BlogOrganizational Management The Complete Guide to Building a Nonprofit Board Organizational Management The Complete Guide to Building a Nonprofit Board Author: Tatiana Morand March 9, 2021 Contents 🕑 11 min read As any nonprofit leader knows, a strong board of directors is critical to an organization’s success and long-term resilience. Beyond fulfilling a legal requirement, an effective nonprofit board also plays an important role in an organization’s governance – for example, by overseeing CEO evaluations and succession planning, providing financial oversight and recruiting new board members – and can help guide strategy, contribute to fundraising efforts and much more. Sounds great, right? It is! But a strong, effective board doesn’t just create and manage itself. In fact, too many nonprofit boards are struggling to perform their duties, let alone realize their greatest potential. A 2015 report from Stanford University found that half of nonprofit directors believe their fellow board members are not engaged in their work with the organization, while a third are not satisfied with the board’s ability to evaluate the performance of the organization. Meanwhile, a full 70 per cent of nonprofit boards don’t have a succession plan in place in the event that the current CEO or executive director leaves, and 40 per cent don’t have formal targets in place for measuring CEO performance. Considering that 70 per cent of nonprofits have faced one or more serious governance-related challenges in the past decade, these stats don’t bode well for the ability of nonprofit boards to quickly respond to issues as they arise. So how can you build – and maintain – an effective nonprofit board? Look no further! In this complete guide to building an effective nonprofit board, we’ve pulled together all the best resources to help you get started. Whether you’re leading an established nonprofit or starting one from scratch, or whether you’re a CEO, volunteer board chair or staff lead for the board, this guide is for you. Let’s jump in! How to Form Your Nonprofit Board If you’re incorporating a new nonprofit, you probably have lots of questions about how to form your first board and start strong. Some of your top considerations should include: How many board members are you legally required to have? Check the guidelines provided by the state or province in which you’re incorporating. Three is the most common minimum number. What is the minimum and maximum term length for your board members? Again, your state or province should have guidance on term lengths. For example, in Ontario, the Not-for-Profit Corporations Act (ONCA) states that a nonprofit board member should have a minimum term of one year and a maximum term of four years (and may be re-elected or re-appointed at the end of that term). Should you stagger board terms? Staggering board terms – with some board members committing to one year, some to two or three years and some to four years, for example – can be a good idea to prevent the full board from turning over all at once. What skills do your board members need to have? Depending on the mission of your organization, you may benefit from recruiting board members with expertise in specific fields, such as law, accounting, marketing or social services. But remember: All of your board members, regardless of their specific skills, should be passionate about your mission and committed to fulfilling their duties. For more insight into how to recruit the right board members for your nonprofit, check out our recent post on this very topic! And if you’re interested in learning more about increasing the diversity of your board, hop over to 5 Steps to Increase Board Diversity at Your Nonprofit. To learn more about how to form your first board of directors, read these useful resources from BoardEffect, BoardSource and The Balance. Creating Your Nonprofit Board Structure You know how to go about forming your board, but you still have questions about the most effective governance structure. Most nonprofit boards have a board executive and a number of directors, who may or may not serve on one or more committees. Here are the four most common executive officer roles and some of the key skills you may want to look for: Chair or president: This person oversees the work of the board and the organization’s CEO and/or senior management team. They should possess strong leadership skills and be invested in the success of your organization. Vice chair or vice president: This person supports the work of the board chair and board executive, including filling in for the board chair when needed, and fulfills special assignments as required. They should be ready to lead and committed to learn about the ins and outs of your board. Secretary: This person is responsible for maintaining meeting minutes and monitoring compliance with your nonprofit’s bylaws. They’re usually required to attend all meetings. Your secretary should be highly organized and detail oriented. Treasurer: This person tracks your nonprofit’s financial standing, reviews the annual audit and usually serves as chair of the finance committee. They should have a strong background in financial accounting. To help you figure out the best structure for your board, check out this sample structure we’ve prepared: Creating Board Committees Creating committees – smaller groups of board members responsible for overseeing certain areas of work – can be an effective way of engaging your board, putting directors’ skills to good use and accomplishing better results. The beauty of committees is that they can be struck at any time. Some committees may be standing, meaning they operate permanently on an ongoing basis, or they may be ad hoc, meaning they’ve been established to address a specific challenge or task that’s arisen. Committees are typically struck by the board chair, who also appoints directors to serve on each committee. Board members who identify a need for a new committee can put forward a motion to create one. Some of the most common board committees include: Governance committee: Responsible for recruiting and orienting new board members and providing education opportunities for the board. Finance or audit and risk committee: Responsible for reviewing the organization’s accounting policies and audit reports and helps identify and manage potential financial risks to the organization. Executive committee: Responsible for dealing with significant issues that may arise in between board meetings. It’s typically comprised of the organization’s lead and board directors (staff and non-board volunteers typically don’t serve on the executive committee). Fundraising committee: Responsible for developing fundraising strategies in support of the organization’s mission, including by supporting fundraising event targets. Marketing committee: Depending on the size of your organization, the marketing committee can be responsible for either developing and executing a marketing strategy or providing advice to support staff-driven marketing strategies. Here are a few key tips to keep in mind when developing a board committee: Ensure the committee has a specific set of tasks and a specific goal or goals. Don’t overburden members by expecting them to participate in too many committees. Be mindful of the time commitment required by members participating in committees. Be open to having non-board volunteers serve as members of the committee to provide additional skills, insights and support. For more information about creating board committees, take a look at this article from MissionBox. Board Roles and Responsibilities: Setting Clear Expectations You can set your board members up for success – whether they’re brand new or they’ve been with you for a while – by helping them understand their responsibilities and establishing clear expectations for their role in your organization’s governance, work and mission. But how do you know what those responsibilities and expectations should be? Start by reviewing your state or province’s guidelines for nonprofit boards. The ONCA, for example, states that nonprofit directors must: Act honestly and in good faith to serve the best interests of the organization. Exercise the care, diligence and skill that a reasonably careful person would exercise in similar circumstances. These are the most basic values and principles that every board member should adhere to. Most nonprofits also expect their board members to fulfill specific duties and actions, such as: Attending a minimum number of board meetings throughout the year. Contributing meaningfully to board meetings while exercising good judgement and care. Declaring any conflicts of interest and recusing themselves from discussion or votes which may present a conflict. Keeping all information and organizational matters confidential. Fulfilling duties as stated in the organization’s bylaws. Avoiding participation in political campaigns in the name of the organization. Each nonprofit will have their own unique expectations and guidelines for board members. To make sure everyone is on the same page, it can be helpful to prepare a non-legally binding board member “contract” that lays out the key roles, responsibilities and expectations you’ve established for directors. Take the time to review the contract, discuss it with your board members and have them sign it. For examples of board member contracts you can use to create your own, check out this resource from Charity Lawyer and this one from Stanford University. Board Training and Orientation Let’s face it: Recruiting the best directors for your nonprofit just isn’t enough to develop and maintain a strong, engaged board. A solid board orientation and training program, combined with a regular process for collecting and acting on feedback, can go a long way toward helping your board members contribute to the very best of their ability. To get started developing an orientation and training program for your board, check out our recent article Use These Eight Steps to Design an Effective Nonprofit Board Training Program. Remember: It’s never too late to get started! Board orientation processes are important for new board members, but you can also offer orientation and training to even your longest-serving members if you’re looking for ways to strengthen board engagement effectiveness. Hosting Effective Board Meetings Have your board meetings become disorganized, too long, ineffective or – worst of all – just plain boring? It might be time to consider a revamp of your board meeting processes. Running efficient and effective board meetings can work wonders for improving board engagement and re-igniting that initial passion that first motivated your directors to get involved. For our best advice on how to run an effective board meeting, check out our post How to Run a Successful Nonprofit Board Meeting in 8 Steps. Here, we share tips such as Send out the agenda early to make sure your meeting runs smoothly and on time. Start and end on time. This shows respect for your board members’ time and helps make their participation on your board more manageable with their schedules. Make sure someone is responsible for taking detailed minutes. Give everyone a chance to speak. And much more! You may also want to consider sharing a “mission moment” at the start of each meeting – a powerful story, quote or video showcasing your organization’s impact – to help remind board members about why the work they’re doing is so important. Evaluating Board Effectiveness You’ve done all the right things to set up your board for success. But how do you know what’s working – and what’s not? Implementing a process for evaluating your board’s effectiveness is an important way to keep track of your board’s strengths and identify weaknesses that may require action. There are many different ways to evaluate your board. According to Boardable, some of the most common assessment methods include: Board self-assessment A board self-assessment is an exercise in which the board evaluates itself. Each board member evaluates their own performance using a set of criteria as well as the performance of the board as a whole. Check out this resource from the National Council of Nonprofits for more guidance and tools for board self-assessments. Peer-to-peer assessment During a peer-to-peer assessment, board members evaluate themselves as well as their fellow board members. This exercise can be done anonymously to avoid potential conflict. Assessment by the executive director The board may be responsible for evaluating your nonprofit’s executive director, but your ED’s work is directly impacted by the effectiveness of the board! Having your ED perform their own evaluation of the board as a whole – not of each individual director – can be an important tool for measuring how well the board is supporting and guiding the work of your nonprofit. Assessment by an external consultant If you feel your board or staff team doesn’t have enough knowledge or expertise about board effectiveness to complete an evaluation, you may want to look into hiring an external consultant. Consultants can perform a fulsome, impartial assessment of your board and offer expert tips and insights to address any issues and strengthen their work. Are you asking the right questions? Regardless of which method you use to evaluate your board, make sure you’re asking the right questions to get the most out of the process. Examples of questions you may want to ask include: Leadership Are the board members performing their roles and duties? Is the board and its members performing as expected? How successful is the current chair of the board in running the board and the organization? Procedure and resources Are meetings organized and frequent? Do committees have appropriate resources? Are they effective? Are directors and board members being educated on rules and procedures? Dynamics Do board members get along? Do their attributes and skills complement each other? Are meetings and discussions progressive and constructive? What are the dynamics at informal gatherings (dinners, parties, retreats, etc.)? Relationships How does the staff view the board? What is the relationship between the board and members? Do the members and the staff trust the board to make the right decisions? If your organization is a chapter with regional or national boards, how is your board’s interaction with these? For more insights and best practices on board evaluation, take a look at this helpful resource from Boardable. The Round-Up Let’s do a quick recap of the steps you need to take to build an effective, committed nonprofit board. Know the basic requirements of forming a board and identify the skills your board members may need to have. Determine the best structure for your board, making sure to match your directors’ skills with their roles where possible. Don’t forget about board committees! They can be an important way to put board members’ skills to use while producing better results. Make sure your board members are clear about their roles and responsibilities. Having them review and sign a board “contract” can be an effective way of making sure everyone knows what’s expected and needed. Develop a solid board orientation and training process to get your new board members started on the right foot or to re-engage your existing board members. Know what it takes to host effective and efficient board meetings, including the best methods for taking meeting minutes. Don’t forget to evaluate your board! A regular evaluation process will help you to identify the strengths and weaknesses of your board and take action to improve effectiveness when needed. And here’s a list of some of the key resources we shared in this guide: Nonprofit Boards: 7 Key Responsibilities for Good Governance 4 Steps to Recruiting the Right Board Members for Your Nonprofit 5 Steps to Increase Board Diversity at Your Nonprofit Use These Eight Steps to Design an Effective Nonprofit Board Training Program How to Run a Successful Nonprofit Board Meeting in 8 Steps How to Write Effective Meeting Minutes (with Templates and Examples) Was this guide helpful? Are there any topics you want to know about that we didn’t cover here? Let us know in the comments! 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