Board Governance: Protecting the Public Interest
With a fluctuating economy and variable, often insecure streams of revenue, nonprofit organizations require a strong board of directors to provide steadfast stewardship. There are various motivations behind joining a board of directors, but a common thread is usually found in the gratification that comes with being able to work for the public good, and hopefully making a difference.
Though the reasons for joining are important to remember, what becomes more crucial is an understanding of a board member’s role and responsibility. Being able to bring individual members together to provide thoughtful leadership in order to make informed decisions that serve the mission of the organization is governance at its most basic. This aspect of board membership plays an integral part in the failure or success of any nonprofit organization.
While nonprofits often select board members that have diverse strengths, it is critical that each member, no matter their individual role, understands the nature of board governance along with the responsibilities and risks it encompasses. Governance boils down to protecting the public interest. Essentially, a board must be able to determine the mission of the organization, what it wants to accomplish, how it will reach its goals, what resources it needs to function effectively and securely, and then monitor its services in order to gauge its overall impact. In order to complete these tasks, a familiarity with the Articles of Incorporation and especially the bylaws is important. Bylaws spell out many governance matters and give guidelines for the procedures necessary in handling particular issues that may arise.
Proper governance requires a board of directors to do the following:
- Determine the mission, purpose and core values of the organization
- Select a chief executive, set their compensation and keep up with evaluations of their job performance
- Decide what programs will be most useful in accomplishing your mission
- Secure resources, financial and otherwise, in order to run programs successfully
- Create a strong public image that ensures integrity
- Engage board members in conversations about plans for the future of the organization
- Assess the effectiveness of the board itself and always look for ways to improve
In addition to the above essentials, fiduciary responsibilities and legal duties also come into play. Taking on fiduciary responsibility is to ensure that the resources of an organization, including all assets in addition monetary funds, are utilized properly and in a legally accountable way. It demands that board members always act for the benefit of the organization they serve instead of themselves. Objectivity and honesty are needed from board members in order to keep the organization from any unnecessary risk.
The basic legal duties include the following:
- Duty of Care – Being capable of making informed decisions
- Duty of Loyalty – Putting the organization’s interests before your own and avoiding any conflicts of interest
- Duty of Obedience – Staying true to the mission while complying with all laws and regulations
Board membership involves all of these functions of governance as well as an understanding of the risks involved. Accountability will always fall to the governing board and individuals can be held liable for inappropriate acts by the organization. This makes active participation, informed decision making and resource development of paramount importance.
Strong board governance is essential to the success of a nonprofit and the responsibility of a board of directors to act along those guidelines helps create a clearer path on which to move an organization forward.
Interested in learning more about nonprofit board governance?
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