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My top 7 matters for nonprofit leaders to consider

 

By Jay Pennie

Over the past 20 years, I’ve worked in the nonprofit arts, culture and education sector in a variety of roles at different times as a staff leader, executive director, as a consultant, and as a volunteer board member. I’ve learned that it takes an incredible amount of work of many dedicated people to make a nonprofit organization function well and meet the needs of its mission. It is not easy. Some will say that nonprofits are “messy” by nature. 

I have been fortunate to work with so many wonderful, devoted, and professional board members who through either instinct or experience did a terrific job of fulfilling their responsibilities with great passion and relative ease.

But, no organization or situation is perfect. When I think back about situations where difficulties arose both in my own experience as well as reading about other nonprofits across the U.S., they seem to all emanate from one or more of the following seven points which are each worthy of discussion beyond the scope of this article. Here are my top seven:      

1.     The importance of instituting best practices for board governance such conflict of interest policies, managing risk, and government and agency compliance. Why is this important?

Too often nonprofit boards do not fully understand their responsibilities nor do they have adequate strategies in place to properly deal with these issues, placing the organization at great risk. Furthermore it is the basic fiduciary responsibility that nonprofit board members fulfill their: duty of care-they need to show up, participate and remain informed of all aspects of the organization; duty of loyalty-must work in the best interest of the organization and not for their own personal gain; duty of obedience-they must be aware of all the laws governing the organization and ensure that they are following them.

 2.     Board nominating committees need to employ best practices for selecting new board members and engaging them once they join. Why is this important?

Nonprofit boards often lack diversity, do not conduct proper background checks, and lack a good system for identifying and recruiting quality board members. The committee must also periodically review the bylaws and update as needed and determine what term limits are best for the organization as well as committee structures. Lack of attention in this area can lead to board or staff “rubber stamping” decisions, poor connections to the communities that the organization is trying to serve, and board members who are not engaged in the mission and activities.   

3.     There must be a clear understanding of roles between the board and staff. The board governs and the staff manages. But, what does that mean in practical everyday terms? Also, the board must understand that there are very important shared responsibilities such as fundraising and strategic planning. Think of a Venn diagram. Why is this important?

A lack of clear understanding of board and staff responsibilities can lead to poor performance by the Executive Director/CEO and high turnover of staff. It can also lead to improper oversight of the Executive Director and conflict battles between the board and staff. There needs to be both clear lines of responsibility and flexibility in the relationship at the same time. The board chair and the Executive Directors are co-piloting the plane in most, but not all situations.      

 4.     The importance of having a process in place for board self-evaluation at least annually. Why is this important?

Clear expectations of board members and the committees they serve on will likely lead to higher performance, satisfaction, and increase engagement and lower unwanted board turnover.

 5.     The importance of proper board oversight of the CEO/Executive Director. The ED should have at least one formal review annually with input from the full board. The review should tie in with agreed upon goals that tie in with the organization’s strategies. Why is this important?

The Executive Director must implement the overall strategies of the organization. A lack of a formalized review process can lead to poor performance by the ED, increased turnover, conflict, and cause the organization to miss defined goals and objectives. 

 6.     The importance of avoiding excessive deference to either the Board Chair or Executive Director by board members. Why is this important?

The lack of oversight of the Board Chair or Executive Director can place the organization at great risk, financially or otherwise. Board members need to ask the right hard questions and avoid a “pack mentality” or “we have always done it that way” thinking. On the extreme end it can lead to scandal and/or financial ruin.   

 7.     The importance of developing a viable strategic plan that supports long-term sustainability of the mission and programs of the organization. Why is this important?

Too often there is little long-term planning or if there is, the plan lacks sustainability from a financial or human resource perspective The plan needs to address both internal and external issues as well as realistic long-term financial support.   

There are probably many other important points that should be discussed. But, these remain my top seven. Feel free to comment about yours. 


Jay Pennie is a management consultant dedicated to helping nonprofit arts, education, and cultural organizations achieve their full potential. He is also President Elect of the Rotary Club of Philadelphia. PhilaRotary.org