What Does a Nonprofit Governance Committee Do?
A nonprofit governance committee performs many of the same duties and has many of the same responsibilities as those for a for-profit corporation. Like for-profit entities, nonprofit organizations often formally combine the function of the nominating committee with that of the governance committee.
If we think about governance as an entity that establishes policies and monitors their implementation we can see that the committee is responsible for overseeing how the board manages itself. The end goal is to lead the nonprofit toward prosperity and sustainability, and good nonprofit governance supports that goal.
The following topics will help clarify the governance committee’s roles and responsibilities:
- The governance committee definition
- The purpose of a governance committee in nonprofits
- Basic governance committee roles and responsibilities
What Is a Governance Committee?
A governance committee definition refers to a group of people who oversee the function and duties of the board of directors. The members of the governance committee also review state and federal regulatory requirements to ensure the board and the nonprofit comply with them at all times. Overall, the purpose of a governance committee is to serve as the main resource on governance for the board.
A nonprofit’s committee structure organizes the nonprofit’s internal and external responsibilities, and a board governance committee is one of the primary board committees. The committee’s members are generally responsible for the nonprofit’s governance activities.
Board governance committees must stay current on governance trends to effectively oversee the nonprofit’s governance activities as laws and regulations periodically change.
What Is the Purpose of a Governance Committee in Nonprofits?
In general, the purpose of the governance committee is to oversee how the board of directors functions. This group is part of the checks and balances that ensure the board is complying with industry, state, and federal regulations and the nonprofit’s established governance framework.
Roles and Responsibilities
The purpose of the governance committee is to oversee governance for the nonprofit, yet what does a governance committee do? The governance committee structure gives the group responsibility for the following five areas:
- Director Nomination and Evaluation
- Executive Director Selection
- Board and Committee Evaluation
- Meetings, Reports, and Procedures
- Regulatory Compliance
1. Director Nomination and Evaluation
The governance committee is responsible for monitoring how the board governs. As part of this role, the group is charged with making recommendations to the board about the minimum qualifications of board director candidates and the process for recruiting board directors. It’s customary for the committee to create a pipeline of qualified board candidates to fill board director vacancies as part of succession planning, which supports governance committee best practices for boards.
In governing themselves, governance committees support and encourage opportunities for board development. They usually also take the lead in conducting annual evaluations for board directors, committees, and the board as a whole. The survey tool on BoardEffect’s board management solution streamlines the process of performing board and director evaluations and creating professional-looking reports.
Governance committees consider various factors in their recruitment decisions for the board, such as:
- Diversity of background and experience
- Diversity of race, ethnicity, and gender
- Business or industry experience and specialized skills
- Age
- Community leadership and involvement
- Potential conflicts of interest
At the annual elections, governance committees usually recommend a slate of directors to fill vacancies. Additionally, governance committee responsibilities usually extend to overseeing the board director orientation process, board development, and reappointments.
2. Executive Director Selection
The board governance committee has a role in providing input about who should serve in leadership positions, especially the executive director. The governance committee also takes responsibility for recruiting and succession planning for the executive director.
Similarly, the governance committee takes the lead in conducting an annual evaluation of the executive director and setting the executive director’s compensation according to the board’s compensation policy.
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3. Board and Committee Evaluation
Nonprofit organizations don’t have any legal requirements for conducting board evaluations, although most nonprofits find board evaluations valuable. Governance committees usually take the lead in conducting and analyzing board and individual evaluations.
Governance committees generally review the standing and ad hoc committees (including their own charter) for appropriateness. In completing this task, the group typically considers the stage of the nonprofit’s development before making recommendations for changes to the board.
4. Meetings, Reports, and Procedures
The governance committee creates or reviews committee charters and committee reports. Committee charters usually indicate how often the committee meets and whether meetings can be held by teleconference or videoconference. The committee charter will also outline any required procedures for producing agendas in advance of the meetings, recording minutes during the meeting, and handling minutes after the meeting.
Boards can and should amend all committee charters to meet the needs of the organization in light of their current stage and developmental cycle.
Governance committee members review financial reports, executive director reports, and other reports as part of their oversight responsibilities.
Committee members are also responsible for evaluating and reviewing the nonprofit’s overall procedures which will aid in board decision-making.
5. Regulatory Compliance
In addition to helping compose a well-rounded, skilled board, governance committees monitor governance and compliance issues. This task includes conducting annual meetings and audits and filing the appropriate paperwork with state authorities. The committee makes reports and recommendations to the board on new and evolving compliance matters.
The Nonprofit Governance Committee Plays an Essential Role in Effective Governance
Governance and nominating committees are usually standing committees with ongoing responsibilities. Because of their focus on governance and the fact that nonprofit organizations are largely self-governing entities, this type of committee is perhaps the most important committee of the board. The gravity of the governance board demands that nonprofit boards should choose the members of their governance committees with wisdom and careful thought.
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