Organizational Structure

Building a Competent Board

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"A good board is a victory, not a gift," said Cyril O'Houle, a governance guru, a few years ago. His memorable words tell us that it is hard work to put together a good board but at the end you can and should celebrate the achievement. Your organization will benefit when the right people are on the bus -- or rather sitting at the board room table.

A board is a team where the sum of the parts truly shapes the entity. The board makes decisions as a group. Individual board members actually have very few rights, mainly obligations to bring their independent opinions into the discussion. So, it matters how you compose your board; what qualities, expertise, experiences, and perceptions your board members bring together.

When filling vacancies (actually also when forming your first board), it is extremely helpful to first define what you need. When you know what you are searching for, it is easier to find it. Start by creating a board matrix that lists the intellectual and other contributions your present board members are providing. This exercise helps you find the gaps. Those gaps define the missing ingredients on your board.

Let's look at some of these key ingredients. See how your board members contribute to the following elements of an effective board. Make sure these elements are part of your search criteria.

Passion. Without genuine interest in the mission of your organization, a board member has difficulties connecting to the basic purpose of your existence. A board member is not a "direct service volunteer" who gets fulfillment from the daily activities and from seeing immediate results. A board member needs to lead the organization at the strategic level where results sometimes take months or even years to manifest themselves. If that connection is missing, it is also more difficult to find commitment, the following element.

Commitment. To serve on a board requires time and desire to participate actively in the board's work. If your board member candidate cannot make this commitment outright -- after you have clearly explained the expectations -- you would simply be adding a name to your board roster without additional benefits. Board service does not simply mean meeting attendance. Commitment assumes a capacity to take on additional tasks, serve and lead committees, participate in fundraising if your organization solicits funds, make a personal contribution, and above all, actively participate in deliberations and providing wisdom to the board room discussions.

Financial literacy. Probably the toughest requirement for a full-fledged board member is familiarity with nonprofit finances. The expectation is not for every member to be a financial wizard but basic knowledge is a must as the board has a fiduciary duty to ensure the financial health of the organization. Without ability to assess budgets and read financial statements with a critical eye, a board member easily becomes a follower who approves financial documents without actually understanding what they represent. A red flag if there ever was one!

Legal awareness. Nonprofits are legal entities. The board is the accountable body for the organization. Board members have legal obligations (The 3 Ds) and even potential personal liabilities vis-à-vis the nonprofit corporation. It is essential that each individual board member understands his or her legal duties and how the organization can suffer from non-compliant actions or omissions. In addition, to provide the needed wisdom to board discussions, board members should also be familiar with legal industry issues. If a board member is a lawyer by profession, his or her acumen brings legal expertise to the board room but he or she should not, at the same time, have a client-agent relationship with the organization or the board. That role belongs to legal counsel retained for the purpose.

Governance understanding. Finally, board members need to understand what governance is all about. One of the responsibilities of an effective board is to take care of itself, tend to its own well-being and education. If board member candidates have no clue about their future roles and responsibilities, the entire "system" will veer off the good path and individual board members may assume functions that may not be appropriate to them. Equally, it is fair to expect that board members are sensitive to group dynamics and manage to relate to their peers just as that: colleagues who provide a diverse point of view to board deliberations.

A lot is expected of a good board member. Few people are born board members! If we expect every candidate to possess all of the above-mentioned traits from the get-go, we probably would run out of candidates very quickly. Fortunately education and training are available abundantly. If the initial constitution of a willing candidate includes the first two attributes above, the rest -- if not yet perfected -- can be fine-tuned and increased with appropriate attention through tutoring and mentoring.

References The Board Building Cycle, Second Edition: Nine Steps to Finding, Recruiting, and Engaging Nonprofit Board Members by Berit M. Lakey. BoardSource 2007. http://www.boardsource.org/Bookstore.asp?category_id=0&Item=1074

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