Nathan Garber & Associates
Governance & Planning Support for the Not-for-Profit Sector

A Strategy for Building Governance Capacity

by Nathan Garber
reprinted with permission of  Nonprofit Boards & Governance Review
http://charitychannel.com/article_3194.shtml

hile many board members express dissatisfaction with their board’s performance, they are at a loss about what to do about it. There seem to be so many problems, some of which seem so formidable that they are simply ignored. Amazingly enough, even with poorly performing boards, most nonprofit organizations still manage to deliver their programs and services pretty well. This suggests to me that, contrary to the fears of some board members, the organization will not fall apart if the board redirects its time to building its own capacity to provide effective governance and leadership. On the contrary, the act of self-reflection might produce an immediate benefit in terms of a reduction in micromanagement and freeing up the executive director to concentrate on the organization’s programs and services.

 In this article, I suggest that building the Board’s capacity for effective governance can be made more manageable by thinking of the Board’s responsibilities as falling into three broad areas and devoting a year to improving the board’s policies and practices in each area.. The three categories are: assuring integrity and accountability, planning and evaluation, and acquisition and management of financial resources.

Assurance of Integrity & Accountability

The Board has a duty to ensure that all its activities, its decision-making processes and structures conform to legal standards and ethical norms as defined in its articles of incorporation, bylaws, policies and applicable laws. Moreover, it must ensure that those in positions of authority are accountable for their performance.

Planning & Evaluation of Programs & Services.

Year Two:
Improving planning and evaluation

In the second year, the main board task is to review the organization’s mission, vision, values and strategies, paying special attention to how to assess progress. While there are many ways to fulfill this responsibility, the process used by many organizations is called “strategic planning”. Through the strategic planning process, the board periodically reconsiders:

·         the organization’s fundamental values and reason for being;

·         changes in the environment in which it the organization operates;

·         the strategies it will use to achieve its goals;

·         the resources it requires to carry out its strategies; and

·         indicators of progress and how to measure them .

If the plan is developed on a three-year planning horizon, it will automatically be reviewed and revised every three years.

Year Three:
Increasing capacity to acquire and manage resources

In the third year, concentrate on improving the board’s ability to acquire and manage the organization’s financial resources. Building the board’s capacity to acquire funds will require the board to consider how to ensure that directors

·         make “personally significant” donations;

·         commit to an annual fundraising plan; and

·         participate in fundraising activities.

For some organizations, this is already a part of their corporate culture. For others, it may take the whole year. Improving the board’s ability to ensure management of financial resources may likewise be more difficult for some organizations. It will require the board:

·         to acquaint itself with organizational practices for recording and accounting of income & expenditures, handling cash, and management of investment

·         to consider whether current policies and practices are prudent and reasonable.

·         to consider how it will monitor the organization’s financial condition in the future;

·         to review its practices for engaging a competent auditor and what it does with the auditor’s reports.  

Year Four:
The cycle begins again

In the fourth year, it will be time to revisit the board’s policies and practices related to integrity and accountability. By this time, the board will have had at least two years experience with the policies and practices introduced in year one. There will have been some changes in how new directors are recruited, how the executive director is evaluated, and the board's financial practices. Year four is the opportunity to celebrate the achievements and consider what to do next. 

Conclusion

The environment in which the board operates is never static. There are continual and unpredictable changes in directors, staff, and volunteers, government policies, liability concerns, client needs and donor interests, to name but a few. Building the board’s capacity to address issues, demonstrate leadership, and govern effectively is a never-ending element of the board’s job. This job is made more difficult if the board is less than effective in the first place.

I offer this suggestion for board capacity-building in the hope that putting some stability and predictability in the process will make it easier for the board to accept and implement. Keeping this cycle going will help to focus the board on governance issues, provide direction to its work and lead to continuous improvement in the Board’s performance.

Nathan Garber & Associates
Training and Consulting for the Nonprofit Sector
1071 Richmond Street, London, Ontario, Canada  N6A 3K1
tel: (519) 439-3008  fax: (519) 439-3008
Nathan@GarberConsulting.com