What Do I Need to Know Before I Join a NFP Board?

In my previous blog “Why Join A Not-For-Profit Board?” I discussed the reasons why I believe you should consider joining a Not-For-Profit Board. I also undertook to cover the questions you need to ask once you’ve decided to contribute to a Community in this way.

Asking questions and requesting information will provide you the basis to determine if:

1. Your experience, skills and abilities will compliment those of the existing Directors, and can be used to can contribute to the organisation in a meaningful way (Boards need a broad diversity of Directors);

2. The organisations values fit your own personal values;

3. The personalities of key personnel (Board President and CEO in particular) and your own personality are compatible – can you work together?;

4. The Board, and organisation, are well governed and managed;

5. The organisation is in a good financial state; and

6. You can commit to the organisations requirements of you as a Director.

To do this you will need to ask questions. The list of information below may seem like a lot of information, and a lot of work to obtain, however your due diligence will ensure your “good fit” on the Board – a Director that doesn’t fit can often be damaging to a Board and to an organisation.

Learn about the Organisation

Learn as much about the organisation as you can - the organisation size, number of staff, programs/services, success of programs/services, target audience, sources of funding, and affiliated and partnering organisations.

There are many resources you can use to do this:

• Annual Reports (there should be one produced every year);

• The organisations promotional material;

• The organisations web site;

• Google Searches;

• Talk to Staff (ask permission of the CEO or Board President);

• Talk to Members (again ask permission);

• Visit one of the programs and observe it in operation (again ask permission).

The Board composition

Review the list of Directors and their backgrounds to determine the Board diversity and the calibre of Board Members. Boards often provide Directors bios on their web site – where they are not provided request them.

Meet the CEO

Meeting with the CEO provides opportunities to:

• Learn about the CEO/Board relationship from the CEO’s perspective;

• Discover any challenges the CEO is facing;

• Learn more about the organisation, its structure and its management;

• Open doors to meeting other staff and Members;

• Open doors to other sources of information.

Board Function

Determine how the Board functions, how often they meet, how long a Board meeting runs for, are there subcommittees, does the Board have any conflict, how is conflict resolved, how does the Board/CEO relationship work and is it a healthy, etc.

The best methods of doing this are to:

• Meet with a Director, preferably the Board President;

• Request to attend one, or several, Board meetings.

Financials

Organisations have many measures of success, particularly Not-For-Profit organisations where the primary aim is not to provide surpluses to shareholders, however the financial management, position and performance of an organisation is a key indicator as to the organisations ability to continue to serve it’s community into the future.

To obtain a good understanding of the organisations financials I’d suggest requesting the following:

• Most recent Audit and Management Letter

• Statement of Financial Position (Balance Sheet) for the past 3 years

• Statement of Financial Performance (Profit & Loss) for the past 3 years

• Current Budget

• Current Cash Flow Forecast

• YTD Profit & Loss Statement and performance against budget

• Value of Cash Reserves

• Source of Revenue and Security of these Sources – grants, donors, fees for service.

Not every potential Director, or current Director for that matter, will have the experience or knowledge to “fully” understand an organisations financial reports, however there are many resources available to assist with this understanding. It may be possible to meet with the Board Treasurer to assist with this understanding – or maybe utilise the many resources available via the Internet. CPA Australia provides a helpful resource called “A Guide To Understanding The Financial Reports Of Not-For-Profit Entities”.

What is expected of you as a Board Member?

• Attendance at Board meetings;

• Participation on sub-committees;

• Involvement in fundraising;

• Financial commitments/contributions;

• Organisations Membership requirements.

• Other requirements (conferences, peak bodies, organisational representation etc).

Governing Documents

A Board is responsible for developing, reviewing and maintaining the following documents, and they provide the framework in which an organisations effectiveness is measured, and also the framework in which a CEO undertakes their management and oversight of an organisation.

• Constitution

• Organisations Vision, Mission and Core Values

• Strategic Plan

• Board Policies & Procedures

• Board Covenant

• Confidentiality/Privacy Agreement

This information will allow you to undertake your due diligence and hopefully ensure you find a Board to which you can contribute, commit and have a positive impact for over a long period of time.

NOTE 1: Don’t let a Board/organisation facing challenges turn you off - your experience, skills and abilities may be exactly what that organisation needs to address and conquer those challenges.

NOTE 2: A Board should also undertake its own due diligence for all potential new

Please share your thoughts in the comments section below, as I learn just as much from you as you do from me.

If this is an area in which TakeControl Solutions may be of assistance to your organisation please do not hesitate to contact me.Directors to ensure a “good fit”.

Dwayne Wescombe

Managing Director - TakeControl Solutions

#Management #Directors #Governance #Board