Generally, it seems like tension between staff and board members has risen over the past few years. Under corporation laws, the board sits atop the corporate hierarchy and possesses the ultimate power to determine the direction of a nonprofit corporation. Yet, it’s reasonable to ask whether this makes sense when the board of a typical charity with employees is composed of a somewhat diverse set of unrelated volunteers, many of whom do not possess strong experience in leading a nonprofit or managing any of its core functions.
Many board members spend just a few hours per month on governance and do not know any of the staff members except the executive and senior management. Board composition may also be relatively homogeneous. And the average tenure of a public charity board member may run around six years (e.g., two consecutive three-year terms).
Staff members are even more diverse in their experiences. Some, particularly those in senior leadership positions, may have a great deal of nonprofit leadership expertise and acumen, but a majority do not. Some may have deep connections to the communities the nonprofit serves, but many do not. And of course a nonprofit’s staff typically consists of many diverse groups with differing opinions on leadership and management.
Many staff members do not interface with the board or understand the legal/fiduciary duties associated with serving as a board member. If they are not fiduciaries, it is fair for staff members to act in their own best interests, ahead of the organization’s best interests, so long as they comply with the law and internal policies. And the average tenure of nonprofit staff members probably runs less than six years.
With regard to, and in some cases, in spite of, these limitations, nonprofit boards are necessary. In the 501(c)(3) context, because a nonprofit has no owners and holds assets in charitable trust (restricted to advancing charitable purposes), an independent board is needed to serve as the fiduciary steward of those assets, representing the public’s interest and providing accountability, oversight, and protection against mission drift, self-dealing, and misuse of charitable resources.
But that doesn’t mean that boards know best.
So, how should nonprofits hire their executive officers, review such individuals’ performance, determine their compensation, and make disciplinary and termination decisions?
How should nonprofits select board members and determine board member term lengths and limits?
How should nonprofits determine their mission, vision, and values, and how their governance and management, including with respect to the allocation of resources, should be guided by these principles?
How should nonprofits determine whether their activities are effectively and efficiently advancing their mission, vision, and values; what changes are needed; and how to adapt their advocacy-related activities accordingly?
How should nonprofits prioritize current and future needs and whether to create or build up an endowment fund or a quasi-endowment fund (which would offer much greater flexibility to use for current needs)?
How should nonprofits determine their risk tolerances and areas for which the nonprofit will be more risk tolerant versus areas for which the nonprofit will be more conservative in safeguarding the organization, its purpose, its employees, and its communities?
How should nonprofits address existential threats like climate change, growing wealth disparities, and unchecked developments in AI and other technologies?
How should nonprofits address broad threats to the charitable sector, including regarding politicizing charities (e.g., eliminating the Johnson Amendment), threatening their exercise of First Amendment rights (speech, assembly, press, religion), and encouraging the warehousing of charitable wealth for private benefit (even if lawfully considered incidental)?
There are no singular answers to these questions. And we shouldn’t frame these issues as if there are only two choices (e.g., either the board or the staff should possess ultimate decision-making authority).
As readers of this blog know, I am a strong proponent of the Purpose-Driven Board Leadership (PDBL) model championed by BoardSource. It’s an outstanding model that can be used to process these issues, but it’s also one that isn’t so easy to adopt and fully implement on the timelines many nonprofits face. We’ll explore this further in future posts.
One last food for thought: In terms of who knows best, where does artificial intelligence fit in?