There's no question that good governance is key to a strong non-profit organization. Without it, a non-profit organization will struggle to create the results and impact its stakeholder's needs and wants.

But what does good governance mean exactly? And how can you make sure your organization’s governance is as effective as possible?

In this post, we'll outline six of the most important keys to unlocking strong non-profit governance. Read on for tips and insights that can help your organization thrive!

1. Clarity of Role

The board of directors is the governing body of an organization. It is the organization’s highest-ranking decision-making body. Its roles include:

• Setting strategic direction.
• Approving the operating budget.
• Ensuring compliance with all the terms of all funding agreements as well as relevant laws and regulations,
• Ensuring the organization is adhering to its mission and achieving targeted results.
• Hiring and where required, firing the Executive Director.
• Sustaining the board and management leadership through ongoing board development training and effective succession planning and implementation at both the board and senior management levels. 

Ultimately, the board and its directors, have a great deal of responsibility to stakeholders, members, donors, and funders for ensuring the organization produces tangible results and that it runs smoothly and effectively towards its board-defined strategic end.

2. Appoint Qualified Directors

To be successful and effective, your non-profit board must be comprised of qualified individuals who have the skills, knowledge, and passion necessary to lead. And while many qualified individuals would be interested in serving on your board, many lack the necessary qualifications.

It is therefore important that boards of directors take the time to recruit, appoint and then equip qualified leaders. A board succession plan is a key tool.

The three must-haves for an effective non-profit board leader are:

1. A commitment to the organization’s mission and goals.
2. Capacity to commit time, skill, and experience.
3. Leadership skills.

The board composition should also be diverse, with members representing a variety of backgrounds and perspectives.  

By appointing directors with diverse backgrounds and these qualities, boards can ensure that their organizations are well-led and effective.

3. Create and Enforce Policies

The board of directors for a non-profit organization is responsible for creating policies that will guide your organization. These policies can cover a wide range of topics, including financial management, risk management, and ethical standards.

In addition, the board is responsible for enforcing these policies.

By working together to create and enforce policies, the board of directors can help to ensure that a non-profit runs smoothly and efficiently.

4. Conduct Effective Meetings

Meetings are a key part of the board's work, providing an opportunity for members to hear from stakeholders, management, and staff, share information and perspectives, discuss strategic issues, and make decisions.

To be effective, meetings need to be well-planned and well-run. That also means board members should come to the meeting prepared, with an understanding of the agenda and the issues to be discussed.

Each meeting should have a clear purpose, and the discussion should be focused and civil. Decisions should be based on a thoughtful consideration of the facts and all viewpoints.

By taking these steps, boards can ensure that their meetings are a productive and efficient use of time - which is good for both the board and the organization it serves.

5. Manage Conflicts of Interest

A conflict of interest can be defined as a situation in which an individual or organization has competing interests or loyalties. Conflicts of interest can arise in a variety of contexts, but they are especially relevant to boards of directors.

Because board members typically have a fiduciary duty to the organization, they may be tempted to put their own interests or the interests of the organization that appointed them to the board above those of the organization. For example, a board member might make decisions that benefit his or her financial interests rather than the interests of the organization.

To prevent such conflicts from arising, boards should have clear policies in place regarding conflicts of interest. These policies should require board members to disclose any potential conflicts and recuse themselves from discussions or votes that could impact their interests. By taking these precautionary measures, boards can minimize the risk of conflicts of interest and ensure that they are acting in the best interests of the organization.

6. Support the Executive Director

One of the best ways of unlocking strong board governance is to support the Executive Director. Board support is demonstrated through:

• The setting of direction and associated key performance indicators and of equal importance is the effective communication of both to the Executive Director.
• Providing advice and counsel when needed.
• Serving as a sounding board for new ideas.
• Providing meaningful performance reviews. In our fast-changing world, boards need to complete those reviews more than once per year. Supporting your Executive Director requires the board to provide timely, honest performance feedback.
• Providing encouragement and the level of resources required to support ongoing professional development for the Executive Director. 

Conclusion

These six keys are by no means an exhaustive list, but they provide a strong foundation for good governance in any non-profit organization.

Call to Action:

At an upcoming board meeting or retreat, discuss these six key areas and work together to identify one or two key areas of growth required to further unlock the potential of your organization.

Your Friend,
Jon Close