Executive-Board Relations -- How to Improve it Without Losing Your Mind or Board Members
Updated: 1 hour ago
Tension. Irritation. Frustration. These are three words often used by chief executives and board members to describe their relationship to each other (aka "Executive-Board Relations"). Not all executive-board relationships at nonprofits are contentious, but most could be much healthier and more productive.
For a nonprofit to thrive, it must develop a systematic approach of creating and sustaining a healthy executive-board relationship, as well as methods of solving relationship issues when they arise.
You can trace much of the strife between boards and chief executives to unmet expectations. Boards get frustrated because chief executives can be lone wolves with big egos who like to push agendas without board support. It also annoys boards when executives make major decisions without informing the board, or when executives withhold information from the board, especially when it’s negative.
Executives get just as frustrated with board members. Irritation reaches boiling proportions when board members blow off meetings with no reason, vote on changes to programs they have never seen, drive personal agendas, micromanage staff, fail to make annual contributions, and make policy changes without considering the implications to operations, programming, or staff workload.
Boards are also notorious for ignoring their responsibilities to raise funds, recruit board members, and volunteer for programs. Most board members of small nonprofits have little or no board experience, yet often act with a sense of entitlement. To a seasoned chief executive with good intentions, a board like this feels like a hangnail.
Why are executive-board relations important?
Maintaining a healthy relationship between a chief executive and a board of directors is a First Things First principle because the relationship between the two sets the tone for a nonprofit’s culture and productivity—inside and outside the organization.
A healthy executive-board relationship is friendly, collegial, professional, and productive. It’s team oriented and cloaked with respect, admiration, and authentic passion. The result emits positive energy and enthusiasm to the staff, volunteers, and the community. When this type of relationship is in place, it creates a dynamic and inspiring work environment that transforms a “you” and “I” nonprofit into a “we” nonprofit.
On the other hand, a contentious, bitter executive-board relationship can rot the drive and enthusiasm of everyone. This often leads to hundreds of hours of lost productivity as the nonprofit must divert its energy and resources to grind through conflicts. Every hour spent dealing with a nagging issue could be spent raising money and executing the mission. Fun becomes resented “work.” Interest withers. Passion wanes and everyone mumbles, “I didn’t sign up for this! I don’t need the headache and aggravation.”
If a chief executive and a board of directors cannot get along and resolve their differences, the relationship will eventually become so corrosive that the nonprofit will lose favor and funding and it may take years to regain the position and momentum it once had.
This all may sound gloomy, but it’s reality. If you have your sights set on becoming a gold standard nonprofit, you must, absolutely must, take action as early in your lifecycle as possible to ensure a healthy relationship exists between your chief executive and your board. First things first!
Case study: Digesting the truth
Weeks before I rescued a nearly bankrupt nonprofit called Sun Valley Adaptive Sports, the relationship between the executive director and board of directors was volcanic. Months of tension and aggravation between the two—and between the executive and staff—led to an explosive, public confrontation where the executive, who founded the organization, threw his office keys at the board chair and said, “I quit!”
The board gladly accepted his resignation. It was a relief to some board members who felt he was in a role beyond his capabilities and experience. Most staff also sighed with relief. They felt unappreciated and uninspired, and said their suggestions fell on deaf ears as operations ran amok and programming became increasingly disorganized.
The executive director had his own beefs. He felt controlled by the board and felt like the board was meddling in the daily affairs of the business and doing too little to raise funds, volunteer, and find new board members.
The situation was a mess and it was my job as the new chief executive to diffuse the drama, renew morale, and rebuild the organization. There were many challenges to address and some of the biggest were the issues the former executive had with the board.
After six years of operation, the board had still not defined roles and responsibilities for its members. There were no governing policies, no committees, no strategic plan, no board development plan, and no board accountability.
Most of the board was apathetic. Only a few members out of 11 had nonprofit board experience. This would not have been a problem had the other board members been willing to learn what it means to be a best practices board member and work as a team to develop and fulfill the typical roles and responsibilities of board members.
Instead, members filled one board meeting after another with empty chatter about what could be done or should be done, but no one was willing to do the work that needed to be done. In the few instances when the board said it would produce a document or write policy, the responsibility inevitably fell on my shoulders because the board claimed it was too busy to complete the project, or said they didn’t have the expertise.
I would have been fine with the board passing off an occasional project, but when my offers to help became their method of doing work, I felt used. This irritated me and eventually created tension between the board and me.
I also started to feel a little resentment toward the board because the staff was working seven days a week, month after month to rebuild and retool every operational structure and every program, while most of the board was doing very little to help rebuild the organization and even less to rebuild the board.
In fact, the more successful SVAS became, the more listless the board became. And why not, I was raising 98 percent of the money, programming was nationally acclaimed, and operations were humming. It felt as if the board was thinking, “Gee, the staff is doing such a great job, why do we need to do anything?”
I expressed my concerns many times to the board and to the board chair. In response, they nodded their heads in agreement, made a few hollow commitments, and repeated how great things were going. Of course, nothing would happen.
In my view, the board chair was partly responsible for the board’s apathy. With no board chair experience, nominal nonprofit experience, and minimal time for board work, a lack of board leadership prevailed. As a result, the board seemed unmotivated to fulfill its responsibilities, uninspired to volunteer, and unwilling to be held accountable.
I’ll never forget the meeting where one board member stood up and, speaking on behalf of the board said, “We feel staff are paid employees of the organization and are expected to do the work of the organization. Board members are volunteers of the organization and should not be expected to do any work, or be held accountable to fulfill any work related tasks.”
I thought, “Whoa! What planet were they living on?” It was at that moment I realized the culture of the board and the culture of the staff were antipodal.
Discouraged and disappointed, I left the board meeting wondering why a group of people who claimed to be so committed to our mission were so unwilling to do the work needed to support it. It was a classic case of lip service passion.
In the fall of 2007, I suggested SVAS hire a facilitator to lead our strategic planning session. The board agreed. I asked the facilitator if she would spend a portion of the session talking about roles and responsibilities of board members and chief executives, and standards of best practices for board operations. With a third party offering advice and direction, my secret hope was the board would learn how a best practices board functions and how they should interact with a chief executive.
The planning session was a milestone for SVAS. The facilitator talked at length about what it means to be a best practices board member and the typical roles and responsibilities that go along with board membership. She covered fundraising obligations, fiscal responsibilities, policy development, committee participation, staff appreciation, board operations, volunteering, executive-board relations, meeting attendance, moral obligations, and micromanagement.
Over and over, the facilitator repeated how important it was for a board to be held accountable for its responsibilities, obligations, and commitments. The other point she frequently emphasized was how critical it was for a board and chief executive to work side-by-side to achieve the goals and fulfill the mission of a nonprofit.
The truth was too much to digest. Within a few months, most of the board members resigned, including the board chair. It was sudden and a bit traumatic, but purging the board turned out to be a seminal event in the history of SVAS.
It took more than six months to fill seven new positions and it was worth the wait. The new board members had long track records of nonprofit experience, active involvement, and had made exceptional contributions to the nonprofits they had worked with.
The new board chair was a fiery, corporate executive with decades of business and nonprofit experience, and had the backbone to hold board members accountable.
With a new board chair at the helm and a team of quality board members eager to work, the culture of the board changed overnight. Drama evaporated. Respect returned. Board meetings were fun and lively, members started volunteering regularly, and everyone was offering to help in whatever capacity they could.
By spring 2009, SVAS was soaring to unimaginable heights. In fact, things were going so well and we were growing so fast, the board and staff voted to explore the possibility of building a multi-million dollar rehabilitation center for our wounded veterans program. Four years earlier, the only thing the board and former executive director were exploring together was a lawsuit against each other.
The restoration of the SVAS board and its relationship with me is a testament to what a culture of hard-working, passionate people can accomplish when the executive-board relationship is healthy and working in partnership to achieve common goals.
The success of your nonprofit will be directly correlated to the quality of your executive-board relationship and how well you establish and nurture a healthy and productive relationship early on in your lifecycle.
Do not delay. Do what you need to do, as soon as you can, to establish a healthy relationship, even if it means making unpopular decisions and taking unpopular actions. The survival of your nonprofit depends on it.
Tactics and Tips
Equal but different roles – a philosophy
The first thing you need to do to build a healthy executive-board relationship is establish a philosophy about how the executive and board should view each other’s roles.
I’m not talking about the details of who should be responsible for what; that comes later. I’m talking about a belief or philosophy your nonprofit holds about the executive-board relationship.
Some old-school boards have a top-down approach to management and see themselves as superior to chief executives because they see executives as “employees” with no voting rights.
Executives, on the other hand, often feel superior to board members, because most of the time they do the bulk of the work, raise the majority of funds, pick up the balls board members drop, and often have more nonprofit experience.
According to best practice standards, neither position is superior to the other. Rather, the chief executive and board should view their relationship as collegial. This means the chief executive and board are equals, though they have different roles and responsibilities.
At the very least, the executive-board relationship philosophy you adopt should include values of respect, admiration, and encouragement. It should also include working together in a collaborative, compassionate, and sacrificial manner to propel your nonprofit’s mission.
You can tweak the values and beliefs any way you want, but what’s most important is creating an executive-board relationship philosophy. Put this at the top of your corporate ToDo list. Once it’s written and approved, add it to your bylaws and work it into your culture as soon as possible.
You should establish policies requiring the board to share this philosophy when orienting new board members, hiring a chief executive, and holding strategic planning sessions. This way, the philosophy will remain front and center in people’s minds and in your nonprofit’s culture.
Clearly defined roles and responsibilities
Unmet expectations and undefined roles and responsibilities are kindling for relationship fires. For the relationship between the chief executive and board to be a healthy and productive one, everyone needs to know who is responsible for what and who is responsible to whom.
To do this, you need to create a set of clearly defined expectations, roles, and responsibilities for the chief executive and the board. You must also establish terms of accountability, levels of participation requirements, and methods of evaluation. Discussing these topics can create tension and controversy because many executives and boards have no idea what nonprofit standards exist for such things, or they try injecting personal agendas.
If you have any suspicion your chief executive and board might fall into a contentious, unproductive discussion when developing terms and protocols for these governance items, I strongly suggest hiring an experienced mediator to facilitate the process. A good mediator can save everyone hours of bickering and weeks of lingering drama. If you’re lucky, the process will turn out to be a fulfilling experience that deepens board culture and builds team spirit.
Below is a brief list of standard roles and responsibilities for chief executives and board members. There are others, but these will prove most useful for beginning the process of building or enriching a healthy executive-board relationship.
Roles and Responsibilities – Chief Executive
Establish a job description
You can’t expect to hold a chief executive accountable for responsibilities if there are none. The most important thing a board can do to manage the roles, responsibilities, and expectations of a chief executive is to write a detailed job description.
A job description for a chief executive should cover all functional areas of business including financial, programming, operations, administration, fundraising, board reporting, and marketing. It should also cover responsibilities for employee oversight and board relations.
You’ll want to design a job description detailed enough so your board can use it to manage your chief executive, but broad enough to prevent micromanagement. It’s important that your board grant plenty of freedom to your executive so she can do her job without feeling as if a pack of overbearing parents is peering over her shoulder waiting to question every decision and monitor every action.
You’ll also want to establish well-defined performance measures tied to the details of the job description. This way, your chief executive will have a clear understanding of what work to accomplish and what goals to achieve throughout the year, and the board will have standards by which to evaluate her performance.
Manage operations and staff
The primary responsibility of a chief executive is managing the day-to-day operations of the organization and overseeing staff. You hired a quality executive because you felt she was the best person for the job. It’s the responsibility of the board to provide oversight of the work she performs, but it is not their responsibility to micromanage. It’s a delicate balance indeed.
If the chief executive lacks the ability to do her job, or has the ability, but not the willingness, then you may need to let her go. After a few blowouts and patches, it’s better to replace a flat tire than to repair it.
The primary guideposts for a nonprofit are its mission, vision, strategic plan, operational plan, fundraising plan, and budget. The executive typically works with the board to develop the first three of these items. For the second three, the executive typically develops drafts, presents them to the board for discussion and approval, and then executes them once the board votes to adopt them.
The board approves major employment policies and the funds to hire staff, but the process of hiring, managing, and firing staff is the responsibility of the chief executive. In small nonprofits, it’s common courtesy to allow a few board members to meet senior level staff before they are hired, but the executive should have the authority to make the final call.
Inform the board
In the nonprofit world, the chain of command is clear: the chief executive is an employee of the organization and reports to the board. As part of her reporting duties, the chief executive is responsible for informing the board with regular updates covering all areas of operations, administration, programming, and finances.
I suggest the executive, in collaboration with key staff, write a brief, bullet-pointed “monthly update” covering the most recent highlights of the organization. She can send this update to board members prior to board meetings. These updates also provide a historical record of successes and challenges that management can use to design marketing material, write annual reports, or to refer to during strategic planning sessions.
Transparency equates to trust. For the relationship between the chief executive and board to be healthy and productive, executives must be willing and comfortable to share bad or unfortunate news.
I remember the time when one of our SVAS ski instructors collided with one of our participants during a lesson. The next morning, after the participant spent a night in the hospital, a lawyer called to say the family was filing a lawsuit.
A lawsuit had serious implications to SVAS and our board. After hanging up with the lawyer, I immediately phoned our board chair and explained the situation. Fortunately, one of our board members knew a renowned lawyer. We contacted him for advice. He called the participant’s lawyer. By the end of the day he resolved the situation and no legal action took place. Whew!
Stuff happens and boards understand. They want to help. In some cases it’s their responsibility to help because boards are liable for instances of “gross negligence.” Your chief executive should immediately inform your board if a senior manager quits, your largest donor decides not to make a gift, a legal issue arises, or a new partnership is underway that will change the way you deliver services.
Boards don’t need to get involved with petty problems, but it’s the responsibility of the chief executive to honestly and promptly inform the board of any major problems, changes, and potentially damaging situations.
Support the board
Board members range from billionaires who attended Harvard to single parents who dropped out of high school. Regardless of education and background, it’s the chief executive’s responsibility to help board members be effective.
The most respected chief executives provide the necessary leadership to engage, encourage, and inspire board members. They are always on the hunt for opportunities to help board members better serve the board and the organization.
It’s also important that board members feel a sense of respect and gratitude from the chief executive. Board members might not admit it, but they do want to feel their time and contributions are valued and appreciated by the chief executive. This is why it’s important for executives to make a special effort to spend one-on-one time with board members to thank them for their help and support.
Board participation
The chief executive is typically the leader of the organization and it’s her responsibility to provide leadership, wisdom, and information at board meetings. She should sit on the board and be treated with the same respect and admiration as any other board member. This is the essence of the servant-leader role and why it’s vital for the board and chief executive to foster a collegial relationship.
Even though chief executives sit on the board, they should not have board voting rights. In rare cases, boards grant chief executives voting rights, but I don’t recommend this due to obvious conflicts. The term for this non-voting position on the board is called ex officio. It means, “by way of position,” or “by right of office” the chief executive has rights to sit on the board. Most nonprofits include an ex officio statement in their bylaws to outline their executive’s role on the board.
Although chief executives don’t have the right to vote, the board should provide its executive the opportunity to cast an ex officio vote, or at least give her an opportunity to express her opinion and provide input on a topic or issue before the board casts its vote.
Boards and chief executives often squabble over who should prepare the board agenda. It’s the responsibility of the chief executive to prepare and distribute board agendas with input from the board chair.
The chief executive and board chair should meet or talk before board meetings to discuss important agenda items in an effort to speak with a unified voice and avoid surprises. Even if the chief executive and board chair hold different positions, the board will feel more at ease knowing the chief executive and board chair discussed the agenda ahead of time.
One area of debate is who should lead board meetings—the board chair or chief executive? The board chair is more common, but the executive can be just as effective. Why? She typically knows the most about the operations, programming, and finances of the nonprofit. She also has good communication skills (or should) and is used to working with people and businesses in a collaborative effort to solve problems and discuss opportunities.
In the end, it’s the board’s call. However, if the chief executive runs board meetings, it’s important she engage the board chair and board members in topics of discussion in a collaborative, collegial manner. Remember, board meetings are environments of democracy, not dictatorship.
Board member nomination and orientation
The chief executive should be responsible for taking an active role in the board nominating process. She is in the best position to know the needs of the nonprofit and the types of people who can best help it. She’s also in a good position to recommend candidates because she’s in constant and close interaction with community leaders, business partners, and donors.
It’s important that potential board members have a good relationship with the chief executive and fit into the culture of the board, and to a lesser extent, the culture of the nonprofit. The chief executive and members of a nominating committee need to thoroughly screen board nominees. As I said earlier, you want to create strong filters and set expectations to ensure you bring on and retain high quality people.
This means finding candidates with track records of getting along with others in business and social settings. Call past employers, business partners, and nonprofits they’ve worked with. Are they team players? Are they good listeners? Are they interested in hearing the opinions of others? Do they shut down if they don’t get their way? Do they seek common ground when negotiating? Are they sensitive to the feelings of others? Do they exhibit authentic passion or lip service passion?
Fast-tracking board nominees for any position without proper screening is a recipe for executive-board relationship calamity. Here’s a piece of advice to keep in mind: Before you nominate—investigate!
Again, the goal is to build an effective board, not a contentious one. This starts with healthy, productive relationships between all the board members and, most importantly, a healthy relationship with the chief executive.
Once a board votes to approve a nominee to board membership, a board member or the board nominating committee should be responsible to orient new board members about their roles, responsibilities, and expectations of their work and time commitments.
The chief executive’s responsibility in this process is to orient new board members about key areas of programming, planning, accounting, fundraising, and any other areas that will help new board members understand the structure and operations of the nonprofit.
Roles and Responsibilities – Board Members
Make a commitment or exit gracefully
It’s not uncommon for boards to spend six months discussing the roles, responsibilities, job description, and accountability of a prospective chief executive, and another six months going through the hiring process.
The irony is many of these boards have no formal roles, responsibilities, job descriptions, or systems of accountability for themselves. Their vetting process for board membership entails little more than spending an hour with a nominee over a cup of coffee.
This is dangerous. The roles and responsibilities of every board member—and the board itself—are every bit as important as those of the chief executive, and in some cases, more so.
Unfortunately, not enough board members believe this. They take their roles lightly because they feel it’s the responsibility of the staff to do the work of the nonprofit since they’re paid to do it. Many board members feel board membership is a “volunteer” position and whatever time, talent, and resources they provide is good enough. Participation is optional. Accountability is out of the question.
True, board members are volunteers. Men and women of the armed forces are, in some respects, volunteers too, and they go to war when told to do so. It’s their role. It’s the responsibility they signed up to perform. Just because board members are volunteers doesn’t mean they get a pass from responsibilities and accountability. By accepting nomination to a board, members are accepting the battle cry to do the necessary work it takes to sustain their nonprofit and fulfill its mission.
One of the first things you should do with your founding board members is to establish a “roles and responsibilities” document for board members. I strongly suggest doing this before you submit your articles of incorporation, bylaws, or begin your 501c3 application. Make sure it addresses time commitments, accountability, performance evaluation, and specific duties board members are expected to perform. I have a comprehensive roles and responsibilities template you can have at a price you can afford—Free! Just email tomiselin@gmail.com and ask for it.
The founding board members must be willing to adopt and abide by the roles and responsibilities of board membership before they bring on new board members. If they are unwilling to do this, you’ll be launching your nonprofit with a bag of worms you’ll one day regret holding. Set precedence from day one.
As you fold in new board members, they should fully understand their roles and responsibilities before they accept an offer to join. Require all board members to sign the roles and responsibilities document, and the entire board should review and sign the document once a year to renew their commitments and obligations.
Boards of more mature nonprofits should go one step further. They should create job descriptions for the board chair, president, vice president, secretary, treasurer, and any other officer positions. This helps the board and chief executive know who is responsible for what and who is accountable to whom. For example, if the secretary suddenly leaves, how can the board reasonably expect to fill the position if no one knows what the responsibilities include?
Too often boards want to avoid creating job descriptions and signing roles and responsibilities documents. They refuse to be managed or be held accountable. Make sure your board members understand board membership is not a weekend hobby or a position of entitlement; it’s a serious responsibility and with it comes work and accountability.
If board members—potential or current—are unwilling to accept these terms, they shouldn’t join the board, or migrate to a non-voting position such as an advisory board member, volunteer, or resign gracefully.
Provide oversight and develop policies
While it’s not the job of the board to manage the operations of the organization, it is the board’s responsibility to see to it the chief executive manages the financial and operational resources of the organization efficiently, effectively, and honestly.
The best way for the board to do this is through policy. Policies outline specific sets of rules, guidelines, and procedures by which the board and chief executive govern and manage various aspects of the board, staff, operations, and programming, all in an effort to hold the organization accountable to the broader community.
At a minimum, the organization should have a conflict of interest policy, confidentiality policy, and policies governing what the board and chief executive can and cannot do. Other common policies include a whistleblower policy, a gift acceptance policy, and a retention and destruction policy. The chief executive will often draft policies requiring board approval for such things as firing employees, employee handbooks, and risk management.
The board should develop policies with the help of the chief executive, since the chief executive is often the person most knowledgeable about policy development and implementation.
The board is responsible for hiring, firing, and overseeing the chief executive. This means making sure the chief executive is fulfilling her roles and responsibilities outlined in her job description, acting fiscally responsible, fulfilling the objectives set forth in the strategic plan, and achieving the performance goals established in her annual evaluation.
Overseeing the work of the chief executive does not include meddling in daily operations or programming. For example, let’s say a chief executive wants to hire two more programming staff. Her board should take a strategic perspective and ask her why she feels programming needs two new staff and how she and the organization plan to financially sustain the positions.
Board members should not write job descriptions for employees, take part in the interviewing process, or determine where the new staff should sit in the office. Board members need to clearly understand when they’re sticking their oversight noses too far into the responsibilities of their chief executive and into the daily operations of their nonprofit.
Build and manage the board
The term used to describe the process of expanding and managing the board is called board development. It’s a task that usually finds its way to the bottom of the board’s ToDo list, but it’s the job of the board chair to make sure it finds its way to the top. A good board member can take more than a year to find, so it’s important your board make it an ongoing priority to cultivate a list of potential board members.
Remember, you must nominate board members who are authentically passionate about your organization’s mission, fit into the culture of your board, provide legitimacy, and are willing to sink their teeth into the work needed to be done to fulfill your mission. No freeloaders. No sloths.
Potential board members need to know from the moment they talk to one of your board members that joining your board is not a club membership they’ve earned because of their business success, social status, or inherited name. They need to clearly understand board membership means responsibility, work, ownership, and accountability.
If potential board members are unwilling to accept this, then they shouldn’t join your board—and you shouldn’t encourage them to join. I cannot emphasize this point strongly enough: you must, absolutely must, do everything possible to ensure you elect high quality board members.
If you don’t, you’ll end up with a bunch of entitled cronies on your board and get nothing accomplished. Worse yet, you’ll be stuck with them for the term of their membership and maybe longer—years longer!
Whatever the size of your nonprofit, you don’t want to find yourself in this predicament. Be cautious. Be protective. Set term limits to three years or less. After a three-year term, require board members to undergo a thorough evaluation that includes feedback from the board, chief executive, and a handful of key staff. Keep evaluation responses anonymous. After a second or third term, establish a policy that requires board members to resign from the board for at least one year.
Let me quickly interject and say I do believe friends and business partners can make terrific board members. However, if you invite friends to join your board, first make sure that they are sincerely willing to work hard, make sacrifices, and contribute resources to make your nonprofit a success. Otherwise, you’re likely to end up with a stale and combative board, and you may lose some friends in the process.
To ensure your board has the vibrant and committed members it needs to be productive and fulfill your mission, establish a tactical plan for board development. This should include a process for identifying, cultivating, recruiting, orienting, engaging, educating, inspiring, evaluating, rotating, and celebrating board members. It’s a big task, but it will prove to be one of the most important you undertake. There are plenty of sources on the Web to help you develop such a plan.
Oversee legal and ethical issues and policies
Board membership is a serious responsibility. A judge won’t buy the pity card your board chair offers after one of your participants becomes paralyzed in a car accident thanks to your volunteer bus driver who was drunk while driving your Special Olympics team home from a swimming event.
“But your honor, this is his first ‘driving under the influence’ violation and he has no speeding tickets. We’re just a little nonprofit doing good work for children with disabilities. We can’t afford the bad publicity or the money to fight a lawsuit.”
Fat chance! In fact, if the court determines the cause of the injury was the result of gross negligence, your board may be personally liable for the legal fees required to fight the case and for any punitive damages awarded to the family. This means board members could lose some big money in the process. Really.
Boards can protect themselves to some extent by purchasing Directors and Officers insurance (if you don’t have it, get it immediately.) This is a special type of liability insurance that protects board members from lawsuits when incidents like the one above happen.
However, if a judge determines an accident was an act of gross negligence, your board, not the staff or volunteers, could still be liable for fines and punitive damages even if you carry Directors and Officers insurance. For example, if the board chair knew the volunteer driver was drunk, but let him drive the bus anyway, a judge would probably categorize the board chair’s action as gross negligence and the board chair could be held personally liable for damages.
Review important policies at least every two years
Boards have legal, ethical, and moral responsibilities to beneficiaries, constituents, and the community. The IRS and each state have laws outlining the legal responsibilities nonprofits must uphold. It’s your board’s responsibility to understand them, apply them, and monitor them.
When was the last time your board read and discussed your bylaws and corporate policies? Don’t feel too embarrassed. I regularly talk with nonprofits that can’t even find these documents and haven’t a clue what they represent.
In case you don’t already know, these documents provide the legal and operational framework for your nonprofit. Articles of incorporation define why you exist and your purpose to operate. Bylaws outline the structure, rules, and protocols of your board and your nonprofit.
Your board should review these documents, along with every one of your major policies every two years to ensure they are up-to-date and accurately reflect changes in nonprofit law and changes at your nonprofit.
The board also has the responsibility of making sure your nonprofit operates ethically. Are you following labor laws? Do you have policies covering bookkeeping and spending practices? Are there any business dealings with board members that might be considered a conflict of interest? If staff feel discriminated against, is there a process for them to safely talk about it? Has your state enacted any new nonprofit laws?
Ethics is a broad subject, but your board needs to ensure your nonprofit is operating on a platform of good morals and values defined by standards of excellence and sound policy.
Board membership might be a volunteer role, but just one serious incident of gross negligence and your board members could wind up giving more than just their time to your nonprofit; they may wind up giving away a chunk of their savings to settle a wrongful death lawsuit.
Help raise money and ensure fiscal responsibility
It’s a primary responsibility of all board members to ensure financial resources are available to execute and sustain their nonprofit. This is not only a nonprofit best practice, but the IRS requires all nonprofits to understand this responsibility before they will issue 501c3 exempt status to nonprofit applicants.
Before any board member nominees join your board, it’s imperative they clearly understand their responsibility to help raise money. No exceptions. Board members can formalize their fundraising commitments in writing by signing a copy of your nonprofit’s roles and responsibilities policy outlining a board member’s responsibility and commitment to raising money.
Still, no matter what policies are in place, or what documents are signed, board members are notorious for dodging fundraising responsibilities. If board members are short on time or shy about asking for money, it’s important they know there are other ways they can help raise money.
They can provide lists of prospects, make introductions, cultivate relationships, host a dinner party, or help organize a fundraiser. Even mundane tasks such as writing thank-you letters are helpful.
You should also establish a policy requiring every board member to make an annual financial contribution. This is a standard best practice and don’t let any board member convince you otherwise. Many foundations will not award grants unless every board member has made a contribution, and some foundations look to see what percentage of a nonprofit’s annual income comes from its board members.
What message are you sending donors if you have board members unwilling to contribute themselves? Why should donors contribute if the board doesn’t? What does it say about your nonprofit and your board members if the income of your nonprofit is $1 million, but less than $5,000 comes from your entire board, four of whom each have a net worth greater than $5 million?
It’s imperative your board and each board member share the responsibility for the fundraising efforts of your nonprofit. Even if your chief executive or volunteer development officer is a gifted fundraiser, every board should establish annual fundraising goals for itself and all board members should make a commitment, in writing, how they plan to contribute to the fundraising efforts of the organization.
Fiscal responsibility for boards goes far beyond raising money, making contributions, and building reserve funds. Your board needs to take responsibility to oversee everything that involves money. This includes investments, real estate, bank accounts, financial statements, audits, IRS reporting, bookkeeping systems, and check writing, to name a few.
It’s the responsibility and duty of your board to see to it these functions, and the policies and protocols governing them, are in place and managed responsibly. If your board has enough members, it should establish a finance committee to handle the financial responsibilities of the board.
Fundraising and financial oversight should not be left to the chief executive or a development officer. It’s a key responsibility of every board member. What good is it if you have the world’s most effective programming and the world’s most efficient operations, but you have a set of board members unwilling to help raise money to support the people and hard work that created both? It’s no good, that’s what it is.
Set a clear precedent from day one; if board members are unwilling to raise money, contribute money, and be held accountable for the financial responsibilities of the organization, don’t elect them to the board, or ask them to resign from the board. Addressing these issues may cause strife, but you must draw a line in the sand. Remain steadfast and do what is right, not what’s convenient.
Keep an eye on the bigger picture
It’s common for boards to get so caught up in the details of running a board that they lose sight of the bigger picture. Board meetings get bogged down with long-winded committee updates, decisions about the best caterer to use for an upcoming gala, and time spent reviewing architectural renderings of the staff’s new office. These topics may be relevant and important, but boards also need to spend time discussing big picture items such as governance and strategy.
At your next board meeting, budget time for board members to reflect on the bigger picture. Ask them to look above the ground fog and scan the horizon. What do they see? What’s on their minds?
You can facilitate big picture discussion by choosing to talk about topics such as strategic planning, long-term funding, changes in the economy, industry trends, upcoming legislation, brand image, program additions, operational efficiencies, roles and responsibilities, or staff morale.
Your board is the guardian of your mission. It’s the board’s responsibility to ensure that the decisions and direction of your nonprofit are in line with its mission and values. To do this well, boards need to set aside time on a regular basis to reflect on and discuss the big picture issues at hand.
Hire, evaluate, and fire the chief executive
Hiring
Your board has the critical role of hiring a chief executive. A wise choice can catapult your nonprofit to new heights; a poor choice can send you into a tailspin of disaster. In the last chapter, I covered the type of chief executive a nonprofit should hire or develop. Here, I’m going to focus on the process of hiring, evaluating, and firing a chief executive.
As I said, unmet expectations are the root of many conflicts between the board and chief executive. To reduce this risk, your board should write a comprehensive job description, compensation plan, and benefits package before it posts a job listing.
The job description should include roles and responsibilities, time off, board expectations, and performance measures. It should also include a brief overview of the management style and character traits you’re looking for in a chief executive and the type of culture you’ve developed at your nonprofit.
During the interview process, the board must be honest and fully transparent about the state of the organization. Chief executives need to understand the history of an organization—good and bad. They need to hear about any board drama, disgruntled staff, inappropriate financial dealings, and sour business partnerships. The board should also ask the prospective executive about what expectations she has of the board, the staff, and the job.
Holding a phone interview and sharing a coffee at Starbucks is not an effective process for hiring a chief executive. Neither is having a four-hour grill session in front of a handful of board members. The best way to hire a chief executive is to observe one in action.
Once you’ve narrowed the field of candidates down to the top three, pay for them to visit your nonprofit for two or three days. During their stays, create various scenarios where candidates have to perform snippets of their job responsibilities so the board and staff can interact with them and observe how they function in real life situations.
Have them make presentations to the board, review financial statements with your accountant, participate in your programming as a volunteer, give a motivational talk at a staff meeting, and make a mock donor presentation to your fundraising team. Do not allow board members to sit in on the staff related interactions with the candidate, and make sure you design thorough and fair methods to evaluate performance.
I use various forms of this interviewing process when hiring executives and managers because it immediately exposes a candidate’s strengths, weaknesses, and character traits. Seeing a candidate in action quickly reveals a person’s true nature in ways a resumé or coffee interview cannot. This is my favorite technique for screening managers at all levels within an organization, and once you try it you’ll know why.
After you’ve chosen a chief executive, make sure the board includes a probationary clause in the offer letter. Require that the chief executive undergo a performance review after 90 days, and only after a successful evaluation should the board vote to officially hire the chief executive. This may seem overly cautious, but the board should have an early dismissal plan in case the chief executive is a washout.
Evaluating
After the board hires a chief executive, it’s the responsibility of the board to evaluate the performance of the chief executive each year. You should know, the IRS 990 form now asks whether or not a board annually evaluates its chief executive.
Boards will do themselves and their chief executive a great service by basing evaluations on specific, predetermined, measurable objectives and outcomes based on the nonprofit’s strategic plan and the chief executive’s job description.
Boards should be careful to avoid evaluating performance based on vague statements such as, “Did the executive do a good job of raising money?” or “How well did the executive get along with staff?” Questions such as these are unfair because they leave room for subjectivity and bias.
For example, if your strategic plan states your chief executive will be responsible to raise $200,000 a year, then it would be fair to ask whether she achieved her fundraising goal. How long did it take? What methods did she employ? How much money did she spend to achieve the goal? These are clear, measurable, and objective questions based on an established performance objective.
Soon after the evaluation process, the board, in collaboration with the chief executive, should establish goals, objectives, expectations, and performance measures for the upcoming year. If the board includes the chief executive in the evaluation process, she will be more motivated to achieve the outcomes expected of her.
Firing
Firing a chief executive, or forcing a resignation, is the responsibility of a board and is never easy. Even if the chief executive was a tyrant, you want the exit to be quiet and smooth. You need to protect your brand, and it may be worth it to suck up a little and appease the chief executive by paying unused vacation days, presenting an appreciation award, hosting a farewell party, paying a bonus, or acknowledging her service publicly in some positive manner.
It’s important the board work to flank any potential criticisms and negative repercussions that may come about as a result of firing a chief executive. The board should prepare a talking points document about the executive’s departure so all board members speak in a single voice when talking about the matter publicly. Sharing this statement with the staff is also a good idea. One board member, preferably the board chair, should be the point of contact for all media.
If the relationship with the chief executive was contentious, I suggest the board member with the healthiest relationship with the chief executive take responsibility for all future communication with her.
Sometimes the unexpected happens. A chief executive may suddenly discover she is pregnant and decide to resign. An aging executive may have a heart attack and be forced to resign, and a young executive may suddenly leave to accept a higher paying job at a more prestigious nonprofit out of town.
Situations like these can cause chaos if a nonprofit is unprepared. Who is going to manage staff? Who will take over the executive’s fundraising responsibilities? What happens if she walks out with her laptop? Who will talk with the media and handle damage control?
It’s the board’s responsibility to establish a plan and set policy to address all types of scenarios that may unfold if a chief executive’s employment terminates. Carve out time with your board to talk about “what if” scenarios and, at a minimum, come up with at least a bullet-pointed outline of how the board would handle each situation.
You definitely want to establish emergency transition and succession plans in case your chief executive has an extended absence or suddenly departs. It’s also wise to have a succession plan for your board chair.
Remember, the average length of a chief executive’s employment is five years. Your board needs to plan—and expect—this type of turnover. Be wise; establish emergency plans early in your lifecycle so you can glide through the chaos when the unexpected happens.
Support the chief executive
If a board hires a great chief executive, it needs to trust its decision and support the executive to do her job without micromanaging her. If a board can’t stay out of the way, the board or a few policies might need an overhaul. The responsibility of a board, as you recall, is to oversee operations, not meddle in them.
Peter Drucker, the famous nonprofit management consultant, had these words to say about board meddling: “A board that understands its real obligations and sets goals for its own performance won’t meddle. But if you leave the board’s role open and undefined, you’ll get one that interferes with details and yet doesn’t do its own job.” Wise words.
A board should also support its chief executive by providing her with the training and mentoring she may need to efficiently and effectively manage the nonprofit. And if the board wants its chief executive to work hard, be happy, and stick around, it will also want to support opportunities that inspire its executive to pursue her personal aspirations.
Chief executives do thousands of hours of thankless tasks. They work late nights, weekends, and holidays in a tireless effort to manage all aspects of operations, programming, and fundraising. Two-thirds of chief executives leave their jobs because they feel unhappy or unappreciated—not because of lack of pay.
How happy is your chief executive? What is your board doing to encourage her? What has your board done to show her how much it appreciates her work and dedication? What is your board doing to support her personal and professional aspirations?
Start with a small board
The discussion above, though 16 pages in length, covers only a handful of the roles and responsibilities expected of chief executives and board members. There are many more, and you’d be wise to seek out credible resources to learn about others.
Now, let’s continue with the subject of executive-board relationships. If you’re thinking about starting a nonprofit, I suggest starting with a small number of board members. With fewer initial board members, it’s easier to arrange schedules, make decisions, and develop a healthy executive-board relationship. I find small, nimble boards are more diligent about getting work done and have more fun in the process.
The smaller the board, the more critical it is that all board members, including the chief executive, be fully committed to fulfilling their roles and responsibilities. Set the bar high and remain steadfast.
Most states require a nonprofit to have at least three board members to incorporate. This is a good starting number. I strongly recommend you not launch a nonprofit with more than five board members. If you find you need more help at the board level during your startup stages, ask people to volunteer as committee members, or create an advisory board. To prevent your board from growing too quickly, establish guidelines in your bylaws that address board size and the pace of board growth.
If your nonprofit is more mature and you feel you have too many board members for the size of nonprofit you’re running, lobby to change your bylaws to reduce term limits and set a maximum size for the number of board members. This will be a challenge, but you can reduce the skirmish by offering incentives to rotate members off the board into other areas of responsibility such as committees and advisory positions.
Encourage open and frequent communication
One of the best ways to nurture a healthy and productive executive-board relationship is through open, honest, and frequent communication. It all starts at the top. If communication between the chief executive and board chair is good, there is a high probability the communication between the chief executive and the entire board will be good.
The chief executive and board chair should have regular, in-person meetings to discuss operations and any major issues facing the board. They should also meet, or at least talk, before every board meeting to review the agenda items and important topics. Nothing is more reassuring to board members and staff than feeling the board chair and chief executive are getting along well and speaking in a unified voice.
Suggest that your board chair and chief executive sit next to each other at board meetings and that they run them in a collegial manner. Board meetings should encourage mutual compassion, constructive discussion, and respectful listening. The board chair and chief executive should always be willing to make time to talk with board members and help them become the best board members they can be.
Some people have very powerful personalities. They can dominate a conversation or steamroll another person’s input. It’s the responsibility of the chief executive and board chair to regulate the ebb and flow of conversation at board meetings and give everyone a chance to safely and openly share their thoughts and feelings.
You’d think the nonprofit world would attract caring and sensitive people, but it’s common for board discussions and interactions to get personal, sometimes vile. If a personality conflict pops up, it’s the responsibility of the board chair to handle it immediately. If the board chair is involved, the entire board may need to get involved.
Everyone is too busy to deal with board drama and your nonprofit is too busy to let it fester. In some cases, it’s best to have a respected honorary board member or consultant mediate the conflict in an effort to resolve problems between the chief executive and the board, or between board members.
To ward off petty fights and bickering, establish—and enforce—a three strike policy for derogatory comments, vindictive emails, gossip, and negative attitudes. That’s right, negative attitudes. A board should not tolerate members who are too immature to act in a professional manner.
Violators should receive verbal and written warnings from the board chair for the first two strikes, and the third strike should result in removal from the board. No exceptions. In the case of the chief executive, a third strike should result in dismissal.
Board members should know from the first day you ask them to join your board that your board is running a tight ship. Yes, you have fun, work hard, and exercise compassion, but you will not tolerate behavior that hurts people or hampers the mission. Board members must understand they are responsible for being thoughtful and engaged leaders, not passive stewards.
Have fun outside the boardroom
Another way to deepen executive-board relations is to spend time together outside the boardroom in fun, relaxed settings. The setting can be as simple as a wine and cheese party at someone’s home, a barbecue at a park, or an outdoor jazz concert. The duration of the event is not important; what’s important is that everyone takes time to get to know one another outside boardroom walls.
It’s also important the chief executive make an effort to spend one-on-one time with each board member throughout the year. This is much easier when a nonprofit has only a handful of board members, but it’s still feasible even if a board has 10 or 12 members. Meeting just once every six months for a cup of coffee, glass of wine, or a short walk can do wonders to nurture a relationship.
Roundtable discussions
Another way to improve executive-board relations is for the chief executive to host monthly “roundtable discussions.” These discussions are informal board member gatherings in casual, social environments. It could be a simple breakfast in the morning, a casual picnic or lunch, or sharing a glass of wine during happy hour at a wine bar. Attendance is not required.
The purpose of the roundtable discussions is to provide board members an opportunity to hang out with the chief executive in a casual group setting on a regular basis and get to know one another. It’s also a time to ask questions, discuss topics, and brainstorm ideas without an agenda, time constraints, or fear of embarrassment.
If your chief executive holds roundtable discussions, encourage her to invite one or two key staff each time. This will provide board members a chance to learn more about programming and operations, and it also provides the staff an opportunity to get to know board members on a personal level.
Board meeting dinners
One of the best ways to combine the casual atmosphere of a roundtable discussion and the seriousness of a boardroom setting is to hold your board meetings over dinner. Potluck style dinners work best to reduce the burden on the host. Start the evening with beverages and a few light appetizers. This allows everyone a chance to unwind from the day and catch up on the latest happenings in each other’s personal lives.
When dinner starts, the board chair or chief executive should facilitate dinner conversation by encouraging attendees to share personal stories for 30 minutes before diving into the board agenda. Starting slowly and keeping things personal will establish a lighthearted, friendly tone for a productive evening.
I suggest hosting a board meeting dinner at least quarterly. If your board is small enough and you have two or three passionate cooks on your board, you may consider hosting all your board meetings over dinner. With delicious food, great wine, and nice people, I can guarantee your board will look forward to board meetings. As a result, the board will develop close friendships and a deep sense of respect and admiration for one another, all while working as a team to propel the mission.
As an alternative to dinner, start your boardroom meetings 30 minutes early and offer beverages and appetizers. This will at least provide time for mingling and personal chit-chat. No matter what you choose to do, your chief executive and board members should make a commitment to get out of the boardroom regularly to deepen their relationships, share some laughs, and have some fun.
Takeaways
The most successful nonprofits are those with passionate chief executives and board members who work well together, understand and fulfill their responsibilities, and have fun in the process.
Nonprofits that trivialize the importance of board-executive relations inevitably find themselves in a ring of drama and conflict. Too stubborn and prideful to solve their relationship issues, they face off like pit bulls and claw and bite each other to the death—death of the nonprofit, that is.
Do not tolerate corrosive relationships. They will eat at the soul of your nonprofit like acid. If you sense a corrosive relationship unfolding, address the problem immediately and take measures to prevent the problem from recurring, even if it means removing a board member or firing the chief executive. You must have zero tolerance for corrosive behavior. Zero.
The first thing you must do to develop healthy executive-board relations is to make it a top priority. Board members need to create documents outlining the philosophy and policies governing the executive-board relationship. Whatever philosophy they adopt, it should include the concepts of collegiality, equality, respect, and good communication.
Healthy executive-board relations also require everyone to work together to fulfill the mission. To accomplish this, you’ll need to develop a specific set of clearly defined roles, responsibilities, and job descriptions for the chief executive and board members, especially the officers.
You will also need to set up various structures and procedures to hold people accountable to fulfill their responsibilities and make good on the work they committed to perform.
Many board tasks and chief executive tasks will be distinctly different, but collectively everyone’s work should harmonize. Again, make it a priority to do these things as early in your lifecycle as possible. The sooner they’re in place, the better chance you’ll have to succeed and the better chance you’ll have to avoid costly mistakes that can haunt you for years.
When humility, selflessness, kindness, helpfulness, gratitude, and servant leadership become words used to define the relationship between your chief executive and board, you’ll know the relationship is strong, healthy, and productive. It will be music to your ears when you feel each is asking, “What can be done to help the other?” not “What can the other do for me?”
Finally, one of the most undervalued attributes of a healthy executive-board relationship is a vibrant friendship between the two. An acquaintance based relationship will work, but a professional, friendship based relationship will thrive.
We all know the best way to build a strong friendship is to spend time together. Create opportunities for your chief executive and board members to spend time together outside the confines of the boardroom in casual, social settings to deepen their relationships and share some laughs.
If you’re running a gold standard nonprofit, everyone will be selflessly busting their butts to make a difference. Along the way, make sure everyone is taking time to smell the roses. Host dinner parties, go hiking, tell jokes, and find ways to celebrate your achievements and milestones on a regular basis. You deserve it!
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Tom Iselin
Americas Best Board Retreat and Strategic Planning Facilitator
Tom Iselin has built four sector-leading nonprofits and four foundations. He’s written six books, sits on six boards, and hosts a video blog and podcast. Each year, Tom speaks to more than 5,000 nonprofit leaders at conferences across the country.
He is considered a leading authority on high-performance nonprofits, and his impact on the industry has been featured on CNN, Nightline, and in Newsweek.
Tom is the president of First Things First, a business specializing in board development retreats, strategic planning, fundraising, and executive coaching. To relax, he loves mountain biking, hiking, skiing, tennis, and baking.
If you’re in the hunt for one of the best board retreat/board development, or strategic planning facilitators, it would be a privilege to learn more about your organization and the aspirations you hope to achieve as you work to propel your noble mission. Jot me an email to set up a meet-and-greet call.
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