We are presenting a lecture on nonprofit board governance this week to a group of MBA students at The Ohio State University’s Fisher College of Business. These students are the future business leaders who will one day be placed on nonprofit boards.
When it’s time to sit on a nonprofit board, we want the students to understand the business model of the nonprofit they are seeking to serve. As future nonprofit board members, they should:
- Know what drives the economic engine. Is it philanthropy, earned income, social enterprise, government contracts, third party reimbursements, or?
- Learn what drives the impact engine. Are the programs evidence-based? Is the organization accredited? Are intended outcomes clearly known?
- Assess debt. Is there a mortgage or reliance on a line of credit? Have there been deficits in recent years? Have board members made loans?
When the time comes for board service, we also want them to do (or don’t do) the following to ensure the best placement and service experience.
DO ask questions:
- What is the mission and vision?
- How big is the operating budget? Can you see the audit or Form 990?
- Who are the leaders, both board and management?
- How are new board members onboarded?
- Does the organization provide opportunities for board development and education?
- How often are board meetings and how are they run?
- Are you required to serve on a committee?
- Does the organization have D&O insurance?
- What is the board’s role in fundraising? Is there a minimum commitment?
- Are there plans for a capital campaign?
- Does the organization have a strategic plan and is it reviewed regularly?
- What data points does the board rely upon for monitoring or decision making?
- What are the main programs and who do they serve?
- How is communication managed?
- How long has the CEO and senior staff served?
DO experience the mission:
- Meet with the CEO and current or former board members.
- Tour the facility.
- Attend a program.
- Sponsor and/or attend a special event.
- Volunteer on a committee or for an activity.
- Talk to a participant.
- Read organization materials, external reports, and news articles.
- Follow the organization on social media.
DON’T make assumptions:
- Your experience on a previous board, or the culture of that organization, may not be the same.
- Your understanding from a conversation may not align with written responsibilities and expectations.
- That the organization is stable — financially, programmatically, and with its leadership.
- Serve on no more than two boards. Your board service should indicate deep belief and commitment.
- Recognize that it’s your investment of time as much as your financial contributions that matter.
- Check yourself against the duty of loyalty test as there could be conflicts of interest when serving on multiple boards.
While especially helpful for first time board members, these do’s and don’ts are important for anyone to consider prior to joining a new board. By ensuring a good fit, board members can fully commit themselves to carrying out their roles and responsibilities.
When business executives have a deep understanding of the organizations they serve, the better they are able to govern and lead. When nonprofits are healthy, so too are families and communities.
Article by: Kerri Laubenthal Mollard, Founder & CEO