Henri Eliot: Commitment critical for directors on not for profit boards

Identify a mix of individuals that have previously served on boards who will come in with experience with the boardroom with those who are new to the boardroom. Photo / Thinkstock
Identify a mix of individuals that have previously served on boards who will come in with experience with the boardroom with those who are new to the boardroom. Photo / Thinkstock

We need to think of not for profit board seats as a deep responsibility and a job that requires due care and attention because at a non-profit there is so much at stake.

Firstly, the very cause of the organisation is at stake as is its survival. A non-profit board is looking after the governance of the organisation and safeguarding its mission. This responsibility of a board member is even more critical in difficult economic times.

Even though non-profits don’t generate revenues, bottom-lines are just as important to non-profits as they are to for-profits. Their sustainability is dependent on it.

Read also:
• Henri Eliot: Are NZ boards spending enough time on strategy?
• Henri Eliot: Why are NZ shareholders so passive?

Fundraising is good where you can find a person to sign on to a non-profit’s mission and campaign on its behalf. Causes rarely make any difference without momentum. The need to raise cash for an organisation provides a useful anchor to gain backers.

Yet, the need to fundraise also runs the risk of building a board that is focused only on numbers and not the governance or long term development of the organisation.

In my experience, there is “real value” in having different skill sets on non-profit boards. Whether in finance, marketing or human resources, individuals asked to join a non-profit board should bring added value to the organisation – and its staff.

Non-profit board members can provide mentoring to an organisation’s staff. Matching the skills of board members to staff and mentoring is something that should be part of non-profit board member’s responsibilities. One should view serving on a non-profit board as a privilege and opportunity to be involved in something significant. By mentoring staff, a non-profit board member gets the chance to see the inner workings of the outfit, add value to the operation, and at the same time establish good will among a team.

The launch of a non-profit is another interesting aspect – and challenge, of building a non-profit board. Unlike established major companies that hire and fire CEOs, non-profits, like start-ups, exist because of a particular individual. I find there is a delicate balance to be had between the CEO and the board. The challenge is ensuring that the board does not see this individual as infallible or as a secretary.

In recruiting for board members, we must ensure that both the CEO and the potential member recognise this. A not for profit CEO must execute on a plan that they can be held accountable for, and a board member must not micromanage on that execution, but still must keep a close eye on the governance of the organisation.

How to recruit for a not for profit board and have a successful boardroom?

The following are a few favourite tips:

• Be sure you are building a board with the right task in mind. Boards have multiple roles, from fundraising to care taking, governance, and oversight. Just like any company or corporation, it is important to do an assessment. Understand the skills that your particular non-profit needs to fulfil your mission.

• Choose people who understand your mission and who understand the value they bring is beyond their chequebook.

• Don’t overload the board with names. Choose a manageable number of individuals that will be genuinely active and contribute in a concrete manner. Not every person who donates money, even sizeable amounts, should automatically be given a seat at the board table. Creating an advisory group or some other way to honour and engage people is useful.

• Make sure there is financial acumen built into the board. Ensure there are people who understand the audit committee, as this is vital for keeping track of an organisation’s performance and integrity. Separately, financial planning and strategic planning are critical to a non-profit’s current and long-term health.

• Ensure that the board member is eager to engage with the organisation and lend their expertise. Outline expectations and responsibilities up front.

• Have at least one genuinely independent member. It is helpful to have some people in the room who are neither donors nor beneficiaries and bring true independence to the discussion and oversight role of the board.

• Make sure people are coming to the board for the right reasons. Belief in the cause and a genuine interest in helping build a strong organisation to address the non-profits cause. The individual’s commitment to the organisation, not reputation should be deciding factor. By the same token, you want to make sure your objectives are in alignment and that both parties feel assured that their activities won’t taint one another.

• Identify a mix of individuals that have previously served on boards who will come in with experience with the boardroom with those who are new to the boardroom. Mixing those with experience with those who have not served on a board can marry best practice with enthusiasm and a desire to learn and contribute to the board.

– NZ Herald

Henri Eliot is CEO of Board Dynamics.

Start typing and press Enter to search