Most people would agree that there's no shortage of things to worry about when running a non-profit. But making avoidable mistakes is not something you want to add to that list.

In this post, we'll look at five common missteps and offer tips on how to steer clear of them.

Let's get started!

1) Lack of Awareness of Their Governance Roles, Responsibilities and Duties

Nonprofit boards are responsible for governing the organization and ensuring it fulfills its mission.

However, many board members lack awareness of their roles, responsibilities, and duties. As a result, they may not be able to effectively fulfill their governance role. This can lead to problems, such as the board being unable to make well-informed decisions, or the board not being held accountable for its actions.

To ensure board members don't make this common mistake, it's important for them to be and remain aware of their unique governance roles and responsibilities. Recommended ways include:

• The board should initiate and take ownership of the process required to provide meaningful and ongoing board governance and leadership training.
• Developing and maintaining clear policies and procedures.
• And, finally, the board should hold itself accountable for these policies and procedures.

As elected or appointed volunteer directors, each must also be continually aware of the following important board duties:

• Fiduciary duty – the duty to act in the best interests of the organization and not in the interests of any individual board member.
• Duty of care – the duty to exercise due diligence and informed decision-making in carrying out their roles.
• Duty of loyalty – the duty of loyalty to the organization not to the organization or community that appointed or nominated them to serve on the board. In addition, every member of the board, management, and staff must avoid conflicts of interest and self-dealing.
• Duty of Diligence - the duty to be prepared for and to actively participate in meetings. Being diligent calls upon each board member to continually seek clarification when not sure about something related to the organization.
• Duty of Skill - the duty to apply your knowledge and experience to all discussions and the making of decisions at the board and/or committee levels.

Follow these tips to avoid making the mistake of lack of awareness of governance roles, responsibilities, and duties.

2) Failure to Hold People Accountable

Nonprofit boards have several responsibilities, from setting organizational strategy to fundraising, to hiring the Executive Director.

One of the most important, but often overlooked, responsibilities is holding fellow board members, committee members, and the organization’s Executive Director accountable.

When people are not held accountable, it can lead to a culture of mediocrity, where poor performance is tolerated, and excellence is not rewarded. This can hurt morale and motivation, as well as the overall effectiveness of the organization.

It is therefore essential that nonprofit boards make accountability a priority.

To avoid this common mistake, boards should:

• Ensure that every director, plus management, understand their roles and responsibilities.
• Develop and maintain clear policies and procedures. Board-initiated policy review should be scheduled to occur at least every second year.
• Hold people, including individual board members and management accountable for these policies and procedures.
• And, finally, the board should lead by example by holding itself accountable for overall results.

By following these tips, you can avoid making the mistake of failing to hold people accountable.

3) Undue Deference to the Executive Director

The Board of Directors of any non-profit organization has a fiduciary duty to the stakeholders, funders, and others to act in their best interest.

One way the Board can fulfill this duty is by providing adequate oversight of the Executive Director. Providing oversight means maintaining a healthy balance between loyalty to the organization’s Executive Director with loyalty for performance and results. 

However, some Boards give their Executive Director too much leeway, potentially or often leading to problems down the road.

Without adequate oversight, the Executive Director may make decisions that are not in line with the organization's goals, or that are detrimental to its long-term health. This can cause stake value to decline and may even put the corporation at risk – reputational and/or financial.

As such, it is important for Boards to ensure they are collectively aware of their role and responsibility to strike a balance between providing oversight and giving the Executive Director the freedom to effectively run the organization.

Some tips to avoid making this mistake include:

• The Board should ensure that it has a clear understanding of its overall roles and responsibilities.
• The Board should establish and then effectively communicate to management its approved key performance indicators (milestones) along with related reporting expectations.
• The Board should have regular (at least quarterly) meetings with the Executive Director where they review progress against goals, objectives, and milestones.
• The Board should have a process in place to receive and act upon concerns about the Executive Director’s performance.

Strong, confident Executive Directors welcome this level of governance leadership.

4) Tendency to Avoid The Tough Questions and Decisions

Organizations, their key stakeholders, and funders rely on boards of directors to provide sound oversight and guidance. To do this effectively, boards must be willing to tackle the tough questions and make difficult decisions.

However, sometimes boards can get caught up in groupthink, where they are so focused on maintaining harmony that they avoid addressing controversial or sensitive topics. Sometimes, board members may be reluctant to rock the boat or cause conflict. Other times, they may simply not have the information they need to make informed decisions.

Whatever the reason, the tendency of many boards and/or their board members can lead to:

• Poor decision-making,
• Lack of accountability,
• And the wasting of limited financial and/or human resources.

When boards avoid the tough questions and decisions, a real loss of opportunity to optimize the impact of the organization to the benefit of your stakeholders, clients or targeted community results.

The following are a few simple strategies boards can use to ensure they are not avoiding the tough questions and decisions.

• Create an environment that encourages dissenting opinions and open dialogue
• Ensuring all board members have the information they need to make informed decisions.
• Adopt a “no surprises” policy, where board members are made aware of potentially controversial topics or decisions in advance.
• Schedule regular check-ins with key stakeholders and funders to get feedback on how the organization is performing.

5) Recruit/Select Board Members without Due Care

Throughout this post, we have reminded readers that nonprofit boards are responsible for their organizations.

Boards and their members are called upon to regularly make decisions about the mission, strategy, and policies. They also approve the budget, hire, and evaluate the Executive Director (CEO), and provide direction and oversight. Because of the importance of their role, nonprofit boards must take the time to recruit and select members with due care.

However, when it comes to recruiting new board members, many boards fall into some or all of the following common mistakes:

• They tend to react to a board vacancy rather than actively planning for healthy board succession.
• When setting out to recruit, they tend to rely on personal relationships or connections.
• Fail to take the time to clearly define the skills, experience, and attributes required to move the organization forward. Instead, they often tend to focus on the attributes required in the past.
• Recruiting individuals who do not have the time or ability to fulfill their roles and responsibilities.
• And, when they complete the recruitment process, they tend not to have an effective orientation program for the new board member.

Nonprofit organizations striving to avoid this common mistake undertake to approve, then implement, policies and procedures associated with the active, ongoing board and management succession planning.

In terms of the board, the sound succession plan includes:

• A policy that defines the skills, experience, and attributes required of board members.
• A process for identifying individuals with the required skills, experience, and attributes to fill current and future board vacancies.
• An orientation program for new board members that covers their roles and responsibilities.

Whether you are part of the leadership of a long-standing non-profit organization or just starting, you and your entire board must be continually aware of these most common nonprofit governance mistakes. By avoiding these five top traps, your leadership group can focus on the organization’s mission and lead to greater levels of organizational effectiveness and impact.

Your Friend,
Jon Close