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Posted by Joel LaSalle on Fri, Jan 22, 2016 @ 01:37 PM

A not-for-profit’s board of directors helps an organization monitor its operations in order to ensure that the not-for-profit meets its obligations to the community. Members of the board can ensure that an organization appropriately manages its financial assets and pursues ventures that support its tax-exempt mission. A board assists in verifying that the pay a not-for-profit executive receives is appropriate to the market in which the nonprofit operates. They can also be valuable sources for guidance about how to improve the management and internal functioning of your organization.

The Stanford School of Business, Board Source and GuideStar recently polled 924 not-for-profit board members from across the country, and the results from the survey show several areas where board members felt that board oversight or organization management could be improved.

Business Continuity Planning

Turnover is always disruptive, but when there’s no plan in place for how to handle staffing changes, it can be particularly troublesome. The 2015 Survey on Board of Directors of Nonprofit Organizations found that nearly 7 in 10 organizations did not have a succession plan in place for the nonprofit’s leadership team.

If your organization does not have a plan in place, it should make creating a business continuity strategy a priority. Not-for-profits often offer salaries that are significantly lower than the corporate environment, which can make it more difficult for nonprofits to attract and retain key employees (to read more about competing for talent as a not-for-profit organization, view our prior blog).

Losing a top employee is particularly difficult. Almost a quarter of survey respondents said one of their top challenges in the past 10 years stemmed from an abrupt departure from a member of their executive team.

Education

Surveyed directors expressed concern that their nonprofit organizations could do more to share their mission and the effectiveness of meeting that mission with the board. Nearly half of respondents said they had not seen data that effectively measured how well a not-for-profit organization met its goals and objectives.

Information collecting is vital to gaining support for your organization. Potential donors and the community your organization serves will want to see how your organization uses its funds and whether the programs and services in which your organization participates accomplish what they set out to accomplish.

Directors also noted a lack of peer benchmarking. Though often used in discussions of compensation, peer benchmarking can also help with other operational elements.

Board Composition

As such an influential decision-making body, it is important that your organization be thorough when determining who to elect to its board of directors. Though the survey found that many of the directors (65%) believed that their fellow board members had the necessary experience, almost half said their fellow board members were not engaged in the nonprofit’s activities.  

Just as your board wants to see your organization’s effectiveness, your not-for-profit should continually examine how well their boards are working for them. This may require changing up your board composition to get the right decision-makers for your organization at the table.

It may be wise, for example, to include someone who has governance experience on your board. Not-for-profits that are experiencing rapid growth may want to add to their board in the coming year to assist with the complex decisions that come with expansion (to read more about resources to identify new board members, view our prior blog). Larger boards may want to form sub-committees to help with specific board tasks, such as gathering compensation data for the not-for-profit’s executive. 

As you move through 2016, consider the other ways that you can improve outreach and communication with your board, such as presentations from successful activities or programs or the outreach a not-for-profit has been doing in the community.

Keep up What’s Working

Despite the financial and governance challenges that many not-for-profits may face, the survey indicates that the vast majority of respondents felt satisfied with their organization’s financial performance and with the leadership of their organization. The survey found nearly 85 percent of respondents were happy with their organization’s overall performance and 70 percent were satisfied with the financial health of their nonprofit.

If your not-for-profit organization is unsure of how its Board judges its effectiveness, consider conducting your own informal survey of members to hear their thoughts and ideas for further improvements.

For More Information

If you have specific comments, questions or concerns about how you can improve your board or governance practices, please contact us here.

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Joel LaSalle is a Senior Associate at CBIZ Tofias in Providence, RI. He can be reached at (401) 626-3268 or JLaSalle@CBIZTOFIAS.com

 

Copyright © 2016 CBIZ Tofias & Mayer Hoffman McCann P.C. - Tofias New England Division. All rights reserved. CBIZ Tofias and Mayer Hoffman McCann P.C. - Tofias New England Division are separate and independent legal entities that work together to serve clients. CBIZ Tofias is a leading provider of tax and consulting services. Mayer Hoffman McCann P.C. - Tofias New England Division is an independent CPA firm providing audit and other attest services. This article is protected by U.S. and international copyright laws and treaties. Use of the material contained herein without the express written consent of the firms is prohibited by law. Material contained in this alert is informational and promotional in nature and not intended to be specific financial, tax or consulting advice. Readers are advised to seek professional consultation regarding circumstances affecting their business.

Tags: accounting, Non-profits, Not-for-Profits, NFP, board members, Joel LaSalle

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