
How do board members fulfill their fiduciary duties of care, loyalty and obedience? In the most simplistic of terms, they meet, learn and make decisions. For the majority of boards, decision-making is done through voting — that noble action of expressing a choice.
Just like past years, nonprofit board members vote on proposals aka motions that are presented at board and committee meetings. Some decisions are complicated though most are not. Non-complicated decisions include recognizing who is in attendance or accepting the meeting agenda and reports. Complicated decisions include making or reviewing policies and plans (e.g., budgets, direction, strategy); approving new board members; and selecting or unselecting an executive — the most complicated decisions.
Effective decision-making, aka voting, involves members being fully informed about the facts, understanding the options and engaging in meaningful conversation. To be fully informed, board members generally rely on three sources of data, with one of the sources being crucial to avoid failure.
1. Executives
Executives, of course, play a significant role in providing data. This makes common sense. Executives are on the ground and at the helm 24/7. They were hired to know and understand what is going on programmatically, internally and externally. Executives are the pathway to achieving a mission.
2. Board Research and Expert Input
Standing (or ad hoc) committees or task forces are a second important source to inform decisions. These bodies convene to dig up and process facts to weigh options ahead of the full body’s consideration. This is a valuable service meant to ensure no stone is left unturned and reduce the whole body’s time that would otherwise be required.
A board can turn to independent experts to provide data. This is best illustrated when a board is presented with the annual financial audit or discerning direction.
3. Board Member Common Sense
Board members themselves may possess areas of expertise that can add value to considerations. In the end, board decision-making boils down to the member’s use of common sense. It is also helpful to recognize that prudence is the standard rule of thumb applied to judging how effective decisions have been. Prudence involves understanding how cautious — not necessarily risk adverse — a member or group of members is in their decision-making.
How to Use Common Sense
With an understanding of what is common sense and prudence, it is imperative that board members must ask questions when they aren’t clear, don’t know or don’t fully understand a matter before taking action. It is just common sense for board members to ask at the board meeting, If, for instance, an executive hasn’t provided data on program activities and results, to understand what is happening to pursue the mission. After all, this is the reason for even board member service, is it not?
And what about budgets and finance reports? It is just common sense for members to understand what’s behind the big budget items before taking action. Common sense would demand that the board go further to ask what the plan is and how they can help if the numbers do not look good for the immediate or future. Certainly, a budget or finance committee member should be able to answer these questions ahead of taking action.
The use of common sense is really the least it takes to be an effective board member. But you might say, what about orientation and training? Yes, again, it is just common sense for a reasonable person to not take on the role of a board member without understanding board meeting processes and structures; organizational history and programs; and board mission, culture and values.
My message is this: As we again enter a new calendar year that will challenge many nonprofit boards in new ways with political, economic, cultural and strategic challenges and demands, board members that fail to govern without common sense will fail. Common sense demands that members come to the table passionate about mission; clear about their fiduciary duties; and ready to make decisions only when they are fully informed.
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.
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