Seminar Focuses on Shaping Effective Nonprofit Boards
Without proper governance of the organization, donors are less likely to give, directors are less inclined to serve and the mission of the charity is less likely to be achieved, Dr. Richard Leblanc, author and professor of law, governance and ethics at York University in Toronto, says.
Co-author of Inside the Boardroom: How Boards Really Work and the Coming Revolution in Corporate Governance (Wiley), Dr. Leblanc gave his recommendations for improving nonprofit corporate governance at a recent seminar held at the Naveen Jindal School of Management and hosted by the Institute for Excellence in Corporate Governance.
The prescription for improving corporate governance in the past has focused on the structure of boards — their size, composition and independence. However, not-for-profit boards should recruit directors based on their competencies, skills and behaviors, Dr. Leblanc said.
“The assumption for not-for-profit boards has been since they’re not paid as directors, governance is less important, and that couldn’t be further from the truth,” Dr. Leblanc said, because not-for-profit organizations serve “vulnerable beneficiaries: health, education and children.”
Sharing insights from his research, he suggested three elements for building an effective nonprofit board: director recruitment, development and assessment.
He suggested to the 160 nonprofit directors in attendance that boards adopt formalized roles, which include charters for the board, committees, the chair, executive director and committee chairs. “This gets everybody on the same page and establishes standards and the right tone at the top,” he said.
Boards should also address vision, mission, strategy and operational plans. Program delivery, risk identification and management, finances, government reporting, ethics, integrity and communication and accountability to members and stakeholders should all be key, he said.
Dr. Leblanc also proposed that boards adopt a succession planning process. “Consider graduate terms of two years and three renewals, or three years and two renewals, contingent on performance to promote renewal and diversity and allow fit and interest determination,” he said.
The event, How to Create Effective Nonprofit Boards: The Necessity of Governance and Leadership, was co-sponsored by the Center for Nonprofit Management, Communities Foundation of Texas and Dallas Social Venture Partners.