Distinguishing Board Roles from Management: Essential Traits for Effective Board Chairs and Members in Non-For-Profits
Special blog featuring: Laurie Horvath, Baker Tilly
The role of a Board of Directors (board) is to govern a not-for-profit organization. It is essential for the board to understand its responsibilities and tasks, as well as the role of the organization’s management. Taking on a board role is a significant journey and understanding the role of board members is critical for success. Management of not-for-profit organizations are most successful when working harmoniously with their board. Organizations function best when there are proper board channels and clear expectations.
Board members have fiduciary and legal roles, specifically in exercising the duty of care, the duty of obedience and the duty of loyalty. The duty of care ensures that board members make decisions and perform their role in the best interests of the organization, actively participating throughout the process. This is crucial when board members are unable to actively participate or attend meetings. The duty of obedience reminds board members of their legal responsibility to ensure the organization complies with all federal, state and local laws and adheres to its mission. This duty also ensures that board members are prudent fiscal stewards of the organization’s financial resources. The duty of loyalty emphasizes that the organization always comes first, taking priority over personal or professional interests a member may have.
Many board responsibilities involve governance, including designing and maintaining the organization’s mission and purpose. A board ensures the organization adheres to its by-laws and monitors individual programs for alignment to the mission. When a CEO selection is needed, board members are responsible for choosing, supporting and evaluating the CEO. It’s important to note that this responsibility only applies to the CEO, all other employees report to the CEO and should not be subject to any board oversight or involvement. Boards are also responsible for their own governance, ensuring strong leadership, succession planning, development and public standing. Boards provide fiscal oversight including the approval of budgets, audits, and tax returns and ensure the organization has sufficient financial resources. Additionally, boards must ensure integrity exists, both legal and ethical, within the board and throughout the organization.
Shared responsibilities between governance and management encompass mission impact and maintaining a healthy, evolving organization that adeptly manages change. However, the board’s succession planning responsibilities are limited to board leadership and the CEO role. It’s crucial to avoid scope creep and ensure the board does not encroach on other management responsibilities.
Effective management of a successful organization requires a harmonious balance with its board. While it’s crucial that boards avoid micro-managing the organization’s leaders, it’s equally important for them to stay informed about progress, issues and outcomes. Finding this balance can be challenging, which is why it’s often recommended for organizations to provide board training and best practices to ensure optimal board performance boards and management should establish a regular cadence to explore their roles, review their scope and ensure working together effectively for the organization’s betterment. By understanding and fulfilling their fiduciary and legal duties, board members can ensure the organization remains true to its mission and operates within legal and ethical boundaries.
For more information, or to learn how Baker Tilly can help your not-for-profit enhance board governance within your organization, contact our team.