The Seven Sins of Nonprofit Boards… Revisited

Hilary Pearson

In August 2020, a very large number of readers had their attention caught by my blog on the seven sins of nonprofit governance. It seemed that many people were interested in how governance can go wrong. Almost two years later, as Annual Meeting time approaches again, and new boards are elected, I want to revisit a question posed in my original blog: Could volunteer boards of directors be the Achilles’s heel, the fatal vulnerability, of non-profit organizations?

Unfortunately, yes. My original list of the “seven sins” of nonprofit governance showed how boards can indeed jeopardize an organization’s sustainability if they don’t do their job properly. I focused on the need for independent oversight and solid risk management. Boards can and should be assisted by external auditors and risk management experts (including cybersecurity experts). They should also be careful to spell out and to adhere to conflict-of-interest policies to ensure that personal interests of directors are not playing a role in decision-making.

Yet, as I reflect on my experience as a nonprofit director and I think more about how boards can get it wrong, I realize that measures to guarantee independent and objective oversight must be complemented by intangible aspects of culture and leadership. If those are missing, a nonprofit board won’t be effective in helping an organization achieve its purposes. Clarity, transparency and trust are fundamentally important to well-functioning boards.

Here is my updated list of seven nonprofit governance sins, taking these intangibles into account.

  1. Not being clear on the board’s role

Boards need to find the right balance in their roles. Boards are part of the governance structure, but they are not the whole of it. They are not the only shapers or custodians of an organization’s strategy, finances or reputation nor should they assume managerial roles.  Directors bring their ideas, skills, and networks to the table. They should reach out, share ideas, stay connected to the context within which their organizations work. But they share governance, they don’t monopolize it. Many boards have a written statement of their roles and areas of responsibility including the legal and fiduciary and the strategic and generative. They are clear about how decisions are made and by whom. Without this, they risk disarray.

  • Not doing regular self-evaluation

The board needs to evaluate itself regularly. This provides important information to board members about their own effectiveness and gives them an opportunity to contribute to improve the effectiveness of the board overall. Without a regularized (at least annual) board evaluation, boards can drift off course and will lose directors.   

  • Not being clear about Board leadership roles and succession

The Chair and Vice-Chair of the board and the chairs of committees are the leadership of the Board. They need clear statements and a shared understanding of their roles. On many volunteer boards, the question of who becomes Chair or who takes on a committee lead is often a matter of who has enough time and is willing to put up their hand. But this shouldn’t be a matter of personal availability only. The responsibilities and qualities of leadership need to be spelled out for all to know. A succession process understood by all helps directors to feel included in the leadership election process. Without full board support and trust, a leader will fail, and directors may leave the table.

  • Not enough attention to diversity and inclusion

This has been one of the biggest questions and most glaring weaknesses of nonprofit boards. Over the last two years, there has been much more focus on the issue of diversity in all its forms. Boards need to pay attention not just to recruitment and numbers, but to how to build more inclusive cultures and to promote conversations that bring different assumptions and experiences to enrich their conversations. Without attention to this, boards will not be able to respond effectively to the changes taking place in our society, and the new risks that rapid change will pose.

  • Not enough attention to board orientation and education

Volunteer boards too often do not take the time to orient and educate their directors. Volunteers can come from many different sectors and while they care about the mission and purpose of the organization whose board they join, they may not be familiar with the culture, responsibilities, and expectations of their board. This shouldn’t be acquired simply through osmosis. Many new directors without orientation feel left out while they try to understand their roles and the context of the organization they are volunteering for. Without a solid orientation and ongoing education, organizations and their boards lose valuable time and talent.

  • Poor communication between Board and CEO

This is a two-way street. It comes down to trust and transparency. From the board’s perspective, directors must be able to ask questions, obtain information and have debates with the organization’s leader without being perceived as intrusive or controlling. But the board must be willing to set clear strategic direction and hold a CEO accountable. If boards do not set expectations around performance and accountability, they are not supporting the CEO.

  • Lack of structure and clarity on recruiting the CEO

A good working relationship with the CEO, as stated above, is essential. It starts with recruitment. This is one of the most important decisions that a volunteer board makes, and as such the process of recruitment should be well structured, well supported and well managed. Boards must take the time to think through the qualities and criteria necessary to their recruitment of a new leader. Once chosen, a CEO should have the support they need from the board to take up their roles. Without this, a board is setting up its organization for failure.

For further reflection, I recommend the excellent ongoing work on Reimagining Governance by the Ontario Nonprofit Network and Ignite NPS. They have continued to develop and test their thinking on governance. One of their new resources (which could spark an interesting conversation at the board table) is Impacts on Governance Design, which describe eleven trends affecting the nonprofit sector today and how they converge to create six impacts on governance design.

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