Improve Your Organization
By Evaluating Your Board of Directors
The information contained
in this site is of general nature and should not be acted upon in your specific
situation without further details and/or professional assistance
As the number of nonprofits skyrockets, so do the
challenges your organization faces. To achieve your tax exempt goals, you need
to use every available resource. Your board of directors can be a valuable
asset. Ask yourself: Is our board of directors a knowledgeable group willing
and able to lead our organization through tough and changing times?
Evaluate your board in the following areas and then take
appropriate steps to increase its contributions to your nonprofit.
Board responsibilities fall into legal, financial and
operational areas, including:
Ensuring that your organization’s mission is appropriate, and
establishing policies to carry out the organization’s goals,
Guaranteeing that the organization complies with its governing
instruments, bylaws and other rules,
Reviewing financial and operational performance, and
Hiring and monitoring key personnel.
Board members should regularly attend
meetings to stay up-to-date and familiar with:
Your mission and governing instruments, such as articles of
incorporation and bylaws,
Key staff members,
Contractual commitments made in connection with
revenue-producing activities, and
Your programs and activities.
Board meetings should:
Convene regularly (at least quarterly or up to 12 meetings a year
is generally advisable),
Start and end on time and work from an organized agenda,
Defer items not on the agenda or not urgent to the next meeting,
Establish committees to work in key areas such as finance,
facilities, personnel and long-range planning, and
Have written minutes that contain adequate detail about
discussions, decisions and authorizations.
The board is responsible for annually evaluating the
executive director’s performance.
Another area for board concern is the threat of
intermediate sanctions for excessive compensation. This threat imposes greater
responsibilities than ever before. You can assess penalties against board
members when unreasonable compensation is found.
The safe-harbor provision that avoids a presumption that
compensation is unreasonable requires the board to:
Be composed of persons who are not related to or controlled by the
person receiving compensation,
Obtain and rely on comparable data about compensation, and
Document the basis for its compensation conclusions.
The board is also responsible for:
Developing job requirements for the executive director,
Establishing personnel policies,
Electing officers and reviewing their performance, and
Authorizing officers and staff to make contractual commitments,
and establish banking and other relationships.
In the area of finance, the board:
Assists with developing and approving the budget,
Monitors fund development programs (though procedures vary among
Reviews financial statements that summarize operations and
account balances at least quarterly (the treasurer and finance committee will
generally review monthly reports), and
Contracts independent auditors and responds to any audit findings.
7 Strategies of a Successful
Board of Directors
No. 1. Look at the big picture. An effective board of directors
poses questions and acts on the answers before trouble arises. For example, it
asks, “What are the objectives of our organization?” “What are the needs
we are addressing?” “How can our organization best serve these needs?”
No. 2. Plan with the end in mind. The budget process is an
example of this. When carefully prepared, the budget is a tool to track progress
and provide an early warning of needed actions.
No. 3. Set priorities. The board should work from an agenda so
that it devotes its valuable time to the right issues. Issues that come up at
meetings but are not urgent can usually be deferred to allow proper planning.
No. 4. Provide
a growth opportunity for staff while working for the organization’s goals.
The organization should strive to meet its goals and, at the same time, provide
an opportunity for staff growth, development and service.
No. 5. Understand
before acting. During a
conflict between the board and the staff or committees, each side should first
understand the opposing side’s position and underlying reasons.
Also, when a request is made, an effective board first seeks to understand
No. 6. Work
as a team. The board’s responsibilities for legal, accounting,
personnel and program matters require a wide spectrum of
skills. The board should be composed of members with skills and interests in
each of these areas and should work as a team to accomplish organization
No. 7. Keep
improving. The board should review the mission statement at least annually
to determine if it’s still appropriate. An annual retreat can be a powerful
way to refresh and energize the board. Outside speakers can sometimes add to a
board’s understanding and ability to serve.
Use this list as a tool for evaluating your board’s
strengths and weaknesses. Then tackle differences while capitalizing on your
With a strong board willing to work together, your
organization will be better able to achieve its goals.