Romer: The role of governance for a nonprofit board
“Welcome to the board: Your role is to govern.” Not all nonprofit directors know the meaning of governance. Some join the board with experience in their own work settings — making administrative or tactical decisions each day. This is not governance.
Board members generally need to better understand their governance roles. Too many boards are quick to fall to tactical and management discussions. This is evidenced in discussions that quickly tumble from strategic to tactical. For example, a discussion about increasing the profit potential of the annual gala. The discussion begins with the venue and budget but is distracted when a director asks, “Will the banquet include a choice of entrees?”
Strategy is characterized as long-term and visionary. Tactical discussions are usually the responsibility of committees or staff. Seldom are they appropriate at the board table.
The board is responsible for advancing the strategic plan and the budget. These two documents serve as roadmaps; the board will decide the destination and the staff will manage the details to get to the destination.
These phrases should be mantras in the boardroom.
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Nose in, hands off
An international phrase to position governance: “Nose in, hands off” suggests directors should focus their efforts on the agenda, board duties and general oversight. Hands off reminds them to leave the tactics to committees and staff. “Nose in” is NOT an invitation to micromanage.
Trust but verify
President Ronald Reagan made the phrase “trust but verify” after the signing of a treaty with Mikhail Gorbachev. The Russian leader quipped, “You repeat that at every meeting,” to which Reagan replied, “I like it.”
Application at the board table suggests that directors ask the appropriate questions and trust the answers. For example, “Do we have event cancellation insurance?” demonstrates duty of care. But it isn’t appropriate during the meeting to ask how much it costs and what is the name of the insurer.
Board governs, staff manage
This phrase balances the partnership of the board and the staff team. Directors should focus on governance. The staff is responsible for management and administration. Add it as a footer at the bottom of agendas. Print it on bookmarks to include in board packets.
Fiduciary duty requires board members to stay objective, unselfish, responsible, honest, trustworthy, and efficient. Board members should exercise reasonable care in all decision making, without placing the organization under unnecessary risk. Be sure directors understand they are fiduciaries and should comply with the duties of care, loyalty and obedience.
We are in the weeds
Empower directors and staff to recognize when discussions have fallen to tactical levels. Everyone at the board table should feel empowered to offer, “This discussion feels like we are in the weeds.” Also remind directors, “Boards don’t do committee work at the board table.”
The brain of the organization
According to corporate governance consultant Badri Meouchi, who is based in Lebanon, “In so many ways the board acts very much like the brain. It thinks, debates with itself and decides on the strategic direction, and then puts in motion the acts that have to happen for that strategy to be executed.”
The brain does not walk— it gives instructions to the legs for them to do the walking, and it also monitors how and where we walk. If a big ditch is spotted by the brain, it instructs the legs accordingly so as to avoid it.
In summary, no matter how it is conveyed, the board has to understand its legal and essential role in governance. Discussions should be deliberate, produce results and avoid staff micromanagement.