Research Friday: Lessons in board governance

posted by
  Sharon Brooks,
 Administrative Assistant

 Fiesta Bowl

Welcome to Research Friday! As part of a continuing series, we invite a nonprofit scholar or practitioner to highlight current nonprofit research reports or studies and discuss how they can inform and improve day-to-day practice. We welcome your comments and feedback.

In April of 2011, a story broke regarding The Central Asia Institute, a nonprofit organization. Although it had been in existence for 13 years, the organization had no audited financial statements, had only three board members (including the executive director), was not clear about how donor money was being spent, and had a clear conflict of interest with the executive director promoting personal book sales through the nonprofit. The truth about the Central Asia Institute was revealed in several high-profile journals and newspapers such as the Harvard Business Review, The Chronicle of Philanthropy and the Wall Street Journal, with articles titled “Lessons from the ‘Three Cups of Tea’ Controversy,” “‘Three Cups of Tea’ Scandal Offers Lessons for Charities and Trustees,” and “Lessons for Donors from ‘Three Cups of Tea’,” respectively.

The Central Asia Institute is only one nonprofit organization that has fallen from grace due to poor nonprofit governance. The United Way and the American Red Cross are two well-known, large organizations that have also experienced controversy in recent years1.

Thankfully, a recent survey conducted by BoardSource in 2012 shows signs of increased governance among nonprofits2. Through surveying chief executive officers from all 50 states, BoardSource reported the following key findings:

Board Governance Versus Management: Where the Board Duties End

posted by
Sentari Minor,
Development Officer,
Arizona Humane

The more I work with boards of directors, the more the topic of board governance versus management comes up. That is, there seems to be an ever-present issue of organizations navigating the very sensitive notion of where board responsibilities end and where the executive director’s duties begin. It is obvious that many boards are unclear of their role within an organization.

We’ve all heard horror stories about members of the board coming into organizations and managing and/or directing staff. While staff interaction with the board should be encouraged, those aforementioned instances are wildly inappropriate. It is absolutely imperative that the board realize its role in an organization, and that role is not to manage employees or to be involved in any of the day-to-day operations of a nonprofit, but to steer the organization in accordance to its mission; to govern.

Peter C. Brinckerhoff, in The Mission Based Management Newsletter writes, "The executive director works for the board. All the other employees work for the executive director. Period." It’s simple: the only employee of an organization that reports to the board of directors is the executive director, no one else. While board members are obviously valuable and insightful, that venerability should be used to govern and not to guide staff or their roles. Not only is it confusing for a staff member for a member of the board to walk into a nonprofit and manage, but it also devalues and derails the authority of the executive director.

So what are the roles of each the board, the ED, and the staff? The topic of nonprofit roles can fill an entire post on its own but below is a quick look of duties at each level (focusing more on the board) that should clarify potential confusion: The board of directors is set in place to guide the vision, strategic planning and overall oversight of an organization. There are also responsible for the legal, financial, and fiduciary responsibility.