Setting up Nonprofit Board Committees for Maximum Effect
When used properly, nonprofit board committees are an effective way to share the load, accomplish more, and zero in on specific issues with more depth. Effective use of nonprofit board committees can increase board efficiency and leave more time for discussion and deliberation at full board meetings.
When should you consider using committees in your nonprofit?
The need for nonprofit board committees and which types will vary based on your organization’s age, size, and activities. Newer organizations may be able to get by with a small working board and few or no committees, while large and established nonprofits would be hamstrung without the robust use of committees.
You’ll want to make a careful inquiry, preferably with the help of a knowledgeable attorney, into the rules of your state, and the needs of your specific organization to determine whether and how to incorporate committees into your board’s activities. Here are some of the considerations.
Standing vs. ad hoc committees.
Standing committees are committees that are needed on an ongoing basis while ad hoc committees are temporary and may be set up for a specific event and dissolved when the event is over.
For example, many nonprofits have a standing finance committee, whose primary function is to engage in an annualized budgeting process, together with financial reporting, and the creation and monitoring of internal accountability and control policies and mechanisms. Larger organizations may also have a separate audit committee, while smaller nonprofits may include audit functions within the overall finance committee responsibilities. Other common standing committees include committees dedicated to governance, nominations, and strategic planning. Many nonprofits also have a standing nominating committee charged with recruiting, vetting, and nominating candidates for the Board.
Additional committees may also be useful if your nonprofit is in a period of significant growth or change, such as expanding operations or conducting a significant capital campaign. Many organizations change over time with respect to their mission, vision, and scope; this may necessitate a periodic re-evaluation of your committees and how they function within your organization.
Many nonprofit boards have a standing executive committee that is authorized to act on behalf of the full board in pressing or emergent situations. A standing executive committee might make sense when:
- Your board is large and/or geographically diverse, making it difficult to arrange last-minute meetings with a quorum.
- Your board needs to take action or make decisions on a more frequent basis than your regularly scheduled monthly or quarterly meetings.
- Your nonprofit is in a season of growth or change that demands significant continuous liaison between board leadership and executive staff.
While the executive committee comprises senior-level leaders who are authorized to take action on behalf of the full board, the committee members still report to the full board. In addition, state law or your organization’s bylaws may require additional ratification of executive committee action by the full board. Often, an executive committee acts as a steering committee for the full board by prioritizing issues for the full board to address. Ideally, the executive committee should support the highest functioning of the full board. The most common activity is exploring complex topics and deciding how to queue them up for the Board. What are the facts? What are the options? Where is the decision to be made? What group process would create the strongest board engagement?
Be careful, however, about ceding too much authority to an executive committee or relying on an executive committee when the Board could otherwise meet. It is not uncommon for executive committees to fall into the trap of acting like mini-boards and leaving the full board out of the loop.
Should you include standing committees in your nonprofit’s bylaws?
If you’ve decided to create or reconsider the functioning of committees for your nonprofit, you may be confused about how to set things up. Unfortunately, it’s a little more complicated than asking for committee member volunteers and scheduling a meeting. You’ll want to make sure that your bylaws and committee charters are carefully crafted to ensure that your committees serve their intended purpose but do not exceed their authority. As discussed further below, it’s often preferable to keep your bylaws focused on the most basic aspects of committee functioning, while relegating the specifics to committee charters. This will allow your organization to respond nimbly when changes in committee functioning need to occur.
First, you’ll want to make sure that your bylaws include basic provisions for creating and abolishing nonprofit board committees, in addition to what authorities may be delegated to committees and what actions must be taken by the full board. Every state has different laws regarding committee functioning so make sure you are up to date on the rules of your state or consult with an attorney who specializes in this area. Many organizations also like to include a provision in the bylaws authorizing advisory committees; advisory committees are a great way to involve additional members of the community in a less formal way or to groom future leaders of the organization.
Once you’ve determined what committees you want for your nonprofit board, it may be tempting to go ahead and roll all of your nonprofit board committee descriptions and rules into your bylaws. Avoid this trap and just include only the most basic high-level information, as described above. By streamlining your bylaws you can allow your nonprofit board committees room to grow and change without the need to amend your bylaws. Committees can then be created and abolished by board resolution rather than a cumbersome bylaw amendment.
The nuts and bolts of nonprofit board committee charters.
Once you’ve outlined the high-level rules of nonprofit board committee functioning in your organization’s bylaws, you can use a committee charter to set forth the comprehensive structure of and rules for each specific committee. Nonprofit board committee charters are helpful on many fronts. They help your board ensure that it is meeting its legal and regulatory commitments, serve as a reference in the case of disputes between committee members, and help to orient new committee members to the committee’s structure and rules.
A well-drafted committee charter should include at least the following basic information:
- Mission and Purpose: Why is your committee being established and what is its main purpose?
- Committee Composition: How many members are required and are there specific qualifications or relationships that must be observed? For example, many executive committee charters require that the board president and key staff, such as the executive director, be part of the committee.
- Duties and Responsibilities: Your charter should set out the key duties and responsibilities of the committee, including when and how meetings will occur, quorum requirements, meeting agenda, minutes and reporting requirements, and the need for board approval of certain actions.
Of course, these are the most basic elements of a committee charter. You may need to adjust your organization’s nonprofit board committee charter to meet the specific needs and requirements of your organization or committee, in addition to considering any overarching restrictions or rules in your particular state. The best course of action is to consult an attorney familiar with the nonprofit laws in your state to ensure your bylaws and committee charters are drafted in a way that is consistent with state law and maximizes the effective functioning of your board.
Ellis Carter is a nonprofit lawyer with Caritas Law Group, P.C. licensed to practice in Washington and Arizona. Ellis advises nonprofit and socially responsible businesses on corporate, tax, and fundraising regulations nationwide. Ellis also advises donors with regard to major gifts. To schedule a consultation with Ellis, call 602-456-0071 or email us through our contact form.