Effective Governance of Nonprofit Boards: An Evolution

As we celebrate our 15th anniversary, we’re publishing a series of articles about how our business has changed over the years. This month’s article focuses on now nonprofit boards have increased effective governance.

Ineffective governance

“Effective governance by the board of a nonprofit organization is a rare and unnatural act,” Harvard Business Review proclaimed in the September-October 1996 piece, “The New Work of the Nonprofit Board.”  

The article continued: “Only the most uncommon of nonprofit boards functions as it should by harnessing the collective efforts of accomplished individuals to advance the institution’s mission and long-term welfare. A board’s contribution is meant to be strategic, the joint product of talented people brought together to apply their knowledge and experience to the major challenges facing the institution. What happens instead? Nonprofit boards are often little more than a collection of high-powered people engaged in low-level activities.” 

If you find this description amusing, you might remember a time when nonprofit boards lacked accountability, members were underused, and governance was more of a formality than a results-focused strategic practice. Perhaps more than any other facet of nonprofit organizational development, nonprofit boards have evolved dramatically for the better within the past 15 years.  

Boards have cultivated their capacity to lead 

Fifteen years ago, most nonprofit boards existed to micromanage an organization. They formed committees to keep tabs on business operations. They reviewed dozens of pages of information during quarterly meetings, many of which were ill-run and inefficient.  

Today nonprofit boards are more sophisticated. They are having conversations about their leadership styles and working hard to increase their capacity to govern more effectively.  

Board governance approaches in 2023 ranges from operational oversight (least mature) to generative visionaries (most mature): 

• Operational: When a nonprofit board and staff are equally involved in defining problems and opportunities for the organization, the board is said to be in an operational mode. 
• Strategic: A strategic board works with nonprofit management to discover strategic priorities and drivers for the organization. 
• Generative: Used when nonprofit staff successfully run both operational and strategic functions, a generative board thinks through and picks apart different organizational components to challenge and improve the nonprofit.
  

Progressive boards today aim to serve in a generative capacity and pursue solutions by focusing on big-picture questions, analysis, and constructive debate. 

Boards are strategic thought partners 

Today nonprofit boards see themselves not as the body dominating a CEO or Executive Director, but as a strategic thought partner who trusts the organization’s leaders to do their jobs. This perspective translates into less micromanaging from the board and more sharing of responsibilities with the nonprofit’s leadership.  

Performance management is one of the keys to such a partnership. In addition to assessing the executive team’s performance, boards today hold themselves accountable to their own performance. Many undergo formal performance reviews or ask senior leaders to provide informal feedback about how they might govern more successfully.  

Beyond regular board meetings, consistent communication and check-ins between the board chair and executive leader are critical to ensure a strong partnership. Authenticity and transparency are necessary, too, especially when the organization is navigating a challenging period financially.  

Boards are increasingly interconnected 

In 2003 BoardSource’s A History of Nonprofits in the United States cited Ten Basic Responsibilities of Nonprofit Boards. They are: 

• Determine the organization’s mission and purpose. 
• Select the chief executive.
• Support the chief executive and review his or her performance
• Ensure effective organizational planning. 
• Ensure adequate resources. 
• Manage resources effectively. 
• Determine, monitor, and strengthen the organization’s programs and services. 
• Enhance the organization’s public standing.  
• Ensure legal and ethical integrity and maintain accountability. 
• Recruit and orient new board members and assess board performance. 

Although these responsibilities have stood the test of time, this insular perspective of board governance is outdated. In 2023 a nonprofit board must think and act beyond its organization.  

In our article, “Reframing Board Governance for Nonprofits,” we discuss that nonprofits increasingly are becoming interconnected. They operate beyond the scope defined by the list above because they need to concern themselves with the work of other organizations to make the most informed decisions.  

Today some nonprofit boards govern as a network for a sector of the community. They operate with a shared leadership structure and share accountability between themselves, too. Such interconnectedness allows for widespread community impact and broader mission delivery. 

Boards are engaged in their professional development  

Learning and development as a field has transcended an organization’s workforce. Providing training for a nonprofit board is now best practice, with leaders onboarding new members and conducting annual group trainings at board meetings or retreats. 

BoardEffect recommends the following governance topics for training nonprofit boards: 

• Board member job descriptions 
• Expectations for financial giving 
• Board orientation 
• Spreading the work of the mission 
• Fundraising strategies 
• Review of Robert’s Rules of Order 
• Board self-evaluations 
• Networking with community business professionals 
• Developing effective agendas 
• Meeting facilitation 

Within the past decade and a half, board members are thinking about and pursuing their own development, too. And many educational institutions offer programs to help professionalize board governance. For example, the Junior League conducts an annual board certification program for any of their members interested in serving on boards in local communities. IMD offers a Board Director Diploma, and Wharton Executive Education administers a six-week corporate governance program. 

Boards prioritize diversity, equity, and inclusion 

Like it has for most of the organizational development areas we’ve explored through this anniversary series, the diversity, equity, and inclusion movement (DEI) is revolutionizing nonprofit boards. Fifteen years ago, despite the diverse people they served, many boards were comprised primarily of white men. Today, organizations are considering their constituents when assessing board representation. Many boards even include seats for clients benefiting from the services they provide. 

Additionally, many board members have embarked on their own DEI journeys. They are thinking about how they personally align with the work of the organization and how they might better embody those values themselves. The real work of board diversity is to mirror the community served, share decision making with diverse stakeholders, set short-term benchmarks for progress, and uphold transparency throughout the journey. 

Nonprofit boards have made a lot of progress during the past 15 years, from transforming their leadership and partnership approaches to evolving professionally and personally in their roles. We at Brighter Strategies are excited about this growth and seek to partner with good organizations to do good work through effective board governance. Contact us today to learn more.