Do Nonprofits Need Board Governance?

Expert panelists, Evelyn Dilsaver, Amédée Levillain, and David Windley shared their insights while Melinda Yee Franklin wonderfully moderated the discussion. 

The key takeaways  and full event recording can be found below. 

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Defining Nonprofit Boards: Distinguishing the type of nonprofit board is crucial before joining, as your role and responsibilities can differ significantly. Although every nonprofit is different, there are two main types of boards to consider: 

• Nonprofit Boards: These boards govern organizations whose primary focus is on serving a public or community interest. Nonprofits are typically mission-driven and aim to provide societal benefits. These boards tend to be primarily focused on fundraising, driven by the mission to engage donors and raise funds. Approximately 80-90% of nonprofit boards focus primarily on fundraising, with members responsible for engaging donors and securing funds. 
• Not-for-Profit Boards: Not-for-profit organizations are usually focused on serving the interests of a specific group, such as a sports club. While these organizations do not exist to make a profit, they can generate revenue, but must comply with certain regulations to avoid being classified as a commercial entity. Their focus is often more internally oriented, aiming to benefit members rather than the broader public. 

Governance Challenges for Nonprofits: 

• Board Composition: Nonprofits often have large boards focused on fundraising, whereas corporate-like nonprofits may trim their boards to enhance operational efficiency.
• Hands-On Board Members: Smaller nonprofits may require board members to be more involved in day-to-day operational roles. 

Succession Planning: Executive Directors (EDs) typically manage donor relationships, making succession planning crucial. When an ED departs, their knowledge and relationships often leave with them, highlighting the need for better governance practices. 
 
Differences Between Nonprofit and For-Profit Governance: Nonprofits’ mission-driven nature can impact governance, often adding complexity, but the strategic and advisory role of board members remains similar between nonprofit and corporate boards. 

Finding the Right Nonprofit Board: When considering joining a nonprofit, you should consider the size and structure of the board and ensure the mission and board culture align with your values and has strong operational practices such as budgeting, governance, and staffing, that can be useful experience and a stepping stone to future corporate board opportunities. Therefore, when deciding on a board that’s right for you, joining a board with a cause you are passionate about is recommended. 
 
Impact of Technology on Nonprofits: Technology, especially AI, is transformative for nonprofits, helping to optimize resource use, streamline board member responsibilities, and remove "board amnesia." 

• Recommended CRM: Apart from Salesforce, Airtable is a recommended tool that allows you to build an in-house CRM without coding experience. It also has helpful templates and AI features to support and comes with a lower price-tag. 
• Board Portal: NACD Northern California utilizes Knowa (today's sponsor), which leverages AI-powered search and summarization features to boost efficiency for both our executive team and board members. This platform centralizes knowledge, streamlining the onboarding process for new directors and integrating documents, meeting packs, and third-party apps for seamless operations. Contact them to get a demo. 

Nonprofit as a Pathway to Public Boards: Nonprofit boards can be more valuable for building networks, than as a resume builder. Engaged members who contribute meaningfully can connect with individuals serving on public boards, which can lead to future opportunities. 
 
Best Practices for Board Composition and Diversity: 

• Term and Age Limits: Some boards have term limits or age requirements. While age shouldn’t limit contribution, regular evaluations of board members help maintain effectiveness. 
• Diversity: Boards should focus on the required skillsets the organization needs and cast a wide net to ensure diverse representation. 

Governance and Legal Considerations: Governance in nonprofits involves unique legal and operational risks, requiring diligence in protecting the organization and its members. 

• D&O Insurance: Regardless of size, nonprofit boards should have Directors & Officers (D&O) insurance to mitigate legal risks. 
• Separate Chair and CEO: Best practice suggests separating the roles of the board chair and CEO. If not, appointing a non-executive lead director ensures balanced governance during executive sessions. 

Crisis Preparedness: 

• Mission-Centered Response: Boards should respond to crises based on the organization’s mission. 
• Revenue Diversification: Boards must ensure that revenue streams aren’t overly reliant on a single source and that operations can pivot quickly during crises. 

Thank you to our partner, Knowa for generously hosting this event: