3 Key Differences Between a Working and Governance Board for a Nonprofit
You may have heard of a working board before. It is a common phrase said in the nonprofit space where many organizations work with a small or nonexistent staff and a slim budget. The board of directors is a fundamental feature of nonprofit strategy, planning, and operation. From the board of directors comes the governance that the CEO and their staff execute in day-to-day operations. The board serves as a fiduciary responsible for fulfilling financial and legal responsibilities, but it also serves to guide an organization’s culture, strategy, efficiency, and mission sustainability. It is from their oversight and guidance that the CEO leads an organization. It is essential for nonprofits of any size to have a strong organizational structure, starting with the board of directors. This starts from and trickles down from the board of directors. So what is truly meant by a working board in relation to a board of directors and what implications does this have on the organization? We will examine definitions of the two types of boards and then take a look at three key differences to understand between a working board and a board of directors.
Working Board
Working boards are governing boards that have additional responsibilities. These board members are responsible for carrying out the board’s directives (yes, their own directives). While some may see this as a blurring of the lines, it is essential that these working board members remain committed to honoring the directives of the board and its decisions rather than acting on their own accord. Governance and management must be taken separately. This type of board requires more thoughtful construction and adherence to structures that allow for consistent implementation of board directives while providing operational flexibility and responsiveness.
Board of Directors (“Governing Board”)
This traditional style of board oversees the operations of nonprofits by periodically meeting to discuss and vote on the affairs of an organization. The board members are typically under term limits so there is a turnover of members and therefore turnover of ideas. This style of board is strictly distinct from a working board. It is a governance board NOT a management board. This is the difference between high-level strategy, oversight, and accountability versus day-to-day operations. A traditional board of directors separates governance and management. The outcomes of their decisions and votes guide the actions of the CEO and their staff.
3 Key Differences to Understand
A working board has operational responsibilities
Where a board of directors or “governing board” is responsible for top-level financial planning rather than the budget sheets, a working board is responsible for both. They must implement their own guiding strategies. Whereas a board of directors is tasked with the duty of ensuring prudent use of all assets, this is achieved through oversights of the CEO and their staff. A working board can ensure prudent use of assets by making sure that they personally use assets prudently. When it comes to their duty to serve the general interest of the organization rather than the opinions of an individual board member, a working board may encounter a greater challenge than a board of directors. The board of directors hands down guidance and watches transactions and activities at arm’s length. Working board members must carry out their own board’s directives. This allows for very precise oversight but also challenges the dynamic between governance and management. If a member was on the dissenting side of a vote then they must remain mindful of their role as board member whilst also carrying out tasks in a staff member’s capacity.
A traditional board has a more fundraising focused capacity
A traditional board does not have as many working responsibilities that a working board does, and with this extra time, there is the opportunity and responsibility to fundraise. Aside from legal and fiduciary duties, board members have the responsibility to always be premier advocates and ambassadors for their organization. The board works in conjunction with the staff and uses their influence and advocacy to introduce potential donors, provide fundraising leadership, and financial support. The whole process begins with advocacy. Board members provide their spheres of influence as well as their combined connections to deliver a highly valuable advocacy service to their organizations. Their advocacy and connections are incredibly important for securing major gifts.
Although your board may not be a working board, do not forget about the impact of a purposeful array of board members. Highlighted in a previous blog on board recruitment, the impact of a diverse board cannot be underestimated. A diverse board brings in insights driven by different experiences and perspectives. Furthermore, a professionally diverse board is where a traditional board of directors finds themselves highly useful through some “working.” Attorneys on the board can offer legal advice and support. Financial professionals can contribute strongly to budget/finance committees. Despite having a traditional board of directors, there is still work to do in fundraising, advocacy, and professional support.
A working board is typically found in an organization with highly limited or no staff
This one may seem similar to our first key difference above, but from this statement, we can understand the environment most working boards exist in and what that means for those board members. A board is often a working board out of necessity. If a nonprofit does not have a staff, then the board has to implement its own directives. We know that a solid majority, anywhere from 66% to 70%, of nonprofits in the United States operate with a budget of $1,000,000 or less, and many of those work with less than $500,000. Hiring a full-time staff may be a priority for these working boards, but it is not financially feasible. From this, we can assume that a majority of working boards are working because of low revenues. This situation creates a challenging cycle in which board members must spend additional time implementing their strategies where a traditional board of directors can spend this time focusing on their fundraising capacity as we examined above.
There is arguably no component of a nonprofit that is more critical than the board of directors. Craft a board made up of individuals with diverse perspectives, backgrounds, and skills who bring a passion for the organization and a commitment to precise oversight. Finding the balance between board members and bringing together complementary skills can provide a nonprofit with all the tools it needs at its highest level to succeed. Setting a board up correctly will lay a solid foundation for the rest of a nonprofit’s strategy. Leading by example is key. A well-structured and motivated board is essential to see an organization’s mission accomplished from the top down.
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