Boards Urged to Do More to Focus on Charity Missions

Some nonprofit boards may be focusing too much energy on their legal responsibilities as board members and too little time on making sure a charity is a doing a good job of fulfilling its charitable mission, says the leader of the major national organization that advises charity and foundation trustees.

“A singular focus on compliance is too narrow, creating underutilized and underperforming nonprofit boards,” says Deborah S. Hechinger, president of BoardSource, a Washington nonprofit group that helps organizations build effective boards.

That exhortation comes as government officials and charity leaders have been debating whether ideas in the 2002 federal Sarbanes-Oxley Act, designed to improve corporate governance and accountability, should apply to charities.

Some nonprofit groups have decided to start complying with those rules voluntarily out of concern that their operations would be questioned (The Chronicle, August 19, 2004).

Ms. Hechinger says she worries that “much of the regulatory debate and recommendations for nonprofit reform today are centering on issues such as board and CEO compensation, travel expenses, audit committees, and the size and structure of nonprofit boards. Those issues are highly important to nonprofit governance.

But boards also need to focus on governance from a larger perspective. They need to bring the intellectual, financial, and reputational capital that they possess to their organizations. Some boards are not making a discernible difference, because they’re only doing part of their jobs.”

New Guide

To help nonprofit board members improve their performance, BoardSource asked governance experts from the academic, business, and nonprofit worlds, as well as legal experts, to make suggestions on what qualities make effective boards. From those inquiries, it developed a list of 12 principles for nonprofit boards, as well as advice about how to follow each of those principles. Among the key suggestions:

• Boards need to let the chief executive run the organization, without micromanaging his or her activities. At the same time, they need to hold that person accountable for how well the charity accomplishes its mission, not merely how much money is spent on salaries. And they need to make it possible for the chief executive to speak freely about any concerns and to share bad news early.
• Instead of merely reviewing the charity’s financial statements, board members need to evaluate how efficient and effective the charity is, and decide on indicators that will allow them to measure how well it is performing its mission and where it needs to improve.
• Board members not only should be independent of the chief executive, they must be independent of one another. Rather than voting with other members of the board because of their seniority, position, or reputation, trustees need to reach their own decisions about each issue.

Copies of the detailed recommendations, called “The Source: Twelve Principles of Governance That Power Exceptional Boards,” are available online at http://www.boardsource.org.