The Stanford Social Innovation Review presented a live webinar yesterday on Better Board Governance. In the webinar, William F. Meehan III, Lecturer, Stanford Graduate School of Business, discussed 9 Attributes of Effective Nonprofit Governance:
- An aspirational mission, with understanding and commitment
- Explicit goals, strategies, and plans to achieve mission
- Board’s roles and responsibilities in achieving mission explicit and well understood
- Sound, objective process to evaluate Executive Director
- Small group of committed and cohesive leaders
- Appropriate size/composition of members to provide necessary skills, perspective and financial support
- Well-defined processes/structure for handling key decisions/responsibilities [focus here was on large organizations with multiple committees]
- Board members view their time as well spent
- Board engaged in the substance of the organization [beyond committee reports]
I think it’s helpful to balance these attributes, which Meehan described as principles and not requirements, with an understanding of how the law applies and may apply. For example –
A very specific, inspirational and aspirational mission statement might impose limitations on how the organization evolves and risks of operating outside of the organization’s corporate authority, depending on how it is worded and where it is documented. Accordingly, it may be strategic to provide for a more general charitable purpose statement in the articles of incorporation and, if the mission statement is included in the bylaws, a catch-all provision that allows for potential expansion of the mission statement over time.
In developing goal, strategies, and plans to achieve the mission, the board needs to make sure the organization is properly informed about the applicable laws and risks and has adequate resources to address compliance and appropriate risk management. For instance, developing goals, strategies, and plans focused on the use of social media to achieve the mission should include guiding rules and policies and the allocation of sufficient resources to provide for compliance and risk management. You should know the rules before you play the game.
The board members must each understand their individual legal and fiduciary duties in addition to the board’s roles and responsibilities. Appeasing board members that don’t live up to their individual duties because they once were or continue to be valuable supporters of the organization may need to be reconsidered. Perhaps recognizing them with honorary titles and delegating to them workable committee leadership functions make more sense than having them continue to serve as poor-performing board members who put themselves at additional personal risk for failing to meet their fiduciary duties.
I’d love to see more presentations on governance jointly presented by nonprofit management consultants and nonprofit attorneys to address both practical and legal concerns.