Non-profit organizations and their legions of volunteers are essential to rural and urban communities alike. In small towns, non-profits are responsible for everything from running curling bonspiels to fundraising for medical equipment.
It’s no secret that while some non-profits are well-oiled machines, others run more like a combine picking up lodged wheat in a rock-strewn field.
What are the rock-star non-profits doing that others aren’t? According to Wendy Bulloch, often it comes down to board governance.
Bulloch is no stranger to non-profit boards. Through her business, Building Up, she has helped boards develop strategic plans, write and revise bylaws, create succession plans, and run better meetings. She’s also served on several non-profit boards. In 2013, she received a Queen Elizabeth II Diamond Jubilee Medal for her board work with the Heart and Stroke Foundation of Manitoba. She’s also on the Brandon Chamber of Commerce’s Agriculture Committee.
In many cases, board members have the best of intentions, Bulloch says. They are passionate and want to do good work.
But even a board stacked with well-intentioned directors can run into problems. Often there are one or two issues at the root of non-profit troubles.
One is that many non-profits operate on a shoestring. Small non-profits in small communities “struggle big-time because of funding,” says Bulloch. These non-profits often can’t afford to hire staff, so board members “are not only setting policy, but they’re doing the work.”
Another issue is that many board members haven’t kept up on the changing responsibilities of non-profit boards.
“Things have changed a lot in the last 10 or 15 years around the whole issue of governance,” says Bulloch.
And there are basic requirements for any board, she says. “You have to have meetings. You have to approve a budget.”
Bulloch adds that organizations need to have motions on the books when they’re dealing with money or applying for funding.
Know your role
Much of the responsibility around governance and culture lies with the board chair, says Bulloch. But everyone at the meeting has to put on their directors’ hats, and leave their personal interests and biases at the door.
A director needs to think about whether he’s in a conflict of interest over a motion, and make sure he’s acting in the organization’s best interest. The organization’s mission statement should be the driving force behind all board decisions, says Bulloch.
Directors also need a clear idea of the difference between governing and managing. Governing is the board’s main role. It’s focused on the organization’s mission. A board’s biggest responsibilities include strategic direction, finances, leadership development, and stakeholder relations, Bulloch says. Board members should know the bylaws, follow the bylaws, and review them regularly, she adds.
If the non-profit has the resources to hire staff, managing daily operations is the executive director’s role. Basically, the board makes sure the right thing is done and the executive director makes sure things are done right, Bulloch says.
However, non-profit boards without the financial resources to hire help will have to do it all. Those boards will have to find a way to run the day-to-day and mind the big picture.
Know your risk
A laissez-faire attitude towards governance can expose board members to liability, Bulloch says.
Non-profits are required to operate by their bylaws, policies, and procedures. Board members who ignore these three pieces of governance and don’t manage the organization’s risk may be open to liability, she adds.
Any non-profit that handles money ought to be incorporated, Bulloch says. For one thing, if the group wants to apply for grants, incorporation is a must. “You won’t get a grant if you’re not incorporated.”
If the non-profit isn’t incorporated, board members should make sure they understand the ramifications of that, Bulloch says. The Public Legal Education Association of Saskatchewan outlines the following issues with unincorporated non-profits:
- Board members are personally liable to creditors for the organization’s debt.
- Property must be in the members’ name, not the non-profit’s name.
- Bank accounts cannot be in the non-profit’s name.
- The non-profit can’t enter into contracts.
- The non-profit can’t take legal action in its own name.
- The non-profit itself cannot be sued — members must be sued.
If someone is thinking about joining a board, one important question to ask is whether the organization has directors’ and officers’ liability insurance, says Bulloch.
While an incorporated non-profit provides some protection to board members, board members can still be sued personally. Directors’ and officers’ liability insurance is designed to cover legal costs and damages.
“I would not join a board if their answer was they didn’t have directors’ and officers’ liability,” says Bulloch.
While board members are bound to disagree, they should avoid being rude at meetings, says Bulloch They should also keep contentious discussions in the boardroom.
“The time to disagree is at the meeting and not when you walk out the door and go to the coffee shop the next morning,” says Bulloch.
Private or secret meetings are also taboo. They’re not professional or transparent to membership, Bulloch says.
A strong board chair is key to managing conflict. Boards struggling to rein in conflict can try the pass technique. Each board member gets a chance to speak, with a time limit. While one board member is speaking, others cannot interrupt or comment. Board members can also choose to pass on speaking, but the chair can give those members another chance to speak at the end.
“Everyone kind of calms down. It takes the anger out,” says Bulloch. The pass technique also gives quiet board members a chance to speak.
Bulloch doesn’t recommend including restrictions on rude behaviour, abuse, or harassment in the bylaws. However, such behaviour can be covered in board policies. Bylaws should also include a process for removing board members if there is just cause. A few examples of just cause include not disclosing conflicts of interest, violating bylaws, and violating board policies.
Plan for the future
Non-profit board members wear many hats, Bulloch says. They volunteer, they are ambassadors for the organization, and they wear legal hats as well. A typical non-profit board may have some worker bees, some board members with a financial background, and some who fundraise.
All those skill sets are valuable. If your board loses someone with a vital skill set, how will you replace them?
Nominations committees are being replaced by board governance committees, says Bulloch. Board governance committees deal with bylaws, succession planning, and policy. And it’s a good idea for all non-profits to have one, no matter the size, as these committees keep boards current and ease board succession.
Bulloch says she can’t emphasize enough the importance of regular governance training and board orientation. There are also plenty of online guides for how to orient new board members.
Board manuals are commonly suggested. They include information about expectations of board members, board mandate, board organization, bylaws, recent meeting minutes, budget and financial information, and any other information a new board member would need. Some also suggest orientation sessions.
Bulloch recommends all boards use a board calendar. This calendar is not only about board meeting dates. It also lists the tasks, responsibilities, and issues the board must consider over the next year. Examples include:
- Bylaw review.
- Succession planning.
- Recruiting new members.
- Financial audit.
- Performance review of executive director.
- Board orientation.