Nonprofits are under pressure. Nearly 75% report persistent vacancies driven by staff burnout, and 69% are facing funding cuts. At board level, these challenges can cause governance standards to slip just as they’re needed most.
The first episode in our Nonprofit Board Excellence Series examines how nonprofits can respond.
We’re joined by David Grant, member of the Board of Advisors at EngagementGene, Jessica Olives, Executive Director at Powerhouse Nonprofit Consultancy LLC, and Sali Osman, Independent Director-Audit Chair and Board Trainer at CFG.
Here are four ways they believe nonprofit boards can navigate these headwinds.
1. Keep governance under review
Governance often takes a back seat to the day-to-day business of running a nonprofit, because fundraising and finances naturally demand attention. But boards need to make time to examine whether their governance processes are still working.
“If governing documents, for example, are not under a regular review, the organization leaves itself open to scrutiny in audits, investigations and litigation,” warns Jessica.
The risk is that small departures from good practice can become accepted over time. Jessica describes this as “procedural drift”, and it means a board can appear efficient while having weaknesses in how it makes decisions.
“Many boards believe that because they’re high-functioning and move through agenda items quickly and avoid conflict, they’re good to go,” she says. “However, they might be bypassing motions, ignoring quorum rules or allowing dominant personalities to take over.”
2. Measure what matters
A common trap for nonprofit boards is collecting more data than they actually need. When everything is measurable, it can become harder to see what really matters.
David has seen this happen first-hand. “Everything becomes a KPI,” he explains. “And then all of a sudden, we lose the ability to evaluate and rank what we’re trying to attain, and the impact of those things on the organization.”
The starting point is to be clear about what the organization is trying to achieve. Boards then need to ask whether the things they are measuring actually help them get there.
“Measure what you care about,” recommends Sali. “Don’t select KPIs just to get more data and colourful dashboards.”
It also helps to distinguish between operational metrics, which track day-to-day performance, and governance metrics, which provide a bigger-picture view of strategy, policy and risk.
3. Hire for where you’re going
Finding the right talent is becoming harder for nonprofit boards. Nearly half (49%) of chief executives say they don’t have the right board members to establish trust with their communities. They’re competing with the private sector for skills, while drawing from a smaller pool of people willing to give their time.
This is forcing boards to get creative. “Some nonprofits are hiring volunteers through social media drives,” Jessica says. “Others are partnering with universities and colleges to reach data analytics students.”
It’s also important for boards to think beyond the skills they need today. A vacancy is an opportunity to consider the capabilities your board will need in the future, whether that’s expertise in digital governance, fundraising or financial management.
“Where do you see yourself in the next five years?” Sali asks. “Ask yourself that question, and then work backwards. Get the talent that will help you get there, not the talent that helped you in the past to get here.”
4. Challenge the case for AI
AI is creating new opportunities for nonprofits, from streamlining fundraising to supporting programme delivery. But adopting it indiscriminately can create cost and complexity without solving anything useful.
Before they invest in a new tool, boards should be clear about the problem they’re trying to solve and the outcome they’re looking for. “Ask yourself: why do you need AI?” Sali recommends. “What’s the business case?”
It’s equally important to manage risks carefully, particularly when giving systems access to sensitive information. “Digital governance is no longer an option,” warns Jessica. “Nonprofits should start thinking about which data is acceptable to provide to an AI.”
And as the rules around AI develop, boards need to keep up with the latest regulations and guidance. “Make sure that you’re talking to the right governing bodies, national and international, and following precedent as it’s being created,” David says.
Boards should also consider how technologies could work together to create new possibilities. “Don’t limit yourself to AI,” Sali says. “Look at the convergence of these technologies – AI, energy storage, robotics – all of them together.”
Watch the Nonprofit Board Excellence Series
These insights are part of our Ideals Nonprofit Board Excellence Series, where governance leaders share practical lessons on strengthening board effectiveness.
Register for the full series for more perspectives on how boards can build the skills, transparency and leadership they need for long-term success.