To close this series of posts, I offer some thoughts offered by other sources on board size:
IRS (2009): “Attention should also be paid to the size of the board ensuring that it is the appropriate size to effectively make sure that the organization obeys tax laws, safeguards its charitable assets, and furthers its charitable purposes. Very small or very large governing boards may not adequately serve the needs of the organization. … very large boards may have a more difficult time getting down to business and making decisions.”
Panel on the Nonprofit Sector (2007): “The ideal size of a board depends on many factors, such as the age of the organization, the nature and geographic scope of its mission and activities, and its funding needs. Although a larger board may ensure a wide range of perspectives and expertise, a very large board may become unwieldy and end up delegating too much responsibility to an executive committee or permitting a small group of board members to exercise substantial control.”
Senate Finance Committee Staff Discussion Draft (2004): “Board Composition – Board shall be comprised of no less than three members and no greater than fifteen.” [This proposal was fortunately never turned into legislation, but the appropriate range determined by the Senate Finance Committee Staff may be a helpful starting point for discussion by startups – GT]
American Red Cross – Governance for the 21st Century (2006):
- “Generally, the non-profit sector, like the commercial sector, has come to recognize that smaller boards—which meet more frequently and have standing committees focused on particular issues relevant to the organization—are more effective than overly large boards.”
- “[M]edian board size among nonprofits participating in BoardSource surveys declined from 17 members in 1994 to 15 members in 2004. Two large nonprofit organizations that recently studied their governance practices, the United Way and The Nature Conservancy, concluded that smaller governing boards were desirable. The Nature Conservancy reduced its board from 40 to 21 members after determining that “a 40-member Board could not govern effectively, no matter how qualified the members were; there were simply too many of them to operate as a modern, hands-on board.” After study, the organization concluded that a smaller board would “improve [its] effectiveness without compromising the necessary oversight for what is a very large and complex organization.” Similarly, the United Way reduced the size of its board from 50 to a range of 20 to 40 after its governance study, and currently has 26 board members.” [The American Red Cross pledged to reduce its board size from 50 directors to a range of 12-20 by 2012 – GT]
- “The trend toward smaller boards also is manifest among for-profit entities. Best governance practices in the for-profit context favor smaller boards. “Directors serving on a smaller board will have more opportunity to participate actively in board deliberations, whereas larger boards may inhibit effective participation by individual members.” Some experts suggest that corporate boards should have no more than ten members, with 12 being the absolute maximum. A 2005 survey of the 500 largest public companies indicated that the average corporate board of directors had 10.7 members, with two-thirds having nine to 12 directors.”
Urban Institute – Nonprofit Governance in the United States (2007):
- "Large board size has been cited as contributing to governance failures in some of the more highly publicized scandals at nonproﬁts, and occasionally proposals have been ﬂoated to impose an upper limit. … While large board size may contribute to problems at some nonproﬁts, our ﬁndings do not indicate larger board size per se detracts from board engagement. Indeed, to the extent that it had any association with activity levels (and usually it did not), it was a positive one: board size was positively associated with board activity in fundraising, educating the public about the organization and its mission, and trying to inﬂuence public policy. As this shows, nonproﬁts use large boards as a fundraising tool, and nonproﬁts with large and active fundraising boards were indeed more likely to say it would be difﬁcult for them were they required to limit board size to 15, as has sometimes been proposed." [Unfortunately, the publication does not define "large board size," but the context may suggest that the term refers to a board with more than 15 members. Moreover, large board size was not correlated to financial oversight, program monitoring, future planning, policy setting, CEO evaluations, or acting as a sounding board for management. - GT]
- "Board size was negatively associated with the ratio of minorities on the board, and age was also negatively associated."
- "On average, boards had 13 members, with a median of 11. Twenty-six percent had more than 15 members, most of whom (59 percent) said it would be difﬁcult for them if they were required to limit board size." [Sample size was 5,100 organizations – GT]
Part One of this post reviewed the legal duties of directors and recommended that an appropriate board size should take into account the number of directors actively participating in the governance of the organization. Part Two focused on pros and cons of very large boards and concluded that the cons typically outweigh the pros.