Why have a board?
You have to have a board. That’s what the law says. Any other reason? Well, having a board really does add value – more value than just raising or giving money.
- Written by
- Simone Joyaux
- March 23, 2014
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. When you’ve finished this article, visit my website for lots of information about corporate governance.
Things to keep in mind
First, corporate governance is a collective activity. No single individual board member matters: only the group – the board – matters.
Second, remember that corporate governance only happens when the board is together at its meetings.
What, exactly, is corporate governance?
It’s the process whereby a group of individuals (typically called a board) ensures the health and effectiveness of the organisation, whether for-profit or nonprofit).
What does a board do at its meetings? The members talk about information, the trends and implications and its core areas of responsibility, such as:
- Relevancy, mission and impact.
- Financial sustainability.
- Legal and regulatory compliance.
- Risk management.
- Governance effectiveness and board member performance.
The board asks essential and cage-rattling questions. With the support of staff, the board explores and argues. And, as appropriate, the board decides, usually by voting.
Make sure your board adopts a policy defining the board’s role, which must cover everything in the example at the top right. Corporate governance is corporate governance. There’s no distinction between different types of organisations. There’s no distinction based on size.
Yes, how you do the work may differ somewhat. And, if you’re a small organisation, 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.
Make sure your board does the right stuff. Your board is ethically, 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.
When you’ve finished your review of your board, 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 to do this 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.
The outline of due diligence, second right, will show you how to carry out the board’s role.
One final thought: do not confuse an 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 from every board member.
Curious about what you should expect of all board members? See board member performance expectations, last right.