AUGUST 10, 2017
How is the board structured? Foundations are looking for information that indicates a well-organized board. Best-practices for nonprofits indicate that all organizations should have some kind of committee structure, but that the number of committees should be limited.
Finance – This committee supports the development of the annual expense budget, tracks the actual spending vs. budget, watches monthly cash flow, and interprets the overall financial health of the organization on behalf of the board. This committee supports the development of the longer-term strategic plan as well as next year’s annual plan. All of the financial policies of your organization should be reviewed by the finance committee prior to board approval. Some organizations establish a separate Audit Committee.
Governance – ensure that policies are created and periodically reviewed which define: the roles and responsibilities of the board. duties and responsibilities of directors and officers; conflict of interest procedures; procedures for nomination, selection, and removal of directors.
Fundraising – While the Executive Director is responsible for the organization’s fundraising, well-run organizations engage the support of the board in various part of their fundraising plan. This committee oversees the development of the Annual Fundraising Plan – and tracks the planned vs. actual results during the year. They encourage, train, and thank other board members for their involvement in the fundraising activities. They explore potential new fundraising activities as part of the strategic planning process.
Executive Committee – includes the chairs of the other board committees and the board chair. This committee is often empowered to make decisions between board meetings and works closely with the Executive Director.
Alternatively, Blue Avocado recommends that organizations limit themselves to the following three committees:
Internal Affairs Committee – All internal and operational issues-including those related to finance, human resources, and facilities-are handled by this committee which is staffed by the CFO and the Director of HR (or the ED where these positions do not exist).
External Affairs Committee – All external issues-including fundraising, public relations, and marketing — are the responsibility of this committee, which is staffed by the Development Director (or by the ED).
Governance Committee – This committee is responsible for the health and functioning of the board. It recruits new members, conducts orientation, produces board materials, and evaluates the performance of the board itself. This committee, staffed by the ED, is arguably the most important of the three. It is responsible for ensuring the effectiveness of the current board and for recruiting tomorrow’s leaders.
Who serves on your board and why? Funders are looking for evidence that your board has expertise in nonprofit governance, finance, and fundraising. They will also want to see that you have members with expertise in your sector. Common board officers include:
President – Heads up the board and supervises all of the business and affairs of the board. While the President can also serve as the CEO of the organization, keep in mind that these two roles are separate; an individual cannot be compensated to hold an officer position.
Secretary – Keeps the minutes of the board of directors. Additionally, the Secretary is responsible for keeping track of the organization’s activities to make sure the actions of the organization are in accordance to the organization’s Bylaws. The Secretary usually keeps track of the board members’ contact information in order to inform the board about meetings and updates on the organization.
Treasurer – Keeps account of the receipts and disbursements in the organization’s books. Additionally, the Treasurer is responsible for keeping track of the organization’s financial condition. This is an important role because it keeps the other officers and board members informed about the financials. This person should have a financial background!
Best-practices suggest that there is no right size for a nonprofit board. The average board size is 16 members. Funders may start to question your organization’s governance if it has a large, multi-million dollar budget and a board with less than 5-10 members.
Funders will want to know how often the entire board meets as well as how often individual board committees meet. According to the IRS, boards must meet at least once a year. Beyond that, there is a lot of debate about the best-practices around frequency of board meetings.
Typically, organizations will have monthly, bi-monthly, or quarterly board meetings. The longer the time between full board meetings, the more likely that the organization relies on an executive committee to make decisions between meetings.
TIP: If your organization’s board meets infrequently, be sure to note if board members are attending committee meetings between full board meetings.
Small, emerging organizations tend not to have board term limits because they lack capacity to continually add new members. However, it is a best-practice to establish term limits for all members, so be sure to mention them if your organization has them.
It is also a best-practice to have a “give or get” policy for board members that requires all members to directly contribute or solicit a minimum donation to the organization. Always include your organization’s give or get policy in the leadership section, but use your best judgement about including the actual minimum donation. A $500 give or get is fine because it ensures 100% board giving, but it’s not nearly as impressive as a $2,500 minimum.
Even if your organization doesn’t have a formal “give or get” policy, you can communicate how committed your board members are by including what percentage contributed to the organization in the previous year. Most funders are looking for 100% board giving. Include the total amount contributed by the board if it is an impressive number!
In short, your objective for the leadership section of a grant application should be to clearly illustrate that your organization’s board of directors is thoughtfully-structured, and comprised of qualified leaders committed to advancing the mission of your organization.
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