Don’t be a Hero- Build a Board
Overview
This month’s Topic of the Month focuses on the Executive of a nonprofit organization.
Executives are tasked with a major responsibility when they are leading a nonprofit
organization. (An Executive can have many names: Executive Director, President, CEO, or
Founder.)
With most grassroots nonprofits, one individual will form an organization around an idea of
theirs. Rather than draw support from a group, these individuals will try to run with ideas
independent of others. Eventually, this strong Executive will reach a limit of their power and
growth stalls. Every Executive needs to build a Board early in the organization’s existence to
ensure success and growth.
Beyond having a strong Board of supporters, the IRS requires every nonprofit organization to
have a Board of Directors who are responsible for the organization. Members of the Board have
a legal responsibility to ensure that the organization is following IRS laws and State Statutes
under which it operates. Further, the members of the Board have a fiduciary responsibility by
which they are liable for any legal action taken against them.
Roles and Responsibilities
The roles and responsibilities of the Board of Directors and the Executive Director are often not
outlined or understood by an organization. It is common to see an organization with a strong
Board and a weak Executive or an organization with a strong Executive and a weak Board. With
most grassroot organizations there is a strong Executive who has a dysfunctional Board. Either
situation is detrimental to the success of the organization because both need to be balanced
with roles clearly outlined. Therefore, the roles and responsibilities of each party should be
clearly outlined and communicated by the organization.
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The role of the Executive is to be a manager of the operations of the organization. This
individual is tasked with the responsibility to oversee programming, reviewing the
financials and ensuring success and develop strategies for the direction of the
organization. More importantly, the Executive is responsible for acting as a liaison for the
Board and keeping them engaged in the activity of the organization.
The role of the Board is to be the governing body representing the organization with
fiduciary responsibility to it. They must oversee the Executive and provide support to
them when necessary. The Board has fiduciary responsibility of the organization, and is
responsible for ensuring there is adequate financial oversight and proper utilization of
funds.
A Board does not naturally come together and function in this way. Generally when there is a
strong Executive, the Board will follow the Executive and take no real action. Rather than be
names on a letterhead and stand in the background, the Executive is responsible for cultivating
a functioning Board.
For further reading on these roles and responsibilities, read Cathedral’s paper on the right
relationship.
Setting the Vision
When incorporating a nonprofit organization, a mission statement is written or provided to show
the state what the organization seeks to accomplish. Many organizations never move beyond
this simple statement of mission to drive their work. How the organization will fulfill the mission
in the long term is never defined. When there is a strong Executive who is starting out without
any vision from a Board, this area is not developed and the organization consistently struggles
to envision growth.
The organization needs to create a vision for what the world would look like if they succeeded
fully. The vision directs the long term strategy of the organization’s efforts. Setting the vision
needs to be a strategic discussion by the Board of Directors. The members of the Board act as
representatives for the organization and need to stand behind the long term goals of the
organization. Having the Board establish the vision for the organization gives them buy-in power
by which they feel more involved in the work. If it is not a collaborative effort involving many
opinions, Founder’s Syndrome will set in. Because the founder has taken on all the
responsibility, there will be complications down the road when further insight is needed and
power needs to be passed off.
Ideally, the Board establishes the vision of the organization and then sets the Executive Director
up to lead with it. Because this usually is not the case, the Executive must involve the Board in
this process early. Having all individuals in the organization tuned in to the long term vision will
bring cohesion. The Executive is responsible for ensuring that the organization does not stray
from the vision of the organization. Regular reporting to the Board is one way to keep the
Executive and the organization focused.
Proper Board Governance: Training and Maintaining a Strong Board of Directors
A strong Board of Directors is not born naturally; it needs cultivation and training by the
Executive. Many Board members have prior Board experience but most do not. Regardless of
previous experience, the organization needs to train members on the roles and responsibilities
that are handed down by the IRS, the expectations the organization has of them, both financially
and operationally, and the mission and vision of the organization. New Board member
orientations, establishing a current member as a mentor to new members, and integrating new
members early and often into committee work will allow new members to thrive and succeed.
Establishing proper Board governance early will make the Board strong and easily maintained.
It is just as important to maintain a strong Board with functioning committees as it is to build
one. Annual Board retreats and term renewals are helpful in training members on a regular
basis and keeping them involved. Strong Boards need to be engaged and functioning properly
in order for the organization to succeed. If the Executive establishes these practices early with a
Board, there is less hand-holding of members and they will take initiative in this work.
There need to be several pieces of Board Governance in place to have a successful Board:
Oversight of the Executive, Functioning Committees, and Frequency of Meetings. The Board is
responsible for overseeing the performance of the Executive. By providing annual reviews and
ongoing support, the Board is capable of ensuring that the organization is suited for success
with a strong Executive running it. These checks and balances between the Executive and the
Board cultivates a healthy relationship and balance of power that naturally makes each
stronger. The Executive is tasked with the responsibility to manage the financials of the
organization. It is then the Board’s duty to ensure the Executive is managing the organization’s
financials with regular review and utilization of proper budgeting. Boards are meant to be
governing bodies responsible for making decisions and providing oversight but often get caught
up in doing the work of the organization.
Committees are meant to do the work of the Board outside the regular Board meetings.
Committees report back to the Board on their work and thus keep Board meetings efficient. In
order for a Board to be strong they need to be meeting frequent enough that all members are
engaged and in tune with the organization. The role of the Executive in this is through consistent
interaction and development of all members of the Board. Establishing committees should be a
joint effort by both the Board and the Executive. It is recommended that a Board meets quarterly
with committees meeting monthly. Often there is an annual meeting that is reserved for a Board
retreat, voting new members in/renewing current member terms, or strategic planning sessions.
Over time some members of the Board will become less involved and can either resign from the
Board or stay on but take less of an active role. Those individuals who stay with the organization
but are not active participants are considered “dead wood.” Dead wood Board members are
detrimental to an organization’s success. It is the responsibility of the Executive and Chairman
of the Board to remove dead wood Board members or get them actively involved. Before
removing any dead wood members from the Board, the organization should work with the
individual to provide whatever support is needed. If removing the individual is the only option,
the Chairman should meet with the individual about resigning from the Board.
Overall Organizational Success
Time after time organizations are seen struggling to raise funds, expand programming, and
have stability. The difference between organizations that succeed and those that do not always
points back to the state of the Board. Boards that are set up with proper governance are set up
for success and that success translates across the entire organization. Underdeveloped or weak
Boards provide no support to an organization. A strong Board brings strength to all areas of the
organization through financial stability, fundraising success, and program success and growth.
The Executive that neglects to develop a strong Board will feel the weight of these issues in
their own organization. Board cultivation allows the Board to take on much of the weight of both
the success and struggles of the organization.
Financially, having a strong Board means that there is regular oversight of organizational
financial statements reviewed and presented through a committee and the Executive. Not only
should the Board be aware of the financial position of the organization, they should provide
oversight on the Executive’s handle on the finances. The Executive needs to involve the Board
in the financial review process. They should have a general knowledge of the financial state of
the organization that can easily be conveyed by them to donors.
For Fundraising, the Board should be actively involved in Major Donor cultivation. Major Donors
play a key role in providing large gifts to the organization. Successful Boards will have personal
relationships with all Major Donors. Apart from Major Donor cultivation, successful Boards will
have a give/get requirement of each Board member. The Duty of Loyalty relates to the
philanthropic priority each member should make to the organization. Board members bringing in
additional funds is another way for the organization to diversify the places where funds are
coming in. Through Board building by the Executive, this aspect of Board governance can be
understood and successfully done. A portion of the Board members should come with the
intention that they can assist with much of the major donor cultivation. Not utilizing the talents of
the members is a fault of the Executive.
For Programming, the Board is responsible for reviewing the programs, measuring success and
preventing mission drift. A Program Committee will be responsible for doing all of these things
for the Board and reporting back. Both the Board and the committee should always be finding
ways to innovate new ways to expand program and reach more constituents. Successful
organizations are always looking for new ways to reach the people they want to serve. The
Executive has a large role in programming. With a grassroots organization, most often the
Executive is the founder and has been either solely or largely responsible for program
development. It is in the best interest of the Executive to involve the Board in program creation
and evaluation. Their contribution will prevent a founder from becoming too involved.
Innovative organizations find ways to take their current programs and either find new ways to
apply them or they will update old programs to newer versions. Keeping programs from going
stale is an important part of long term program success. Innovation is an area that the Board
can leverage when approaching donors. Being an organization that is innovative will keep Board
members engaged. An Executive should always be pushing the Board to think long term and
have innovation in mind.
Conclusion
It is often easy for an Executive to carry the organization on their back without support from a
Board. Because of the time it takes to build and cultivate a strong Board of Directors, many
organizations don’t see the value in what a strong Board provides. The result for the
organization is an incapacity to see real growth. It is also often found that a strong Board will
carry an organization without a strong Executive in place. Rather, the organization will funnel
through weak Executives over the years and stunt the organization’s success. Both pieces need
to be in place and need to be strong in order for long term success and growth.
Articles for Further Reading:
1. Bayrasli, Elmira. “Building Successful Nonprofit Boards.”
http://www.forbes.com/sites/elmirabayrasli/2011/06/06/building-successful-non-profitboards/
2. Great Board Expectations: Wagenmaker and Oberly
https://gallery.mailchimp.com/2e6c4baad83d4929c311e3272/files/Great_Board_Expecta
tions.pdf
3. What Makes an Effective Nonprofit: Association of Small Foundations.
http://www.fidelitycharitable.org/docs/What-Makes-An-Effective-Nonprofit.pdf
Peter Giersch is a Managing Director in Cathedral’s Milwaukee office. Jessica Zignego is an
Associate in the Milwaukee office. This article was written for our Nonprofit Topic of the Month
for June as part of our General Executive Counsel program.
For more information, please visit Cathedral Consulting Group LLC online at
www.cathedralconsulting.com or contact us at info@cathedralconsulting.com