Have you ever wondered why some nonprofit agencies are so successful, why they run so smoothly, or why the board and staff members work so well together?
It could be due to everyone liking and respecting each other. It could also be due to everyone having a lot of experience in performing their jobs.
It could also be due to having excellent communication in the agency with a clear mission that everyone embraces and supports.
All true. I’ve not see a successful agency that did not exhibit these characteristics. But there is one more characteristic that is generally overlooked and receives very little attention. That is, until a problem surfaces, and then it is too late. I’m talking about nonprofit governance.
What is Nonprofit Governance?
When someone mentions governance, most people’s eyes glaze over. They immediately think of bylaws, articles of incorporation, lawyers, etc. Dry and boring! I get that. But that is no reason to ignore governance considerations. The idea of just “winging” it is not a strategy for success.
But first, what is governance?
The term governance is a collective word generally understood to include everything that guides how an agency is run. Anything that controls decision-making and how people interact between the board, staff, and volunteers is a governance matter.
A robust governance program is meant to outline the best way to meet the needs of your nonprofit. It does this by documenting previous decisions and establishing policy so similar situations are handled a certain way.
In addition to addressing key policies and practices, governance documents can address situations that surface infrequently, but need to be cautiously resolved and documented.
Some issues that the governance might cover is your board’s position on:
- How board committee positioned are filled (through election, appointment, etc.)
- accepting gifts
- lines of authority
- risk management practices
- financial processes and controls
- executive parameters
- conflicts of interest
- lobbying efforts
- emergency procedures
- performance reviews
This is not an exhaustive list. What you include in your governance will depend mainly on the specific needs of your nonprofit.
What Goes Into a Nonprofit Governance?
An agency may have several governance documents covering a wide range of guidelines. Among these documents are your mission, vision, values, bylaws, articles of incorporation, and all governmental rules and laws. Many also include the current strategic plan, goals, and financial reports.
A wise board will compile, retain, and maintain all of its policies in one place – its Board Policy Manual. This is where all the established processes and procedures will be stored.
This manual can serve as a receptacle for all important policy and philosophy decisions the board makes. It should be brought to each board meeting for guidance, as needed.
It also serves as a great board training manual for new directors or as a refresher for others.
Why is Governance So Important?
If a board does not have or does not follow its governance practices, it can find itself in real trouble. You can face anything from sustainability challenges to legal issues.
Your nonprofit needs to commit to well-grounded practices if you want to be effective. Having a centralized resource to guide your nonprofit can help avoid inconsistencies and rash decision-making.
Your board is made up of people that can give in to stressful situations. When problems occur, your agency can refer back to documentation on how similar situations have been handled in the past. That way, your team will have a better chance of making an informed decision.
So for the sake of consistency, professionalism, and efficiency, it is hard to beat having a healthy perspective and commitment to appropriate governance practices.