Board evolution involves changing how board members think, act, and interact with one another.

The fundamentals of building a strong board of directors are relevant across the nonprofit sector, and most boards go through three stages: Organizing/Founding; Governing; and Institutional, which do not necessarily correlate with the amount of time since the board’s founding. Boards need a governance committee and an established assessment process, as well as a plan for cultivating diversity.

As president of Northrop Nonprofit Consulting, I have worked with nonprofits and nongovernmental organizations around the world on strategy, organization development, governance, and change management. From my experience, I have learned that despite significant differences in the context and communities in which nonprofit boards work, the fundamentals of building a strong board are the same across all types of nonprofits. I hope that the information in this article will resonate with and prove valuable to readers striving to build partnerships between community-based organizations (CBO) and healthcare entities.

Board Stages of Development

“Boards are not – and should not – be static. To be effective, they must change and evolve as their organizations change and grow” (BoardSource, 2017a). This is as much the case in the healthcare space as any other segment of the nonprofit sector, and I have certainly found it to be true in my twenty years of working with nonprofit boards. On the other hand, best practices in governance – a set of structures and activities that boards should consistently implement – does connote something static, or rigid. Can the same set of best practices be applied to boards at different stages in their development? I would argue that not only can they be applied, but also that nonprofit leaders can use many of these practices to help move their organization through the development stages.

BoardSource, the leading organization in the United States focused on strengthening and supporting nonprofit board leadership, describes the following stages in a nonprofit board’s development or lifecycle: Organizing/Founding; Governing; and Institutional (BoardSource, 2017a). In each stage, boards tend to have common characteristics, and experience similar challenges and strains, regardless of the type of organization or scope of its operations. Understanding these stages and the common passages or transitions between them can give nonprofit leaders perspective about where their board is in relation to other boards and stages, provide relief in knowing they’re not alone in what they are experiencing and, in some cases, motivate urgency to accelerate their organization’s transition to the next stage.

Recently, I led a governance training in which participants spent time exploring both of these ideas – best practices and stages of development – and determined that the board in question is a Founding Board, in the process of transitioning to a Governing Board. In learning about the stages, the group said they took great comfort in knowing that what they were experiencing is typical, and even greater comfort in learning best practices that would ease them into the next phase.

It is important to note that the stages of nonprofit board development do not necessarily correlate with the length of time since an organization’s founding; I have worked with Organizing/Founding Boards that have been serving the community for more than thirty years, and with Governing Boards that are within a few years of starting up. While organizations may function effectively and for extended periods of time in one phase, the fact that boards should not be static remains true: boards must grow and evolve to meet the changing needs of an organization and clients it serves.

Best Practices for Board Growth and Development

Which best practices can help a board grow and move from one stage to another? Performing an intentional strategic planning process and then using the new strategic plan are key. When an organization’s mission, strategy, and priorities are clear, the makeup of the board to support that strategy also becomes clear. A strategic plan ensures that changes to the board (particularly board composition) are not only aligned with an organization’s mission and goals but also allows making those changes to be less personal.

One of the most valuable practices for evolving and building a board is to have a designated Governance or Board Development Committee. The most obvious reason is that this committee has the following fundamental responsibilities that pertain to good governance:

  • Helps create and clarify board roles and responsibilities;
  • Pays attention to board composition;
  • Facilitates board orientation (also known as on-boarding), education, and exit;
  • Encourages board development and supports board engagement;
  • Assesses and addresses individual and collective board effectiveness; and
  • Ensures strong board leadership and succession.

Sometimes boards can perform these functions without a Governance Committee, for example through an Executive Committee. I have found, however, that all too often these functions get lost in the hierarchy and prioritization of more pressing issues and thus tend to be neglected. A Governance Committee gives the board and executive management a forum and a vehicle for dealing with questions about tough board issues, such as the following:

  • Should we institute term limits?
  • How can we be more responsible and accountable for our own effectiveness, meetings, and functioning?
  • Is it time to encourage our board chair of many years (or any other board member) to move on?
  • How can we stop discussing and instead begin bringing on more diverse, more fundraising-focused, more [fill-in-the-blank] board members?
  • Governance Committee can be hugely helpful in addressing these and other issues that relate to board functioning and effectiveness.

Other Drivers for Board Change

Another key lever for driving board change is a formalized board assessment process. According to BoardSource’s most recent “Leading with Intent” article, only a slight majority (51 percent) of organizations report using a formal evaluation instrument to assess their board effectiveness, despite it being a best practice (BoardSource 2017b).

Some boards conduct self-assessments that ask members how they feel the board is doing- what is going well and what they think needs to be improved in terms of board effectiveness. This is the S-W of a SWOT analysis-the assessment of an organization’s internal environment, its Strengths (S) and Weaknesses (W), coupled with an analysis of the external environment, the Opportunities (O), and the Threats (T) the organization faces. That kind of assessment gathers board members’ impressions and perceptions of board effectiveness, rather than evaluating the board against what the board should look like or be doing-i.e., against governance best practices.

Of the many best practices commonly discussed in governance articles, websites, books, and blogs, knowing the roles and responsibilities of board members is probably the most important information for nonprofit leaders. At any stage in its development, there are ten basic responsibilities of a nonprofit board (Ingram, 2015), as follows:

Determine the mission and purpose. It is the board’s responsibility to create and review a statement of mission and purpose that articulates the organization’s goals, means, and primary constituents served.

Select the chief executive. Boards must reach consensus on the chief executive’s responsibilities and undertake a careful search to find the most qualified individual for the position.

Support and evaluate the chief executive. The board should ensure that the chief executive has the moral and professional support he or she needs to further the goals of the organization.

Ensure effective planning. Boards must actively participate in an overall planning process and assist in implementing and monitoring the plan’s goals.

Monitor and strengthen programs and services. The board’s responsibility is to determine which programs are consistent with the organization’s mission and monitor their effectiveness.

Ensure adequate financial resources. One of the board’s foremost responsibilities is to secure adequate resources for the organization to fulfill its mission.

Protect assets and provide proper financial oversight. The board must assist in developing the annual budget and ensuring that proper financial controls are in place.

Build a competent board. All boards have a responsibility to articulate prerequisites for candidates, orient new members, and periodically and comprehensively evaluate their own performance.

Ensure legal and ethical integrity. The board ultimately is responsible for adherence to legal standards and ethical norms.

Enhance the organization’s public standing. The board should clearly articulate the organization’s mission, accomplishments, and goals to the public and garner support from the community.

How well do boards fulfill these responsibilities? Most boards are pretty effective when it comes to legal and fiduciary oversight, often because nonprofit boards recruit people from the private sector who have expertise in these areas, and the skills are highly transferable. Organization and management oversight tends to be more of a mixed bag. Boards generally perform well when it comes to strategy and program management oversight, but not as well in monitoring program strength or holding management accountable for impact assessment. And, from my experience, boards tend to perform poorly the important job of regularly evaluating the organization’s executive director.

My toughest critique, though, involves the fundraising side. In my years of doing this work, I do not think I have met an executive director who does not want more fundraising efforts from his or her board, nor have I encountered a board that feels it is maximizing its fundraising potential. The “Leading with Intent” survey data back up my impressions, including my observation that boards continue to struggle with the fundraising role. The article also notes a critical, persistent gap in nonprofit boards: board diversity. The latest survey reveals that not only are boards still struggling with the issue, but also the problem is getting worse (BoardSource, 2017b).

How to Cultivate Board Diversity

How then can boards use best practices to address the persistent issue of lack of diversity and other issues of board evolution? Establishing board member terms can help. Terms are simply a length of service or a minimum number of years that the member commits to board service. Terms usually range between two and six years; three-year terms are the most common.

If implemented properly, terms force a board (usually via its Governance Committee members) to have regular conversations with each board member about his or her board performance, engagement with the organization, and interest in continuing to serve. For members who have been missing meetings, not contributing financially (if that is a requirement), or not fulfilling their role in other ways, the end of a member’s term is the ideal time to have what I call a “grown-up conversation.” While sometimes uncomfortable, these conversations should lead to the person either leaving the board or stepping up their level of engagement.

Term limits can be a more conflicting, complex issue. Term limits limit how many consecutive terms a board member can serve (usually two), and they are a best practice. Term limits help prevent the accumulation of power in one individual over the rest of the board; they help the board keep up with and adapt to changing times; they force change, often helping to bring new talent, skills, and perspectives to the board; and they help prevent burnout by eventually moving everyone off the board. In the earliest possible stage of development, term limits should be instituted and codified in a nonprofit’s bylaws.

However, when an organization’s executive director or board member tells me that their board needs to institute term limits-because they want to remove a member who is not contributing, has been around too long, is not helpful, or worse yet, is toxic-they hate hearing that term limits probably will not solve their problem, at least quickly. The challenge lies in the fact that the board that is trying to evolve, in this case by instituting term limits, is the same body that has to discuss, debate, and ultimately approve the term limits. Too often these conversations drag on, or become contentious or personal, and eventually those leading the change effort lose the will to fight. Instead of focusing on term limits, I encourage boards to use board terms and the “grown-up conversation” strategy to nudge stagnant members off the board. Once the board has done this and been able to transition and evolve a bit, it is easy to implement term limits.

The more time I spend in the nonprofit sector and the more organizations I work with, the more I see that not only do best practices apply in all stages of an organization’s development, but they also apply across types of organizations (e.g., direct service, advocacy, membership) and fields (e.g., human service, education, social justice, health). I also have seen that beyond best practices, board evolution is about leading change – changing the way people think about things, do things, and interact with one another – and this is the tough part. But if a nonprofit board can consistently reflect on its purpose and evolve, it will be well on its way to building board strength.

Conclusion

Nonprofit boards move through different stages of development and must evolve and grow as their organizations grow. Governance best practices should be implemented by boards at every stage of development and are a key lever to help nonprofit boards transition to the next phase. Being clear on roles and responsibilities, establishing a governance committee, instituting terms and term limits, and using a formal board assessment process will strengthen both the board and the organization to ensure quality service delivery and mission fulfillment.

Gayle Northrop is the president of Northrop Nonprofit Consulting and a lecturer and senior faculty advisor at UCLA Anderson School of Management in Los Angeles, California, where she teaches social entrepreneurship, impact measurement, and non – profit governance.

‘Boards must grow and evolve to meet the changing needs of the organization and clients they serve.’

A key lever for driving board change is a formalized board assessment process.

Not only are boards still struggling with diversity, but the problem is getting worse.

References

BoardSource. 2017a. “Board Passages: Three Stages in a Nonprofit Board’s Lifecycle.” goo.gl/z1g5u5. Retrieved October 15, 2017.

BoardSource. 2017b. “Leading with Intent.” goo.gl/hfcFFx. Retrieved October 15, 2017.

Ingram, R. T. 2015. Ten Basic Responsibilities of Nonprofit Boards (3rd ed.). Washington, DC: BoardSource.

Copyright American Society on Aging Spring 2018

 

This article was written by Gayle Northrop from Generations and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.