The last few decades have seen an evolution in the responsibility, composition, and rules of conduct of non-profit boards, due in large part to the Sarbanes-Oxley Act (SOX) of 2002 (USA). The law changed the landscape for both for-profit and non-profit corporations in the United States by increasing corporate responsibility through stricter auditing procedures and greater individual responsibility among board members.
This provided new legitimacy for non-profit board governance and raised the standard for board conduct. It is, therefore, more important than ever for an organization to thoroughly review its governance practices and hold an honest self-evaluation.
Board executives should carefully consider their existing governance procedures to confirm that the organization’s controls are in compliance with SOX, ensure that the board effectively fulfills the mission of the non-profit, and maintains a high level of legitimacy.
It is imperative that board members understand the importance of a strong relationship with the staff and volunteers of the organization. The board is responsible for setting a vision and goals that the staff can rally behind. However, the success of the organization is dependent on the performance of employees and volunteers that are willing to receive lower pay (or no pay) for what they feel is rewarding work.
All too often the duties of personnel and the board are not clearly delineated or the board is out of tune with the actual day-to-day management required to run the organization. It’s important that personnel clearly understand their responsibilities, but it’s almost more important that the board understands the problems and limitations the staff faces so that it can make informed strategic decisions, for two reasons. First, the board wants the organization to function effectively, and secondly, the board members are legally responsible for the activities of the organization. It is imperative all operations remain in compliance with the law, both in the books and on the ground, and the best way to do this is for the board to maintain a meaningful connection with the staff.
In order to ensure proper implementation of the board’s vision and maintain compliant behavior, the board must have a strong line of communication among its members and with the organization’s staff and stakeholders. This includes communication and outreach, as well a tracking system for member activities, important items, and documents. It’s important to invest in a centralized management system that includes regular updates and continuous conversation.
Non-profits are extremely unpredictable environments. It is important for the board to cover its bases and be knowledge about how to handle unforeseen circumstances. One way good way to do this is to make sure that the board members are actively involved in specific roles and share different responsibilities. Members can do this by taking responsibility for a less defined role, serving as a public figure for the organization, drafting stronger policies, or monitoring a specific operation, among other duties.
There is a strong correlation between the efficiency of the board and an organization’s overall effectiveness. While the board’s responsibilities may seem straightforward, much of the time members ignore them on a micro level. When members are no longer active or consistently updated on the latest developments, the organization’s effectiveness measurably drops or turns over to the staff. It’s not enough for a board to decide on a “strategic plan” – the individual members must be willing to take specific actions to fulfill this. Ultimately, if an organization starts to weaken, strict adherence to regulations will fall, and board members may find themselves in a potentially devastating situation.
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