The Carver Model actually sets out four types of policies (Carver & Carver, 2001) that the Board should concern themselves with :
    1. Governance Process. These policies set out the actions of the Board like its responsibility to perform visioning and accountability
    2. Board-Staff Linkage. These policies govern the relationship between the Board and the Executive. Examples of these policies include how the staff are monitored by the Board and who is responsible for making what decisions (operational vs governance.)
    3. Executive Limitations. These policies set out what the executive (e.g. the Executive Director or CEO) cannot do. For instance, in some organizations the disposal of real estate may only be with the consent of the Board – this could be codified in an Executive Limitations policy
    4. Ends Policies. Ends Policies set out the goal of the organization – the reason for its existence. This may be codified in a mission or visions statement in addition to an Ends policy.
  4. Boards should formulate policy by determining the broadest values before progressing to the more narrow ones. This means that policies should be developed from the broad (such as a policy statement that sets out the need for evaluation) down to the narrow (the policy surrounding the use of Key Performance Indicators.) The result is that policy flows logically from very large to very small.
  5. A board should define and delegate rather than react and ratify. This principle means that the Board should create policies that delegate tasks to the CEO and then respect the delegation. If situations are covered in existing policies, when something new comes up those policies will kick into effect, rather than the Board writing new policies.
  6. Ends determination is the pivotal duty of governance. The Board should always keep in mind the outcomes of the organization. Their goal should be to monitor outcomes and delegate the achievement of those outcomes to the CEO or Executive Director. The Board should remain strategic.
  7. The board’s best control over staff means is to limit, not prescribe. This means that the Board should indicate (as in principle 3, Executive Limitations) what an Executive is not permitted to do. They should not be telling the Executive what they should do. This subtle difference gives the Executive Director the freedom to achieve the goals set out by the Board.
  8. A board must explicitly design its own products and services. This means the Board should write their own policies rather than merely adopting policy templates that may not be relevant for their specific needs.
  9. A board must forge a linkage with management that is both empowering and safe. The CEO must feel that the Board will honour its commitment to policy governance while the Board has trust in the CEO or Executive’s ability to manage. If this trust breaks down, leadership will falter.
  10. Performance of the CEO must monitored rigorously, but only against policy criteria. Objective measurement criteria for the Executive is important – but this must be measured in relation to the Ends policies.

Advantages and Disadvantages of Policy Governance

Broadbent (1999) in his landmark report, Building on Strength: Improving Governance and Accountability in Canada’s Voluntary Sector (also called the Broadbent Report) reviewed the Carver Model among other elements and identified a number of advantages and disadvantages.

Strengths of the Carver Model include emphasizing the role of the Board as trustees of the organization and highlighting the importance of moral ownership, not just legal ownership. Additionally, the focus on policies and a rejection of operational decision-making avoids micromanagement of the Executive and prevents rubber-stamping of policies or decisions.

Finally, the focus on the “Ends” – the visioning and the measurement of the Executive against those outcomes rather than the methods to achieve them, produces a future-focused Board.

Disadvantages of the Carver Model include a lack of focus on operational priorities. Although the goal of the Board is to help set the strategic priorities, a Carver Board is not involved in the implementation of those policies which can lead to them becoming corrupted.

Additionally, some activities that are performed by working or hybrid boards like fundraising are not performed by a true Carver Board. This means that it may be unsuitable for some small organizations where the Board holds the responsibility for major fundraising in the organization.

Finally, because many decisions are made by the CEO rather than the Board this can lead to weakened information flow and a lack of transparency as decision are made by the CEO out of view of the Board. (Coyne, n.d.)

Conclusion

The Carver Model represents one way of governance that has become increasingly popular in Canada and the US. Implementing the Carver Model may allow you to make a more effective Board despite the potential drawbacks and criticisms that have been levied at the model.

References

BoardWorks. (2005) “Why is it that the Carver Policy Governance Principles can seem so hard to Honour?” Retrieved on June 30, 2017 from http://www.hospice.org.nz/cms_show_download.php?id=317

Carver, J. & Carver, M. (2001) Le modèle Policy Governance et les organismes sans but lucratif [The Policy Governance Model and non-profit organizations]. Gouvernance. 2(1). 30-48. Retrieved on July 2, 2017 from http://www.policygovernance.com/pg-np.htm

Carver, J. (2006). Boards that make a difference: A new design for leadership in nonprofit and public organizations. San Francisco, CA: Jossey-Bass.

Coyne, T. (n.d.) The Many Failings of the Carver Governance Model. Retrieved on July 2, 2017 from http://www.k12accountability.org/resources/Accountability-Committees/Carver_Governance_Model_Failings.pdf

Policy Governance Model. (2016). “The Policy Governance(R) Model – Publications”. Retrieved on July 2, 2017 from >http://www.policygovernance.com/pubs.htm

Cite this article as: MacDonald, D.K., (2017), "Carver Model of Policy Governance," retrieved on June 26, 2019 from http://dustinkmacdonald.com/carver-model-policy-governance/.
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