5 Board Oversight Failures and How to Overcome Them
It is becoming customary for nonprofit boards to conduct an annual performance review. An annual board assessment can help a board identify and address structural and procedural challenges to fulfilling fiduciary duties for a nonprofit.
In addition to the annual approach to a more formal assessment, I've come up with five fails boards have likely experienced. The best thing about these scenarios is the board can simply remedy them by providing board members with a high level of satisfaction and productivity.
1. Zero Expectations
Scenario: Besides showing up at the scheduled board meetings, board members are not expected or requested to do anything — speak during a meeting, participate in a committee, participate in strategic planning, or offer any insights or opinions.
What should have happened? One thing is for sure. During recruitment, board members should have asked what their purpose is and what is expected of them. It’s never too late for members to ask each other and gain clarity about expectations.
It’s also essential that, at a minimum, board members understand how they can best support the executive. Learning years later the executive sees no value in having a board falls on the board member. Members should ask the question.
2. Outdated Reports
Scenario: The executive director’s report lists activities conducted since the prior board meeting.
What should have happened? A member should have asked about results, outcomes or, in essence, these activities’ “so what?” — specifically in terms of pursuing the mission. A simple dashboard would do the trick. Meanwhile, recognize that the dashboard’s development demands that staff and the board work together to be clear about the desired outcomes.
3. Rubber Stamps
Scenario: Financial reports are presented, and no one asks “so what?” Oftentimes, board treasurers (my preference) or the organization’s finance person present the current balance sheet, income statement and sometimes the cash-flow statement. The next thing you know, the chair calls for a motion to accept the report. When a member moves to accept, it’s seconded and the task is completed.
What should have happened? At least one board member should ask one of these questions:
- “Does this report mean we are in great shape?”
- “What is being done about the condition we are in?”
- “How can the board be of assistance?”
This latter question is, of course, the best question. It’s common sense for a body that bears the fiduciary responsibility for a nonprofit to ask how it can help.
Scenario: Board members have not been showing up for meetings. Board member absenteeism is a serious matter and at minimum does not relieve absent board members from their duties.
What should have happened? Board members should, at board meetings, ask the governance committee to reach out to absent board members to understand why they aren’t showing up. Then, based on the committee’s report, determine what actions should be taken to address absenteeism.
It will be important to recognize that members may have a number of really good reasons, like conflicting schedules, competing work/home demands, not feeling valued or not liking what happens at meetings.
5. Capital Campaign Launch
Scenario: The executive director has pitched that it’s time for the organization to conduct a capital campaign for a new building, endowment or extra cash in the bank. The executive is seeking approval on paper. And the campaign begins.
What should have happened? At minimum, board members should have asked a lot of questions with a specific focus on the fundraising plan and the role of board members. Yes, I’ve seen executives raise the targeted money but resent that only one or two members helped. It could have been different, beginning with asking for a task force or committee to study the plan to answer these very questions. Board members should understand that their participation in any fundraising matters internally with staff and externally, but information equally matters.
These scenarios point to one path for board members: Take nothing for granted and always ask “why?” It’s just common sense and more importantly, this is how fulfilling a board member’s fiduciary duty begins. And, while on the subject, remember to conduct that annual board performance review. It’s just common sense.
The preceding blog was provided by an individual unaffiliated with NonProfit PRO. The views expressed within do not directly reflect the thoughts or opinions of NonProfit PRO.
Related story: Why Digitizing Annual Reports Is the Future