Beyond the meeting – Transformational approaches to nonprofit Board governance

The significance of an effective Board in guiding nonprofits in India has been well-documented. Today’s environment is challenging. It is marked by reduced foreign funding, complex domestic funding procedures, increasing compliance burdens, and a scarcity of talent. It’s crucial for NGO leaders to invest substantial time and effort into cultivating a a robust Board.

Nurturing the Board goes beyond simply assembling one. It involves the ongoing work of managing, maintaining and enhancing its effectiveness. This process is essential for fostering a Board that not only supports but actively drives the organization’s mission forward.

It is important that NGO leaders not only focus on having a Board, but ensure their Board is an effective one. It must serve their constantly evolving organizational needs as a partner. I use the word “Board” broadly in this article. Compliances require the presence of Legal Board members from a fiduciary responsibility standpoint. However, most NGOs today have also assembled an Advisory Council. They oftentimes have equal voice and a seat at the table.

My reference to a Board is to that entity which plays the role of governance and stewardship for a nonprofit. It may be legal or advisory in nature, or as is oftentimes the case, a mix of both.

In this article, we will examine the three levels at which most Indian nonprofit Boards operate. Regardless of an organization’s size or sector, these levels are relevant to the journeys that many NGOs take on the path of good governance.

Some Boards advance to the highest levels of effectiveness fairly quickly. Others remain at more basic stages for decades. In our experience as an Accelerator, a key factor contributing to the level of success an NGO achieves, as well as its sustainability and growth, is the effectiveness of its Board.

Toward the end of the article, we will also explore some best practices that we have observed in the sector, that speak to more effective Board behaviors.

Foundational governance

At the most basic level, an NGO must ensure that its Board has the following characteristics and plays the below mentioned roles for meeting the first level of governance.

Fiduciary responsibility: The fiduciary responsibility of a Board member refers to the legal and ethical obligation to act in the best interests of the organization. This responsibility encompasses three main duties: duty of care, duty of loyalty and duty of obedience.

Independence: Board members should operate independently, free from conflicts of interest. One of the most common representations of this on a Board is not to have any relatives, family members or close friends of the Founder on the Board, unless justified by a core role that they are playing.

Regular tasks and meetings: The Board should carry out its routine responsibilities and hold regular meetings to review progress and address issues. Regular tasks include approving plans and budgets, approving annual accounts, assessing CEO performance, etc. Quarterly meetings are considered a norm. However, one needs to also ensure that they are documented well in the form of Minutes and Resolutions.

Strategic governance

As organizations grow and evolve, the Board’s role should become more strategic in nature. Key aspects of effective strategic governance include the following.

Clarity of roles: Clearly defined roles for Board members are critical. This clarity can be arrived at through well-defined JDs for each member. Candid one-on-one conversations at the time of joining are also key.

Such processes can ensure clarity in roles and responsibilities of each Board member. For example, The Apprentice Project, an Atma Accelerator partner, spent time clearly articulating Board JDs. They defined 3-4 roles. They then looked for individuals in the sector who fit these roles.

Time investment: Board members should give time beyond meetings. Meetings oftentimes involve presentations and decision-making. However, the true advisory nature of a Board, where a CEO can consult them and engage them in key decisions, happens beyond meetings.

A good way to do this is by setting up subcommittees for making strategic decisions. These include long-term strategy planning, salary benchmarking and corrections, culture resets, etc.

Individual performance: A healthy system of self-evaluations, facilitated by the CEO, should be the norm. For example, at Atma we conducted a self-assessment for our Board in 2022, In this process, each member reflected on their role, time and contribution to the organization. Decisions to stay on or move from the Board were taken based on the same.

Risk management: Proactive identification and management of organizational risks are gaining greater importance. This is especially crucial with the complexities and changes in the external environment. Shifts in the sector, especially those related to FCRA restrictions, CSR laws, and overall accessibility of funding channels to continue the mission of the organization, are adding to the risks that need to be managed.

Succession planning: The Board plays a critical role in preparing for future leadership transitions to ensure continuity of the NGO’s work. Planning succession for top leadership roles – CEO, COO, etc., – is an activity the Board must proactively undertake every year.

Transformational governance

Highly successful organizations are those that have scaled, effectively partnered with governments and multilaterals, and thrived over many decades. The Board’s role extends to transformational governance that contributes to such success. This advanced level involves the following factors that need to be considered while thinking about governance and Boards.

Influence and networks: One of the most crucial roles of a Board is to open doors for the organization’s work to reach places of power and influence. Leveraging connections and networks to advance the organization’s goals to drive its success is a role very few can play.

Fundraising: Given the complexity and criticality of fundraising for nonprofits, driving efforts to secure financial resources goes a long way in ensuring the success of an NGO. Many Board members are financial contributors to the organization’s mission in their personal capacity.

Brand building: Enhancing the organization’s reputation and visibility helps attract all kinds of stakeholders to its mission. Who one has on their Board, is a big factor of influence regarding the two points mentioned above as well. Having an influential Board member itself signals strong brand credibility for an NGO.

Capacity building: Strengthening the organization’s infrastructure and capabilities is a lifelong affair. Given the more daily pushes and pulls that a CEO is engaged in, the Board can play a strategic role in driving capacity investments for long-term success and sustainability of an organization. Examples of these include technology investments, establishing a corpus fund, and establishing a marketing strategy, etc.

Culture custodians: Holding leadership accountable to the values, beliefs and behaviors the organization stands for is a soft but important role that a Board can play.

There is a saying that “culture eats strategy for breakfast.” As nonprofits, where our work centers so heavily around people, culture cannot be ignored.

The Board must be the ultimate culture custodian in a nonprofit, supporting the leader in building and strengthening it. Boards are pivotal to the survival, sustainability and growth of nonprofits.

The success of an organization is the result of many interconnected factors. These include the contributions of the founder, Board, leadership team, staff, volunteers, donors, beneficiaries, and partners.

The CEO is responsible for managing these stakeholders. However, the effectiveness of the Board is crucial for successful succession and continuous change management.

Best practices for more effective Boards

While this section can include a long list of practices, I have focused on sharing my top five. This list is driven by the consideration of what contributes the most to the success (or the failure) of a Board to play its role effectively. These practices are perhaps not as written about in the sector as needed.

Strong induction: When Boards fail, most often we have heard it’s due to the Board members not performing their roles. When Board members are asked why, a very common reason is a lack of clarity on what their role was in the first place.

Founders/ CEOs often enthusiastically bring members onto the Board. However, they tend not to invest enough time to align with them on expectations.

A strong induction, across a few days, perhaps weeks, is critical to ensure the effectiveness of what each member brings to the table. The induction should cover context (about the organization and the communities it serves), introduction to team members, an understanding of the NGO’s needs, and the roles the member is expected to play.

Values alignment: A Board seat comes as a position of power. To ensure this power is not abused, it is important for Board members to operate with a high moral compass.

Adherence to fundamental social values such as fairness, justice and trust is essential. Boards should model the values they wish to see translated into the organization’s culture and its end impact on the ground.

Allyship: In the hierarchy of where a Board is placed in an organogram for an NGO, it should not be seen at the top, but instead alongside its CEO/ leader. Being a leader is often a lonely journey. Boards can play a crucial role in serving as allies and trusting partners to nonprofit leaders.

Leaders can be undermined if the Board does not recognize their contributions and uphold their rights to be heard and acknowledged. For the CEO, the Board is a crucial stakeholder. Often, the CEO relies heavily on the Board for guidance and mentorship. The ally role is an important one for each Board member to play.

Open access and communication: For very long, Boards have been seen as the last step of a proverbial ladder to climb to. However, this dynamic should be flattened to a level playing field. Even employees of an organization must have access to Boards. For example, Population Foundation of India allows team members by rotation to attend and present at Board meetings.

What is equally important is that Board room discussions are shared with the organization at large. This helps break silos and rally all stakeholders, young or experienced, toward the NGO’s mission. For example, at Atma, we bring back key decisions made in Board meetings. Every couple of quarters we present the Board deck to the team.

Diversity: Boards should not be elitist. Especially in a nonprofit context, a Board should come in with a service mindset and operate with strong values. This must be one of inclusion and diversity. The NGO needs to ask this question to itself – does the Board truly represent its key stakeholders, given the vision and the mission?

In conclusion

In addition to the roles they play as fundraisers, stewards, capacity builders, the Board must include persons old and young, men and women. They may include nonbinary genders as well, if that aligns with who the organization is.

Some representation from the target stakeholder group is also important. Keeping the key stakeholders (women, children, farmers, etc.) at the center of everything an NGO does, including how it constitutes its Board, is crucial. For example, Amnesty International has a beneficiary on its Board to ensure inclusive representation.

A nonprofit Board must not serve only the CEO, but the employees, target populations, donors and the entire community of influence for the NGO. The role of good governance is key in this process of stewardship toward creating a better world and society.

References

Rahul Rishi, Maulin Salvi and Sahil Kanuga. September 30, 2023. “Navigating governance challenges: strengthening nonprofit organisation in India”. Nishith Desai Associates.

David A. Nadler. May 2004. “Building Better Boards.” Harvard Business Review.

Dasra and ISDM. “Effective Boards Effective Organisations.”