While there seems to be wide agreement that there should be no laws that limit the maximum number of directors on the board of a nonprofit corporation, we all know that there is some number beyond which effective and responsible governance is impractical.  That number may vary depending on the particular nonprofit and its directors.  But the problem of very big boards is still too often overlooked.

 

Imagine if the number of people pictured represented the directors on a board.  How would they set a mutually convenient date and time to meet?  How would they each get a chance to participate at a meeting on each key issue facing the board?  How would the size of the board affect their individual perceptions of their responsibilities?

The starting place in determining whether a board is too big is to look at director participation in board actions and particularly at board meetings.  Are all of the directors active in governance?  Are they all attending a majority of the board meetings?  Do they all have a voice in making important board-level decisions.

Directors are responsible for overseeing, and ultimately directing the management of, the activities and affairs of the nonprofit. Each and every director owes fiduciary duties to the nonprofit, including a duty of care that requires the individual to serve the corporation with such care, including reasonable inquiry, that an ordinarily prudent person in a like position would use under similar circumstances.  To meet this standard of care, a director must participate in (1) making informed decisions; and (2) providing oversight to ensure that the nonprofit is acting to advance its exempt purposes consistent with the law and within its financial means.

The board may delegate the management of the nonprofit to staff, committees, officers, and others, but it cannot delegate its ultimate oversight responsibilities.  Practically, this means:

• delegating responsibilities with due care (e.g., to appropriate persons subject to certain limits, reporting requirements, and accountability mechanisms);
• establishing prudent organizational policies to help improve operations and ensure legal compliance;
• periodically reviewing program reports (which should do more than merely list accomplishments) and financials;
• planning the future course of the organization; and
• getting appropriate assistance and support.

All directors should be involved.  Yet, too many directors are not, particularly on very big boards where it's easy to pass the buck and hide from any scrutiny of their own performance or lack thereof.

Some executives encourage this lack of participation because they do not want directors interfering with their leadership and management and they certainly do not want boards holding them accountable.  Instead, they want a fundraising board that gives, gets, or gets off.  But such boards (if they are largely inactive in governance) are cheating their organizations and eroding the public trust.

Part Two of this post will examine some of the pros and cons of large boards.

Part Three of this post details comments from others regarding large boards.