Good governance in non-profits
Whether we’re buying a new car, booking a holiday, or building a strong board, we tend to conduct a cost-benefit analysis, with varying degrees of formality. In considering the cost of effective governance, we should also think long and hard about the potential costs of ineffective governance – a stressed Chief Executive, a chaotic staff team without clear direction and boundaries, a poor reputation among funders, not to mention the financial costs of fraud and inefficiency. Poor governance by one organisation also risks damaging the reputation of the sector as a whole which, as we all know, impacts on fund-raising, volunteering, and our ability to attract high calibre board members and staff.
Everyone reading this will be well aware of the fundamentals of governance. Boards should:
- ensure compliance with the law, their constitution document, and regulation
- provide clear, long-term vision, and ensure the strategy is taking us towards that vision
- set the tone for culture and behaviours by defining values and ensuring they are lived throughout the organisation
- oversee performance and ensure agreed targets are being met
- agree the risk appetite for various aspects of the work, and ensure everyone is managing risk appropriately throughout the organisation
A well-governed organisation is a joy to be a part of, and getting governance right needn’t be expensive. There are a number of simple, low-cost governance tools that can really make a difference.
Need governance support for your board? Contact Leading Governance today for one-to-one or group governance training for your board.
Our top 5 tips for good governance are:
1. A governance calendar
Setting the dates for the year, and ensuring all the key actions are listed in a way that creates flow, can make a real difference.
- Knowing when company returns to statutory agencies are due is useful, especially if there is a change of key staff. Ensuring that new directors are signed up as directors, and retiring directors’ resignations are notified to the Companies Registration Office are legal requirements.
- Agreeing dates for all board and committee meetings will optimise attendance and engagement of members, and ensure that committees are able to report to the board in a timely way. The governance calendar can be linked with dates for papers to be issued, and meetings for the Chair and CEO to agree the agenda and reports. This in turn enables effective preparation, which is key to the quality of meetings.
- Booking the board away day ensures commitment to it. It’s really important that the whole board is there to set the strategic direction of the organisation. It’s also a great opportunity to identify any skills gaps on the board, and plan for new board members to join in time for the AGM.
2. Role descriptions
Role descriptions for the board as a team, for individual board members and for office bearers are essential. Giving them to potential new board members before appointment ensures that they know what is expected of them before they commit. Linking role descriptions to the board member review process helps to clarify effective behaviours and gaps. Written terms of reference for committees helps to ensure that they are doing board level work, and not overlapping with the role of the Chief Executive.
3. A scheme of delegation
A scheme of delegation provides clarity around ‘matters reserved for the board’, and ensures that the senior staff feel comfortable getting on with their day to day work, while being in no doubt about when board decisions are needed.
4. A code of conduct
For a code of conduct to be truly effective, it should be designed by the board itself, and physically signed by each of its members ensures a sense of ownership. The code of conduct guides important boardroom behaviours – attendance, listening with respect, giving and receiving feedback. It can really help to build trust, which is an essential ingredient for a high performing board team.
5. A register of interests,
The register of interests should be updated at least annually. It helps the Chair to ensure that any potential conflicts of interest are known and managed appropriately. This is a source of assurance to all stakeholders.
All of these tools require thought and time to develop. The Leading Governance website provides templates and guides on how to create all these governance documents for your own organisation. Using the resources which we provide will help you build your own, bespoke board manual, which will vastly improve the governance of any organisation. This is a very worthwhile investment – not just to prevent disaster, but also to drive leading governance, where a strong board team acts as the ‘brain’ of the organisation.
If you’re still not convinced that effective governance is worth the effort, ask some battle-weary board members how much time and energy they’ve had to give when things have gone wrong – when a fraud has been discovered, when key staff have resigned or taken long-term sick leave, when funders have withdrawn their support. I rest my case!
Some useful reading –
- The Oxford Handbook of Corporate Governance
- Corporate Governance: Principles, Policies, and Practices
- Corporate Governance and Accountability
- Corporate Governance: Law, Regulation and Theory
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