Nonprofit boards are generally involved in important decisions concerning the direction of the nonprofit organization and share in the nonprofit’s mission. Some boards are purely administrative in nature ensuring that a reasonable budget, bylaws, and various policies needed to ensure the organization stays in compliance with various regulations are in place. Other boards are much more involved with the organization with board members often volunteering time, contributing money, and seeking out large donors.
In a recent article from The NonProfit Times, the author noted that among boards where there is more personal involvement expected it is key that the expectations be made clear. Clear communication of the needs of the nonprofit and how each board member is expected help will keep board members on the same page and keep them from feeling unjustly criticized by others that may comment about their lack of involvement. Let’s face it, comments always get back to the subject.
So, how do you communicate with your board and make sure everyone is aware of the nonprofit organization’s expectations of the board members? The most important thing is to write down the policies within a document and have each board member receive a copy and sign a copy acknowledging that they have read these policies. This could be distributed annually along with the conflict of interest policy acknowledgment.
The AICPA recently published a short article titled Strong Policies Make for Effective Boards. Although this article discussed more of the governing policies, I believe the overall steps that it suggests can be applied to the situation above as well. Below I applied these steps directly to the situation of the nonprofit expectations of board members.
- The nonprofit should inventory the policies that are already in place. Note that while most policies should already be documented in written form, it may be that there are accepted practices that could also be considered policies.
- The nonprofit should consider what policies should be in place and what they should include. For this, the nonprofit should look back at those accepted practices that have not yet been formally documented and consider any other aspects of board involvement that have been discussed but not yet implemented. A discussion should be had among management and the board to determine how the needs of the nonprofit will be met and how to memorialize the board’s expected involvement.
- Create a process for updating policies. As the organization changes its needs and related policies should also change. Reviews of policies may take place annually if the organization is growing or changing rapidly. Otherwise, it is likely a good idea to review policies surrounding board involvement on a less frequent basis such as biannually. Management and the board should come to an agreement as to how often such policies will be reviewed.
- A means of effectively communicating the policies need to be established. For those policies concerning board involvement, the most effective way to communicate the policies is to set up a time during a board meeting on an annual basis to distribute the written policies and obtain a signed confirmation that the policies have been reviewed by each board member.
- Ensure policies are consistently applied to each member. This will help to avoid fostering resentment among board members who may either feel that others are less involved in fulfilling the board duties and create a better working relationship among board members and management.
- Consider when exceptions are acceptable and make sure those exceptions are documented. One example may be when a board member is required to make a certain level of donations to the organization. It may be possible that a board member truly cannot contribute to the prescribed level. For such circumstances, an alternative should be documented within the board policies.