Summary: We are going to focus on a topic that might surprise some people; why the board of directors of a non-profit organization can actually be the executive director’s best friend!
Why Do These Tensions Arise?
In most nonprofits, the fact of the industry is that most of the policymakers and decision-makers on a board of directors are volunteers with limited nonprofit managerial experience. This is quite a bizarre situation when you think about it, and can quite often lead to tensions and conflict between the board and the executive leadership team.
The reason this happens is that the function of the board of directors is to ensure that the public good is being served. Because nonprofits receive tax benefits, the law imposes that volunteers (AKA people without a financial interest in the organization) have to oversee it to ensure that the public good is being served.
This results in board members that often have limited experience in managing a nonprofit, or with the nonprofit industry in general.
As you can imagine, this can create quite a tension between board members and the executive directors of a business, as it can seem like they are both working toward different goals.
Shift Your Attention: Look at your Board as a Resource
As a result, many nonprofits have started to look at boards as a “necessary evil”, or a roadblock toward achieving what they want to do. In order to overcome this, nonprofits need to shift their perspective and start to see their boards as a resource instead.
Nonprofit leaders need to start seeing boards as a community-based resource with a lot of potential. Many board members have extensive experience and are quite well connected in their community. There are many ways that nonprofit organizations can benefit from utilizing these community connections.
However, putting this into practice is not as straightforward as it sounds. That is why, in this article, we’re going to take you through some of the most common problem areas, and give you suggestions on how to fix these problems.
Common Issues with Board of Directors in Non-Profits
In this section, we will take a look at some common issues with nonprofit boards of directors. Sometimes, in order to find solutions, we need to look at the most common problem areas. So let’s look at some issues typically encountered by nonprofits:
Do Board Members Show Up to Board Meetings?
The first and most obvious red flag with a nonprofit is that many have board members that don’t even show up to meetings at all. Almost always this is because the meetings are so boring!
Underutilization of the Board
Board members know when they are underutilized. They know when they don’t serve a valuable function to the organization, and this is when they tend to lose interest.
The reality is that there are many ways to utilize a board more effectively. Whether it be capitalizing on their community connections, supporting fundraising goals, or drawing on their extensive experience to help meet the organization’s goals. Policies need to be put in place that clearly defines these roles, and gives the non-profit board members a clear sense of purpose.
Board Members Need to Understand Their Role
It is the board members’ job to provide oversight and evaluate the CEO, but it is the CEO’s job to hire and evaluate their own employees. These organizational roles should be respected by everyone.
Board members should be careful not to undermine a CEO by giving direct orders to a staff member. These roles and responsibilities should be made clear to board members and staff members alike.
Recruitment & Training of the Board
Recruitment needs to be a focus. Recruitment of a board should be done on an extensive and ongoing basis. Board members need to be hired who truly understand the nonprofit’s organizational structure and goals, and whose own goals align with those. Finding a good fit is crucial, especially when so much of the role is about working toward a common goal.
No Evaluation Process
Sometimes, a huge issue with board members is that they don’t feel accountable for the organization’s success. Furthermore, they are unclear about their role and don’t feel a sense of control over their decisions.
Our recommended solution to this is to have an annual board member evaluation. This means an evaluation of each board member individually. This should be based on a set of goals that are determined at the start of the year. This provides the opportunity for a board member to have clearly defined objectives to work toward, and to have these objectives measured at an annual meeting.
What this also does is allows the board member and the nonprofit to see where their goals meet up. During this annual evaluation, both sides have the opportunity to express what works for them and what doesn’t. It can be an opportunity to ensure that everyone is one the same side when it comes to the company’s objectives.
Conclusion: These Issues Are Not So Different
As you can see, there are many potential issues that can arise in this unique nonprofit industry. Throughout this article, we have given you many situations in which problems can arise and offer solutions to each. But at the end of the day, all these solutions are similar in their objective.
The real issue is just in making sure that the board of directors is utilized effectively to help the nonprofit reach its goals. Board members are full of highly experienced people, often with deep ties to the community. Through effective management of the board’s responsibilities, and with clear objectives & goals, the board of directors and executive directors can work together to achieve a common goal.
All of the situations identified above are solved in a similar manner. No matter the issue facing your nonprofit, you can be better off by utilizing your board of directors as a resource, and not viewing them as a hindrance. This is the essential shift in perspective that is the first step toward success.
About the Guest Doug Borwick, Arts Management and Not-for-Profit Management Programs
For three decades, Doug Borwick headed the Arts Management and Not-for-Profit Management Programs at Salem College in Winston-Salem, NC. (He created the latter, one of the first such college majors in the country.) Specializing in planning and board development, Dr. Borwick has served as a consultant for twenty years. In 2012, along with Amy Justice, he founded Outfitters4, Inc.
About The Host Stephen Halasnik, Financing Solutions
Stephen Halasnik is the host of the popular, The Nonprofit MBA Podcast. The Nonprofit MBA podcast’s purpose is to help nonprofit leaders. Mr. Halasnik is the Co-founder and Managing Partner of Financing Solutions. Financing Solutions is a leading provider of Lines of Credit to nonprofits and small businesses.
Mr. Halasnik is a graduate of Rutgers University and has an Executive Masters from the MIT Birthing of Giants Entrepreneurship program. Mr. Halasnik is a best selling Amazon author and is considered a leading authority on building great, purpose-driven businesses. Mr. Halasnik lives in New Jersey with his best friend, his wife Gina. Mr. Halasnik’s number one purpose is raising his two boys, Michael and Maxwell, to be good men.
About Financing Solutions Nonprofit Line of Credit
Financing Solutions, an A+ and 5 stars rated BBB company since 2002, is a direct lender that provides lines of credit to nonprofits and small businesses.
Financing Solutions nonprofit financing product is a great alternative to a traditional bank line of credit because it costs nothing to set up, nothing until used, and when used, is inexpensive. The credit line requires no collateral and no personal guarantees.
Nonprofit Organizations use their line of credit to help with emergencies or opportunities when cash flow is temporarily down (i.e. Payroll funding)
Please feel free to fill out the no-obligation, 2-minute nonprofit line of credit application here. The time to set up a credit line is when you don’t need it so that it is ready to be used, just in case.
Note: Financing Solutions donates 10% of its profits to various nonprofit charities
