Your board is an essential component of your nonprofit and provides much-needed guidance and insight. However, mistakes in governance are serious and could end up harming your organization. From failing to fully understand the tax legislation and rules that a nonprofit must follow, to airing board grievances and divisions outside of the boardroom, there are major mistakes to avoid. Here are a few of the most common governance errors boards make (and what to do about them).
As time goes by, the mission for a nonprofit shifts and new practices will be implemented. In some cases, the board fails to update the actual governance documents to reflect the new priorities and practices. To prevent this, bylaws should be reviewed regularly and updated when changes are made. An annual review of governance documents to be sure the group remains in compliance is important. Verifying documents are up to date can prevent or correct this common issue.
Every time your board holds a meeting, follow the governance documents and rules for recording and reporting. If you have specific guidelines for recording minutes, record keeping, and order, follow them or amend them. Without accurate governance documents in place, your board could descend into chaos the first time you have a conflict that divides the members into more than one faction.
Boards are designed to provide focus and direction, but not at the expense of engagement and connection. Boards that exist mainly for the annual meeting and to provide direction, but that don’t get directly involved supporting the organization are missing out on valuable opportunities.
It is a common error. In most cases, the organization does need and benefit from direction, but taking things a step further and getting involved can help the group help its target population and meet its goals. Board members that assist with fundraising, make valuable connections, and are aware of events and operations are best able to help a nonprofit achieve its goals.
When you serve on a board, you have both responsibilities and legal requirements that must be fulfilled. Not every board member is a tax expert or attorney, but all should be aware of the implications of running a nonprofit. From salaries, to employees and contractors, to political lobbying, your board has specific tax-related obligations that must be complied with. Not being aware of these responsibilities could put your organization at risk.
When the board makes decisions, they do so in private. Some decisions and plans are straightforward and everyone agrees. Others are more controversial and may be put to a vote. Both sides of a controversial or split decision need to maintain confidentiality about which members voted for which side. Breaking confidentiality can cause dissent and unrest for the organization and board. Confidentiality is also a must for the general plans and operations of the group. Sharing these things with outsiders could imperil the organization’s mission or reputation. Airing disputes or grievances outside the boardroom can damage the organization and cause strife with employees, too. Be sure to write this into your nonprofit governance bylaws, as stated above.
Boards benefit best with a diverse mix of leadership. Some, however end up very heavy with professionals in the same industry or vertical. If your board is packed with CFO-level executives, your finances will be in order, but you won’t have insight into marketing, the local community, education, or technology.
A diverse board is a thriving one, with more than a single background or point of view and some insights into your local community and the people actually being served. Therefore, if your board all looks alike or shares a very similar resume, it is time to diversify.
While each of these governance mistakes is common, they are also easily remedied. Reviewing your board for one or more of the issues above can help keep things running smoothly and ensure that the groups is able to do its best work for your brand. (RELATED: Tech Future: Board Self-Assessment Tools )
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