Therefore, this article is not going to round up the “usual suspects” that 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.
Top Nonprofit Board Mistakes
- Failing to monitor programming effectiveness or make course corrections
- Not wrestling with tough questions
- Not keeping board level confidences
- One person (or a small group) running the show
- Not holding executives and inactive directors accountable
1. Failing to monitor programming effectiveness or make course corrections.
It can be tough to admit when a program your team has invested time and effort into just isn’t working. It could be that a program isn’t bringing in enough grants, donations and program service revenue to fund itself. Programs that aren’t attractive to donors or institutional funders often must find a permissible way to bring in revenue. But if a program is a net loss regularly, it is part of the duty of your board to reevaluate it and make a course correction.
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, it extends to programming. But don’t view this as a funeral – see the opportunity in failure. If your board can regroup after a tough loss, the nonprofit can come out stronger than before with more impactful programs.
2. Not wrestling with tough questions.
Asking tough questions is sometimes uncomfortable, but often beneficial. A good director will politely and diplomatically ask the tough questions and share concerns with the rest of the board. Whether your organization is facing challenges recruiting and retaining staff or finding funding, your board should be the think tank where these difficult topics can be openly and honestly discussed. It’s not easy to be the person who challenges or questions the status quo, but it can cause discussion and insight that benefits everyone. This will hopefully be well received by the other directors and result in frank discussions.
It may also be helpful for directors to talk about their concerns with other directors outside of the context of the normal board meeting to identify whether others share similar concerns. These one-off conversations can help people share their concerns more candidly. However, beware of your board forming cliques, which can cause conflict. If your board is not wrestling with tough issues, it should evaluate whether it is being effective. No organization is perfect. So if you find your board isn’t solving problems regularly or finding ways to be more effective in programming or fundraising, you might not be asking the right questions.
3. Board-level confidences are not kept.
Board-level confidences being kept means keeping certain information confidential, but it also includes board members choosing not to dissent publicly. Though there should be a healthy amount of discussion and disagreement within board discussions, once a vote is made, every member of the board needs to publicly respect and abide by those choices. The Executive Director or CEO is sometimes a director as well (either non-voting 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 directors—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. Board discussion should be confidential. This is the only way to ensure open, honest and full conversation.
4. 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. If there’s one person or a small group making every decision and/or determining what information the board is entitled to have, something is wrong. Whether it’s a founder who doesn’t want dissenting opinions presented or a board chair who has gone rogue, I’ve seen these scenarios lead to major conflict on boards. This person or group of people is not where the buck stops legally speaking; it stops with the full board.
It is the full board that will be held responsible if bad things happen—much like the board that simply did not pay attention and was held personally liable for $2.25 million. It may just take one lone voice that is willing to question (see #2, above) in order to get things to change. But realistically, you recruited the people on your board for a reason. Whether they are a prominent donor or a subject matter expert on your cause, each board member has something valuable to contribute. Making board members feel silenced is a disservice to the organization, robbing the nonprofit of their insights.
5. 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. While these exercises can feel like a formality in small nonprofits, they are beneficial for several reasons. Assessments like annual reviews leave a paper trail, which is always helpful if conflict ever arises. But it also provides a level of accountability and clear goals for the Executive Director and the Board. It can be difficult to rally an entire board around a set of goals, but it’s nearly impossible if those goals aren’t clear and measurable.
Be honest and up front with new directors about the time commitment you expect from board members to avoid recruiting inattentive directors. Though life happens and sometimes causes people’s priorities to change, noncommittal directors can cause problems with their absence, even blocking the board from being able to take action if they don’t have enough people present for a quorum. These directors will usually self-select off when the involvement responsibilities increase. But if they do not, there are ways to remove a board member who has become MIA for a long period of time.
Hopefully, these top five nonprofit board mistakes have given you some food for thought. They may even lead to some good conversations! Are you on a board characterized by one or more of these mistakes? If so, it might be time to tackle question 2 right off the bat and face the tough questions head on.
- Ellie Carter, https://charitylawyerblog.com/2009/10/05/top-15-non-profit-board-governance-mistakes-from-a-legal-perspective/
- Gene Tagaki, https://www.nonprofitlawblog.com/category/governance/
- Jan Masaoka, Blue Avocado, https://www.blueavocado.org/content/ten-biggest-mistakes-boards-and-executives-make
- Melanie Lockwood Herman, Venable, https://www.venable.com/the-top-10-legal-risks-facing-nonprofit-boards-02-18-2011/
- BoardSource Book, Case Studies for Nonprofit Leaders