Top 5 Mistakes of Boards

By Zachary S. Kester, JD, LLM, CFRM, at Charitable Allies

In the past few months I’ve received many calls regarding badly behaved Boards, and become aware of at least two Indiana Attorney General investigations into nonprofits. That got me thinking about the top mistakes of nonprofit boards.

I am not going to round up the “usual suspects” in this article—many nonprofit leaders already know about fiduciary responsibility and keeping good records. Instead, here are the “sleeper” mistakes—the Top 5 Mistakes of Boards that, in practice, often create more damage than the obvious oversights and might not be on your radar:

  • Failing to Monitor Programming Effectiveness or Make Course Corrections
  • Not Wrestling With Tough Questions
  • Board-Level Confidences are Not Kept
  • One Person (or a Small Group) Runs the Show
  • Not Holding Executives and Inactive Board Members Accountable

Are you on a board characterized by one or more of these mistakes? If so, you may want to start a board meeting analyzing these issues.

  • Failing to Monitor Programming Effectiveness or Make Course Corrections. Nonprofit Nonprofit boards are sometimes faced with declining programming revenue, requests of grantors for additional outcome measures or a decrease in interest from typical funding sources for a particular program. They should be asking “Why?” and “What can we do?” in these situations. If the programming is not effective, or the organization is unable to show its effectiveness, many managers try to gloss over the problem rather than engage the board and its resources in determining a solution. This is both a missed opportunity and a board failure. The oversight of boards is not only financial, but extends to programming.

 

  • Not Wrestling With Tough Questions. Nonprofit leaders are here to help people. Asking tough questions is therefore uncomfortable at times. A good board member will politely and diplomatically ask the tough questions and share concerns. This will hopefully be well received by the other board members and result in frank discussions. It may also be helpful for one board member to talk about their concerns to other board members at a time other than the board meeting to identify whether others share similar concerns. If your board is not wrestling with tough issues, it should evaluate whether it is being effective.

 

  • Board-Level Confidences are Not Kept. This is one of the largest hindrances to effective board governance. The Executive Director or CEO is generally a board member (either nonvoting or full). Any decision made by the board is the decision that person will implement. If the ED or CEO frequently says to a colleague something along the lines of “the board decided” or “over my objection” then that person is affecting the integrity of the Board. Further, individual board members—whether voting or nonvoting—should be able to talk freely with one another and in meetings with the confidence that their comments and conversations will stay within the board. This is the only way to ensure open, honest and full conversation. The board room should be virtually sacrosanct.

 

  • One Person (or a Small Group) Runs the Show. Sometimes an Executive Director, the founder, the board chair or the executive committee are in full control of the organization, making every decision, determining what information the board is entitled to have, etc. This person or group of people is not, however, where the buck stops; it stops with the full board. It is the full board that will be held responsible if bad things happen—much like the Lemington Home for the Aged board that simply did not pay attention. It may take one lone voice that is willing to question (see #2, above) in order to get things to change.

 

  • Executives and Inactive Board Members are Not Held Accountable. Too often, nonprofit boards let their finger off the pulse of the organization. They do not complete assessments of the executive director, and often do not complete self-assessments. When board members are inactive, or are little more than a warm body in the board room. Even if the executive director or inactive board member is not actively doing something “wrong” (i.e., stealing, treating people very poorly, etc.), not showing up or not performing to par is equally bad. These types of executives and board members often desire to improve and be more involved, but just may need some guidance. Sometimes though, they can, in fact, be dead weight, causing more harm than the good they bring to the organization. These directors will usually self-select off when the involvement responsibilities increase.

Hopefully these Top 5 Mistakes of Boards have given you some food for thought. They may even lead to some good conversations!

Charitable Allies is a 501(c)(3) charity that serves the legal and administrative needs of nonprofits in Indiana and beyond. Contact Zac Kester, Executive Director, at 317-429-1649 or zkester@charitableallies.org with any questions.