Why do many nonprofit organizations struggle with governance issues?
First, there are simply too many nonprofit organizations in the United States. The Third Sector continues to proliferate at an outstanding rate. It seems that anytime someone has a noble idea, with merit, there is an opportunity to create a new organization.
There is nothing inherently wrong with creating a new nonprofit. The problem is a lack of qualified individuals to effectively govern each new entity. The most common question asked by new and existing board members of each other is: “Who do you know that would be a good board member?” We can all list names of qualified people who would serve well but they are all over-committed as it is.
Second, no two nonprofit organizations are governed alike. There is any number of publications, guidebooks or state nonprofit organizations to tell you what is the proper role of a board member or which “best practices” your organization should have in place. But a checklist will not serve you well. It does not explain how your board of directors has developed its governing model over time. It does not examine the depth of the relationship between the governing board and the leadership team. And, finally, the sector is just too diverse in size, scope, and mission to prescribe a defined list of responsibilities.
Third, nonprofit organizations are hesitant to spend limited resources on board development and training. And if they do commit the resources to training, it can often be described as a “consultant” who comes in and informs your board on the actions it should be taking. You know…best practices. Or, in the case of the vast majority of nonprofit organizations, the money is simply not available to invest in board development. Or worse, the board has no interest in becoming a better governing body.
Nonprofit governing members would benefit from clearly understanding three critical concepts: the duty of care, the duty of loyalty, and the duty of obedience. Understand these critical components and you understand governance.
Your board can be improved. The governance relationship between the senior leadership and the board of directors may be enhanced. The key is examining how your board functions and not anyone else’s board. Small- to medium-sized nonprofits need affordable and effective development guidance. If a consultant or practitioner does not invest the time to determine how your board currently governs prior to offering you his or her services, you should re-evaluate how you are spending precious resources.