Board Governance: Is your baby protected?

You may be wondering what protecting a baby has to do with board governance. Well, a nonprofit is like a baby in many ways. It relies wholly on others for its development, growth and sustainability. And like a baby, a nonprofit needs dedicated adults to take responsibility for both its well-being and its financial interests.

A nonprofit is dependent upon its board of directors to guard it from all threats, internal and external alike. Collectively, board members must be willing to make the hard decisions necessary to protect the organization and sometimes that means going against the staff, including executive director (even if when he is the founder). The board’s primary responsibility is to ensure that the nonprofit achieves its mission. Any threat to that possibility must be swiftly neutralized. Yet, time and time again, we hear stories of boards failing to meet their responsibility.

Just this week Nonprofit Quarterly ran Kate Barr’s story, Improving Nonprofit Decision Making amid Economic Crisis, in which she describes how the board of directors at a highly respected nonprofit failed over nearly two years to exercise its duty to take quick, responsive, and sound action in response to numerous red flags indicating a financial crisis was looming. When some members of the board were ready to make the hard decisions, others cowered when executive director scoffed at their recommendations. Ultimately, the board chose to appease the executive director, leaving the organization not only in a financial crisis but also with a tarnished reputation.

In this case the board made protecting the feelings of the executive director more important than protecting the organization, and now the nonprofit is paying dearly for it. Would your board have responded differently?  Can you be sure?  Kate includes strategies your board can take to improve its decision making and better protect your organization.