For a nonprofit organization to succeed, it must have a high functioning Board. While management deals with the day to day operations (planning, organizing and executing the organization’s programs), the Board of Directors provides oversight over the organization’s management, finances, mission, and strategic goals.
Nonprofit Board Functions. It is common for nonprofit boards to shift their emphasis based on the current needs of the nonprofit. Over the course of a nonprofit’s lifecycle, a nonprofit’s board may focus on different areas and emphasize different functions. Nonprofit board functions are often divided into three categories as follows:
- Working: For smaller non-profits that lack the resources to hire a full-time staff to manage its programs, the Board’s role. is to plan and manage the organization’s activities.
- Strategic: For well-established organizations, the Board’s role is to provide oversight over the organization’s management and finances, as well as shaping and upholding the organization’s mission.
- Fundraising: For many nonprofits, the primary Board role is to fundraise.
Nonprofit Board Roles. The roles of a nonprofit’s Board of Directors include:
- Establishment of vision, mission, and values. The Board helps determine the company’s vision and mission to guide and set the pace for its current operations and future development. It also determines the values to be promoted throughout the organization and reviews organizational goals.
- Setting strategy. The Board of Directors reviews and evaluates present and future opportunities, threats and risks in the external environment and current and future strengths, weaknesses, and risks relating to the organization. In collaboration with the Chief Executive, it determines strategic options, selects those to be pursued, and decides the means to implement and support them. In conjunction with the Chief Executive, the Board determines the tactics that underpin the organization’s strategy and ensures the organizational structure and capability are appropriate for implementing the chosen strategies.
- Financial and operational oversight. Members of the Board are responsible for hiring the Chief Executive, reviewing the Chief Executive’s performance at least annually and setting the Chief Executive’s compensation. They approve the annual budget, determine organizational policies and ensure they are followed. In addition, they hire the auditor and accept the audit, shoring up any identified weaknesses, and monitor and evaluate the implementation of policies, strategies and business plans.
- Delegate to management. As part of their oversight role, the Board delegates authority to management, communicates with senior management, determines monitoring criteria to be used by the Board, and ensures that internal controls are effective.
- Fundraising. Many nonprofits establish a stated give or get for members of the Board. The idea is to set a goal for donations or personal fundraising for each board member. Others have a more flexible approach stating that the organization should be among the Board member’s top three charitable beneficiaries or that the Board member should contribute a meaningful amount to the organization.
A strong Board of Directors is the backbone of any successful nonprofit. By nurturing a more effective Board of Directors, your nonprofit can successfully achieve its goals.