Best Practices for Nonprofit Board of Directors for Growth and Meaningful Impact

Nonprofit organizations play a critical role in the global economy, with over 1.5 million nonprofit organizations registered in the U.S. alone, employing 12 million people (7.5% of working Americans) and contributing around 6% to the country’s GDP. 

Such a huge impact is possible, particularly due to the well-coordinated work of nonprofit board members and the experience they bring to the table.

The article below explores the non profit board of directors best practices that help optimize the overall efficiency and improve board performance, ultimately contributing to the success of the organization’s mission.

Main responsibilities of board members

Here are the core responsibilities of board members of a nonprofit organization:

1. Fiduciary duty
2. Governance and strategic planning
3. Financial management
4. Fundraising and resource development
5. Legal compliance
6. Hiring and evaluating new board members
7. Managing executive committees
8. Risk management 
9. Succession planning
10. Board training
11. Community outreach

Nonprofit board of directors best practices

Let’s explore some of the best practices for non profit board of directors that help them operate more efficiently and fulfill the organization’s mission and goals.

1. Establish clear board expectations

With nonprofits, first and foremost, the chances are that most board members are doing so on a volunteer basis. Therefore, efforts must be made to accommodate schedules and make meetings as accessible as possible.

When directors conduct interviews, they should provide precise job descriptions and clearly explain what is expected of board members. For instance, board members of nonprofits are generally expected to be integral donors and fundraisers.

Drafting out policies of these expectations will make all ground rules official. Plus, it’ll provide members with reliable information that they can cross-reference at their own convenience.

2. Stay financially lean and creatively mean

There’s no avoiding the fiscal challenges of being a nonprofit. Unfortunately, many organizations let this eat away at them until they plainly give up on impacting change.

No matter the budgetary issues, nonprofit boards of directors must never lose sight of their nonprofit’s mission and vision. The mentality should always be to think of new ideas first and worry about the money later.

Boards shouldn’t say “no,” if an exciting idea seems financially unobtainable. Instead, conjure up ways that it could be executed within the confines of a nonprofit budget.

3. Think big picture

Unfortunately, there are no ways of avoiding moments of tremendous adversity as a nonprofit board member. It’s the nature of the industry.

No matter how scary things get, it’s critical not to get muddled in small details. Also, avoid becoming too tactical and sterile just to stay afloat.

At the end of the day, nonprofits are working towards something of incredible significance. Those involved need to focus on the grand scheme and remain mission-focused to push through the hard times. 

Losing sight of the mission as a board of directors is a genuine possibility without implementing practices that keep it at the forefront.

4. Have a succession plan

Turnover in the board should be expected. Since these positions are regularly unpaid, some board members’ professional circumstances may disrupt their availability.

Much of the time, internal successors aren’t readily available. As such, nonprofit boards should continually work towards being prepared for and even embracing leadership transitions. Changes should be seen as a form of growth instead of a crushing loss. 

5. Develop policies

One of the key elements of good governance practices for nonprofit organizations is the adoption of strong policies. In particular, a conflict of interest policy, a code of conduct and ethics, and risk management guidelines.

It’s the board’s responsibility to ensure they understand and follow them. By taking a proactive approach to policy development and enforcement, nonprofit organizations can promote transparency, build trust among stakeholders, and improve the organization’s effectiveness.

6. Choose and adopt a suitable governance model

Another element of best practices of highly effective nonprofit boards is the adoption of a strong board governance model, which sets the framework for how the board operates and makes strategic decisions. Depending on the nature and mission of the organization, this can be:

• Policy governance model. It involves the creation of different management committees, each with its own specific responsibilities for different areas of governance.

• Cooperative model. It’s the most democratic governance model with no hierarchy, where all members make consensual decisions as equals. It requires all members to be committed to the organization’s mission.

• Patron model. With this model, board members heavily focus on fundraising and networking. Board members are often expected to have the means to contribute themselves financially.

• Community engagement governance model. It involves engaging community members in the decision-making process and taking their opinions into account.

Nonprofit board of directors composition best practices

A well-composed board can provide effective leadership and governance, while a poorly composed one may cause harm to the organization’s reputation and financial stability. To ensure your board composition is strong and effective, follow these best practices:

1. DEI (Diversity, Equity, and Inclusion). A diverse board in terms of race, ethnicity, gender, age, and professional background can bring new ideas and perspectives leading to greater results.

2. Skills and expertise. A mix of skills in marketing, fundraising, finances, and legal ensure a board can effectively manage a variety of its operations.

3. Board size. A general recommendation is 8–10 members; however, large organizations with complex operations may require more directors. 

4. Board structure. It should include an executive director or CEO, a board of directors, and various types of board committees like finance, governance, and fundraising.

5. Term limits. Recommended term of board service for nonprofit organizations is 3–5 years, with the possibility for additional terms.

Nonprofit board of directors meeting best practices

Here are five best practices for a high-performing board during board meetings:

1. Clear agenda. It should include all relevant items for board discussions and be sent in advance along with other meeting materials.

2. Active engagement. All meeting participants should be actively engaged in the discussion, ask questions, and provide feedback.

3. Informed decision-making. Board members should have access to all relevant data, financial reports, and evaluation programs when making decisions.

4. Meeting minutes. Accurate and thorough minutes with recorded decisions and actions taken by the directors should be kept for each board meeting and distributed to all board members in a timely manner.

5. Ongoing assessment. Board members should assess the effectiveness of the meeting and identify areas for improvement after each gathering.

3 challenges of nonprofit board governance

Let’s explore three main challenges of nonprofit board governance and see how to cope with them effectively.

Implement best practices to improve board of directors governance

To ensure effective governance of a non-profit organization, implement the following best practices:

1. General best practices for board governance include establishing clear expectations for the board, adopting a suitable governance model, developing policies, and having a succession plan.

2. Best practices for board composition include diversifying race, ethnicity, gender, age, and skills, having a moderate board size (8–10 members), and establishing term limits (3–4 years).

3. Best practices for board meetings include having a clear agenda, encouraging active engagement, promoting informed decision-making, keeping accurate meeting minutes, and conducting an ongoing assessment.

Following these board of directors governance best practices for non-profit can help nonprofit boards to:

• Increase efficiency and achieve goals faster
• Increase transparency and accountability
• Have more productive meetings
• Manage risks more effectively 
• Improve fundraising

To enhance the board governance process, organizations are recommended to use board meeting software, such as iDeals Board. This is a secure platform for board communication and document management. Using it, boards can reduce costs associated with offline meetings and have 24/7 access to critical data required for efficient board management.  

FAQ 

What are the best practices in nonprofit management?

The best practices for non-profit board of directors include establishing clear expectations, adopting a suitable governance model, developing a succession plan, legal compliance, financial sustainability, performance monitoring and evaluation, and technology implementation.

What are the best practices for the board of directors of a new non-profit organization?

Non profit board governance best practices for a new organization include mission and vision setting, diverse board recruitment, policy development (board culture, governance, conflict of interest, etc.), new directors training, financial sustainability planning, and performance evaluation.