Stanford Research Offers 9 Tips to Improve Nonprofit Governance

Despite this, almost all directors surveyed believe the executive director understands the mission well, and 87% are satisfied with that person’s performance. Some 85% are satisfied with their organization’s overall performance.

The disconnect? “It’s human nature,” Meehan says. We don’t like to hold ourselves accountable, and we don’t want to stand out to say we don’t understand something, he says. “It’s the simple law of human nature in small groups.”

Smart nonprofits will focus on finding the right people—ones who aren’t afraid to ask the difficult questions and challenge their executive directors.

“What great nonprofit boards have is a handful of serious, committed board members who ask the right questions, spend the time, raise the money, and are intellectually engaged,” says Meehan. “You only need a handful, and you never get more than a handful. But it’s essential.”

Nonprofit boards would also benefit from creating a more rigorous goal-setting and measurement process, Larcker says.

The researchers offer nine recommendations to improve nonprofit board governance:

1. Ensure the mission is focused, and its skills and resources are well-aligned.

Too often, a nonprofit’s mission is too broad and/or unachievable, like ending world hunger. Narrow your mission’s focus to the skills and resources you actually have or might have.

2. Ensure the mission is understood by the board, management, and key stakeholders.

3. Establish explicit goals and strategies tied to achieving that mission.

One of the executive director’s primary tasks is to develop goals and strategies that will make meaningful progress toward achieving the organization’s mission. The board must ensure that the theory of change and the logic/business model to do so are sound.

4. Develop rigorous performance metrics that reflect those goals.

Meehan quotes Einstein, who wrote, “Not everything that counts can be counted; and not everything that can be counted counts.” Develop performance measures that are pragmatic and useful. The emerging standard of performance measurement is randomized controlled trials.