Governance Model for a Charitable Nonprofit Organization
The media has generated a fair amount of negative publicity about the boards of directors of nonprofit organizations and corporations because of poor or weak governance. The unsavory attention has motivated many nonprofit boards to re-evaluate their governance models with the goal of finding a governance model that suits their organization.
Carver’s policy governance model is a popular model. Many nonprofits have familiarity with it and become inspired to start with this model. Many governance experts believe that Carver’s model is too diverse to work well for most nonprofits. Some sort of hybrid governance model seems to be ideal more of the time.
Consultant Mel Gill believes that it’s perfectly fine for nonprofit boards to develop governance models as they go. Gill notes that boards have different characteristics and needs, which they can only meet by customizing their approach to the best governance model for the organization. It’s helpful for nonprofit boards to become better acquainted with a range of alternative governance models.
Regardless of the development stage of the nonprofit, a board portal is a valuable asset for nonprofit boards as they seek the best governance model to suit the board, the staff and their constituencies.
What Is the Traditional Governance Model?
The traditional model of governance sets a standard where the board is responsible for oversight and planning, while delegating management of daily activities to an Executive Director or CEO. Gill cites the following as critical elements of good governance:
- Creating a vision
- Securing resources
- Defining clear roles and responsibilities
- Establishing benchmarks for performance
- Monitoring those benchmarks
- Being accountable to key stakeholders for the organization’s direction and performance
The traditional model places boards and board committees in the role of basic board functions. Boards manage responsibility for finance, human resources, programs and fundraising. Most boards find this is a good base of governance standards for them to start with and they can form a customized hybrid form of governance as they begin to develop policies and the general infrastructure.
The Carver model helps boards to form a basis in the differences between management’s role and the board’s role. Management is the means for getting things accomplished, whereas boards provide the ends to which they want the organization to achieve. As most nonprofit board directors have less experience than directors of for-profit corporations, boards and managers need to spend much time in collaboration because boards aren’t as familiar with the operational aspects as more seasoned directors.
Nonprofit Models Require Flexibility
Roles for board members and managers tend to be strictly defined. The structure of nonprofit organizations sometimes requires board members to fill the manager role at least occasionally. The flexibility that nonprofits require can blur the lines of authority. Many nonprofit organizations run solely on volunteer power, so there’s not an option of delegating duties to someone else. Nonprofit board directors often have to wear various hats, and their governance model should reflect that. Certain issues, like the size of the group, the complexity of the organization, the geographic span, and personal or political agendas, are factors in the need for management and governance.
Having flexible roles usually works best when the board and staff have clear agreement on their respective roles and they share a common sense of trust and respect.
Setting Up the Structure
It’s not uncommon for strong relationships to develop between board directors and between board directors and staff because of the passion they share for the charity. At the same time, problems may develop when relationships become stronger than the nonprofit’s governance structure.
Regardless of the model that the organization develops, boards need to ensure that the basic structure is in writing. The governance structure is the safety net that prevents problems. This is especially important as the charity grows and its needs change. A solid governance structure provides a strong foundation on which the charity can build.
Unlike for-profit corporations, where the shareholders own the company, no one really owns charitable organizations. The board of directors is responsible for controlling the nonprofit’s assets, making sure the charity complies with laws and that the nonprofit serves its stated purpose.
Another vital part of a charity’s nonprofit governance structure pertains to having a shared vision, shared goals and clear lines of accountability. These components will strengthen the organization if things start to unravel. More so in charitable nonprofit organizations than in for-profit corporations, goodwill, honesty and constructive discussions go a long way when difficult challenges arise.
Benefits of a Board Portal in Developing the Charitable Nonprofit Governance Model
A board portal is one of the first investments charitable nonprofits should make as soon as it’s practicable. A board portal by BoardEffect will be of great assistance to charitable nonprofit boards that are developing their governance structures.
Charitable nonprofits, especially start-ups, can’t always afford to establish office space. This means that important documents such as articles of incorporation, bylaws, policies, role descriptions and other important documents end up at someone’s home. Paper documents are susceptible to floods, fires and other natural disasters. BoardEffect’s online platform stores an unlimited number of documents securely in the cloud, where board directors can access them at any time.
Board directors can easily enter the board portal using any mobile device, which is also an asset when charitable nonprofits haven’t yet established an office. The portal offers a high degree of security, which assures charitable boards that their internal communications are confidential now and in the future. As board directors come and go and committees form and change, the board administrator can change the user permissions on the portal so that only the people who need access to various parts of the portal can get it.
Concluding Thoughts on Charitable Nonprofit Governance Structures
The nature of charities requires nonprofit boards to maintain the public’s trust. Charitable boards carry strong burdens of accountability. A sound governance structure helps them greatly in carrying out their responsibilities. The challenge for charitable boards is to research alternative approaches to governance and learn more about the factors that will form the best governance model for their needs.
