An Alternative Form of Small Nonprofit Governance

Requiring nonprofits to be accountable to their board works on paper, and often in reality, but sometimes it’s perceived as a flawed system. When a board fails to work with the organization they govern it’s more than flawed. It can become a nightmare for everyone, and reports of that nightmare surface at every gathering of nonprofits I’ve ever attended.

There are historical reasons for implementing a legal framework of oversight. Boards are the hedge against fraud and abuse. In theory, boards bring experience and community awareness to the work. They help with fundraising and hold staff members accountable to the mission. Where it works, boards are an incredible asset. Given that, why all the whining among nonprofit ED’s? Clearly there’s a miscommunication somewhere.

In my opinion, and in my experience, boards are a distant entity. They are a disembodied group that rarely understands the daily work of the organization they run. Moreover, they relate to the process at odd intervals, driven often by schedules rather than by the events or issues that really matter. That may not be true in your situation but it’s often the account I hear from EDs and emerging leaders. The other thing is a ridiculous power differential. A board member often simply has to voice an opinion where staff are required nearly always to justify their positions with research, spreadsheets, survey results and the like. An ED can debate all she wants, and make suggestions, but in some matters, she is legally powerless.

On the other extreme is the rubber-stamp board. They exist for all kinds of reasons, including unfortunately, resume building and access. These boards trust their ED to do what’s right all the time. They can be taken by surprise on occasion and suddenly realize that they have been abdicating their responsibilities, but their role, if we are to be honest, is to make the organization look good on paper.

This article is not about fixing board relationships. If it were, I wouldn’t have bothered to offend half the nonprofit sector with the introductory paragraphs. It’s simply the presentation of a rough idea, that we replace boards with something else, at least for organizations who’s net revenue is less than one million dollars per year. Of course the dollar figure is arbitrary, but please read on.,

Until your nonprofit is moving large sums of money, you should not have a board meddling with the work. Instead you should have a professional team working with you in support of financial and legal obligations. That’s it. In essence, I propose a system that feels like training wheels. The professional team’s involvement is limited to keeping the small nonprofit on track legally and financially. They will give significant advice on setting up the organization, but then like auditors, their role would be limited to reporting on taxes and advising of other legal and organizational issues – best practice, that sort of thing.

In addition to the professional person or team, each nonprofit organization of this size would be encouraged to create a volunteer ‘advisory panel’. The constituents of the organization would be represented in that group as would be various other professionals in a position to benefit the mission. The difference between the existing framework, with President, Secretary and Treasurer, and this system with a professional team and advisors, is significant. Advisors can speak for a nonprofit, but they would not be in a position to dictate. Likewise, the professional team would have the ability and obligation to the state to report indiscretions, but would not make hiring and firing decisions, nor would they be involved in most of the day-to-day work.

Members of the advisory panel would be true ambassadors, enlisted for their skills and devotion to the cause. Replacing those who didn’t perform would not be a difficult matter. Simultaneously, the risk to the community of an organization abusing the financial position and tax considerations would be limited by budget and professional oversight.

Of course this is just one man’s opinion, and there are many reasons why such a system might not be considered seriously, but here is the challenge to the nonprofit sector. There appears to be structural and chronic dissonance between boards and managers. What is the best fix?

Have ideas? Let me know and I’ll publish any serious contenders right here.

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