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Friday, June 24, 2011

The Essential Roles for All Nonprofit Boards - Amy

The list of essential roles for nonprofit boards could be very long. When we first started talking about Boards 6 weeks ago, we discussed fiduciary responsibility – or acting as the caretaker of the organization. While this does include monitoring the financial state of the organization, it also includes making sure the organization is following the mission. We also discussed the “prudent man rule”. The Prudent Man Rule resulted from a common law case in Massachusetts in 1830 and directs that an individual should act in a way using the discretion, intelligence, and prudence a common man would use in dealing with his own affairs. Since a Board of Directors is ultimately handling the money and management of an organization owned by its stakeholder and/or the community, the expectation is that they will use the Prudent Man Rule in the handling of the affairs of the organization. The other essential task that must be administered by boards is the evaluation of its CEO. The CEO is answering to the Board of Directors. All other employees hired by the CEO are subordinate and ill-suited to monitor and evaluate how effect the CEO is as a leader and manager. While this task may be difficult for Boards that allow their CEOs a lot of decision-making power, it is still a role that should be fulfilled by the Board.

Other roles that may be taken on by a nonprofit board include fundraising, policy making, marketing, and strategic planning. The extent to which the Board may participate in these roles depends on the organizational structure and how involved the Board wishes to be. In larger organizations, fundraising and marketing may be large enough that it warrants full-time paid employees to manage it instead of a few part-time volunteer board members overseeing the events. I would argue that strategic planning is a role that should be jointly handled by the CEO/paid staff and the Board of Directors. This is an important task for any organization that requires input from all levels, buy-in to be effective, and helps the organization stay committed to its mission. While the Board should have say and input in most of the administrative policies, it may be more appropriate in larger organizations or those with specialized requirements to have the CEO completing the polices that are used every day such as the Standard Operating Procedures.

Other agency attributes that should be taken into consideration is the governance style, size of the Board, and funding streams. In an agency where the CEO is the main decision maker, the Board may not have the same roles as an organization where the Board makes most of the decisions. As we briefly talked about above, depending on the size of the organization, a large organization with a large board may not need as much involvement from its board members as a small organization with a small board. Smaller boards may be required to take on more roles simply because there is no one else to do it and the agency doesn’t have the money to add staff or hire a consultant. Finally, depending on the available funding streams, agencies may not need as much money from donors or fundraising, because they are getting their money from grants or government contracts.

These are just a few of the roles that a nonprofit board may take on, as well as some aspects of the board that affects those roles. Just as an agency needs a lot of tools in the toolbox to get the job done, the Board may need to wear a lot of hats to get the job done as well.

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