Because you have to. That’s what the law says.
Why else? Because having a board does add value – more value than raising or giving money.
Fundraisers and executive directors must be experts in corporate governance. It’s your job to understand corporate governance and explain it to your board members.
Go to workshops. Read books. Visit my website for lots of information about corporate governance.
First, keep in mind that corporate governance is a collective activity. No single individual board member matters – only the group (called the board) matters.
Second, remember that corporate governance only happens when the board is together at its meetings.
So what, exactly, is corporate governance? The process whereby a group of individuals (typically called a board) ensures the health and effectiveness of the organization (whether for-profit or nonprofit).
What does a board do at its meetings? The board talks about information – the trends and implications. The board asks essential and cage-rattling questions. With the support of staff, the board explores and argues. And, as appropriate, the board decides. And the board usually decides by voting.
What does the board talk about? The board talks about its core areas of responsibility. And what are those? Things like:
· Relevancy, mission and impact
· Financial sustainability
· Legal and regulatory compliance
· Risk management
· Governance effectiveness and board member performance
Review the role of the board, posted on my website. Make sure your board adopts a policy defining the board’s role. And your policy must cover everything in my example. Corporate governance is corporate governance. There’s no distinction between different types of organizations. There’s no distinction based on size.
Yes, how you do the work may differ somewhat. And, if you’re a small organization, your board members may help carry out management / operational activities. But that’s not what your board does. Your board – at its meetings – does corporate governance.
Focus! Make sure your board does the right stuff. Your board is ethically and morally and legally accountable to carry out corporate governance. So do it! Or do you want to explain why you’re not doing what you’re supposed to do? Do you want to explain that to donors and the government? I think not.
Review the board’s role posted on my website. Now figure out how to do that work at the board meeting. Explore the easy stuff first, for example: The Board’s job is to ensure financial sustainability and integrity. How do you do that at a board meeting?
The board reviews and adopts the budget. The board reviews actual performance compared to budget. The board adopts a fund development plan and monitors the progress of raising money. The board reviews and adopts gift acceptance policies and borrowing policies.
Visit my website and review the due diligence outline. That document outlines how to carry out the board’s role.
One final thought: Do not confuse the individual board member with the board. They are different! The board is a collective and only does its work and has authority as a group when it is together. The individual board member functions as part of the group that is called the board.
Make sure you define the performance expectations of the individual board member. And remember, you expect the same performance for every single board member.
Curious about what you should expect of all board members? See board member performance expectations posted on my website.