3 Key Areas That Optimize Your Nonprofit Board's Governance

Not enough or too much information? Just how much information do nonprofit board members need and want to do their jobs? And at what point does the amount of information lead to micromanaging the executive? 

Executives, by and large, tend to provide too little substantive information and too much non-substantive information that support ensuring the board can do its job of governing. Bottom line — this is not about how much information is too much or too little, but what information best supports a board in doing its job of governing.

Governing centers around fundamental strategy and evaluation. Nonprofit boards are accountable to mission, their constituents, funders and regulators. To satisfy this responsibility, here are the three buckets of information that can support a board in fulfilling these duties.

1. Financial Information

All communication from the executive to the board begins with understanding what most enables a board to fulfill its fiduciary duties of care, obedience and loyalty. Many suggest that the most essential information for the board should be around financial conditions and the economics of pursuing the mission. Or more overtly, does the organization have the resources it needs and how are these used?

So what financial data is best? The standard answer is the balance sheet, income and expense statement, and cash-flow statements. Each of these provides a unique lens that tells the story about a nonprofit’s current financial condition at a specific point in time, as well as what was intended and planned. 

In addition, on a monthly basis, staff should provide a simpler statement of financial condition that answers these questions: 

• How much cash is in the bank?
• How much money is owed (next 30 days or + days)?
• How much money is expected (next 30 days or + days)?
• Concerns?

On a quarterly basis, and for the purposes of clarity, efficiency and effectiveness, use graphic dashboards with board agreement on critical Items. Bar or line charts are best to compare what was planned (budget) versus where the organization is at a specific moment in time or what could be given the current state of finances. 

2. Program Information

Program, that is a nonprofit’s activities and accomplishments, is what draws individuals to serve on the board. Design a dashboard based on a board and executive agreement as to what indicators matter most related to achieving the mission. A dashboard can provide numbers about outputs, such as how many attended which program or used what services. Then compare that to what was planned. 

Raw numbers and an anecdote or two about outcomes better describe what happened as a result of outputs. These measures can provide a board with a stronger sense of how well the organization is pursuing its mission. 

Bottom line though — the board should be conversant with each program’s: 

• Levels of demand.
• Demographics.
• Psychographics.
• Needs and wants of those served.
• Nature of provided services.
• Satisfaction with services.
• Results and impact. 

This data supports board members in fulfilling their fiduciary duty of care through policy, evaluation and strategy efforts. It also provides members with the fodder for serving as legislative advocates and for fundraising.

3. Operations Information

Though I’m not convinced that boards benefit from this info, nonprofit executives often also provide operational and/or administrative data (like the number of unfilled staff positions or redecorating projects). Instead, such data can lead a board into micromanaging — an executive’s worst nightmare. Providing too much information risks board members’ desire to focus on operations, which is the job of the executive. This can lead to the board bossing around the executive or minimally interfering with operations.

However, there is operational information that should be given to the board. Among these are: 

• Changes in leadership staff.
• Building or property challenges.
• Legal challenges to the organization.
• Bad press or public positions.

Board members should all be aware of any matters that could affect program delivery and mission accomplishment, but executives do their best when identifying these matters along with proposed plans for action and/or what steps might be taken by the board.

A nonprofit board needs to know what enables it to do its job of governing. That is, fulfill its fiduciary duty of care by informing its planning, policy and evaluation tasks. However, informing the board is not about quantity, but about quality and pertinence. Graphics say more than words, but understanding what information is optimal begins with a conversation with your board.

The preceding post was provided by an individual unaffiliated with NonProfit PRO. The views expressed within do not directly reflect the thoughts or opinions of NonProfit PRO.