The Role of a Non-Profit Board

By Grayden 🔸 @ 2023-03-04T13:34 (+39)

This is a linkpost to https://www.eagoodgovernance.com/role-of-the-board

Background

This is a cross-post from the website of the EA Good Governance Project. It is shared here for the purposes of ensuring it reaches a wider audience and to invite comment.

The content is largely consensus best-practice adapted for an EA audience. Leveraging this content should help boards be more effective, but governance is complex, subjective and context dependent, so there is never a right answer.

Introduction

The responsibilities of a board can fall largely into three categories: governance, advisory and execution. Here, we explain how to work out what falls in which category and key considerations about whether the board should be involved.

Essential: Governance

The Board comprises individuals who hold assets “on trust” for the beneficiaries. By default, all power is held by the board until delegated, and the board always remains responsible for ensuring the organization delivers on its objects.

In practice, this means:

• Appointing the CEO, holding them to account and ensuring their weaknesses are compensated for;
• Taking important strategic decisions, especially those that would bind future CEOs;
• Evaluating organizational performance and testing the case for its existence; and
• Ensuring the board itself has the right composition and is performing strongly.

Being good at governance doesn’t just mean having the right intentions; it requires strong people & organization skills, subject matter expertise and cognitive diversity.

When founding a new non-profit, it is often easiest to fill the board with friends. However, if we are to hold ourselves up to the highest standards of rationality, we should seek to strengthen the board quickly.

Optional: Advisory

The best leaders know when and where to get advice. This might be technical in areas where they are not strong, such as legal or accounting, or it might be executive coaching to help an individual build their own capabilities, e.g. people management.

It is common for board members to fill this role. There is significant overlap in the skills required for governance and the skills that an organization might want advice on. For example, it is good for at least one member of the board to have accounting experience and a small organization might not know how to set up a bookkeeping system. Board members also already have the prerequisite knowledge of the organization, its people and its direction. However, there is no need for advisors to be on the Board.

We recommend empowering the organization’s staff leadership to choose their own advisors. The best mentoring relationships are built informally over time with strong interpersonal fit. If these people are members of the board, that’s fine. If they are not, that’s also fine.

The board should build itself for the purpose of governance. The executives should build a network of advisors. It is best to keep these things separate.

Best Avoided: Execution

In some organizations, Board members get involved in day-to-day execution. This is particularly true of small and start-up organizations that might have organizational gaps. Tasks might include:

• Bookkeeping, financial reporting and budgeting
• Fundraising and donor management
• Line management of staff other than CEO
• Assisting at events

Wherever practical, this should be avoided. Tasks undertaken by Board members can reduce the Board’s independence and impede governance. The tasks themselves often lack proper accountability.

If new opportunities, such as a potential new project or employee, come through Board members, they should be handed over to staff members asap. It’s a good idea for Board members to remove themselves from decision-making on such issues, especially if there is a conflict of loyalty or conflict of interest.

Board members should not work in the organization’s office. Board members should definitely not take an executive role in the organization, e.g. Chair and CEO.