Creating an effective Board – Executive Director relationship is critical to the success and strategic growth of a nonprofit organization. The nonprofit Board of Directors exists to provide governance oversight, high-level strategic positioning and accountability for organizations. The Executive Director provides oversight and management of the people, programs and operations of the organization. In turn, the Board sets the mission or purpose of the organization, and the Executive Director implements that purpose.
Nonprofit Boards of Directors: What Do They Do?
The role of nonprofit Board member is more than just a line on a resume. The nonprofit Board of Directors assumes certain important responsibilities of an organization, and Board members are bound by three duties in their governance role.
The Duty of Loyalty requires Board members to act in the best interest of the organization and not in their own personal interest, by disclosing any conflict of interest, real or possible. Board members are also required to avoid transactions that benefit the Board member or their family personally.
The Duty of Care requires Board members to:
- Be familiar with the organization’s finances and activities;
- Participate regularly in the organization’s governance;
- Act in good faith using the due diligence, care and skill;
- Be informed through regular attendance at board meetings;
- Be an active participant in discussions and decision-making; and
- Ensure the organization and its assets are properly managed.
Finally, the Duty of Obedience requires Board members ensure the organization complies with applicable laws and regulations and its internal governance documents and policies, uses resources to achieve its mission, and engages in authorized activities to carry out its purpose.
In carrying out the Duties as outlined above, the Board of Directors is responsible to, at minimum:
- Establish a clear organizational mission;
- Adopt corporate bylaws;
- Provide regulatory compliance and legal governance;
- Assure financial solvency of the organization, approve the annual organizational budget, and establish and uphold fiscal management policies and procedures;
- Hire a competent Executive Director, and regularly assess their performance;
- Develop and adopt a strategic plan and perform regular evaluation of the plan’s success; and
- Maintain regular attendance at Board meetings and actively engage in discussions of the Board of Directors and committees.
Creating an Effective Board – Executive Director Relationship: What Does a Nonprofit Executive Director do?
The Executive Director holds the highest level of responsibility within the staff of a nonprofit organization. In their role, the nonprofit Executive Director is responsible for helping the organization to achieve its mission by identifying the resources necessary to do so. The Executive Director also provides organizational management and oversight of staff, funds, programs/services, and operational functions.
Managing Nonprofit Employees
The Executive Director provides oversight for the development of organizational staff. This includes identifying the positions needed, hiring competent staff, evaluating staff and managing nonprofit employees.
Nonprofit Resource Management
The management of nonprofit resources, including funds, equipment, property, and any other resources held by the organization. Nonprofit financial management is a critical responsibility of the Executive Director, as proper financial management can pave the way for future funding success and diversification.
Nonprofit Programs and Services
Nonprofit programs and services are at the heart of the organization’s mission and represent the purpose for which the organization exists. Maintaining the quality and excellence of programs and services is one of the utmost responsibilities of the Executive Director.
Nonprofit Organizational Growth and Development
The Executive Director is also critically responsible for the viability of the organization. This includes assuring nonprofit funding sustainability. In their aim to grow the nonprofit organization, the Executive Director will assure the pursuit and management of grants for nonprofits, funder stewardship, and funding development activities.
Building a Successful Board-Executive Director Relationship
The nonprofit organizational model is complicated. That’s why it’s important to understand roles and responsibilities to maintain appropriate checks and balances to assure organizational growth and success.
Almost all issues within the Board-Executive Director relationship can be traced back to the confusion between governance and management. The Board is responsible for providing governance oversight, while the Executive Director is responsible for management.
How can we prevent these common misunderstandings?
As in any relationship, communication is key. The biggest sign of a successful organization is the relationship between the Board chairperson and the Executive Director. And that starts with healthy communication.
The Board chairperson and the Executive Director should meet regularly to discuss pertinent information, particularly in advance of Board meetings. Information to be shared at Board meetings should be reviewed between and approved the Board chairperson and the Executive Director before it is released to the full Board. All points of discussion and pertinent backup documents should be shared with the Board in advance of the meeting.
Board committees should meet regularly, and include the participation of appropriate staff members. Staff participate to supply pertinent information and offer advisement on decisions.
Other tools that can help include Board member and Board officer job descriptions. Even in volunteer roles, like that of the Board, a job description can provide clarity and purpose to those filling the role.
Organizations may also consider performing Board self-assessments, which helps the Board to evaluate their performance, clarify their understanding of the organization and its operations, and determine goals.
Nonprofit Management and Consulting Services: Creating a Successful Nonprofit
Like any business, nonprofit leadership can benefit greatly from the support and guidance of a nonprofit consultant. Consultants offer new and alternative perspectives to help leaders think outside the box, especially when it comes to strategically positioning the organization for growth or change.
Nonprofit consultants help support both the Board of Directors and the Executive Director in identifying their roles and operating within their appropriate capacity. Consultants also facilitate Board development to strengthen the relationship between the two entities. Board development not only helps to grow the Board in their understanding of their role in governance, but also provides increased clarity regarding the division of duties between the Board and the Executive Director. Through trainings and workshops, consultants can provide both the Board and the Executive Director with the knowledge and information they need to successfully operate their nonprofit.
Consultants often support leadership in the development of strategic plans and strategic goals for the organization. Similar to a business plan, the strategic plan outlines the goals of an organization over the next 3-5 years and the path to achieving these goals. The Board and the Executive individually and together play critical roles in establishing strategic goals.
Nonprofits can also benefit greatly from outsourcing their funding and business philanthropy needs, including grant research, grant writing, grant management, and funder prospecting. This frees the Executive and staff to focus on mission-oriented activities, while assuring that funding opportunities are pursued, consistent outreach is performed, and funders and grants are well cultivated and managed.
Creating an Effective Board – Executive Director Relationship: Choosing a Solution
Nonprofit consulting starts with us. A qualified nonprofit consultant helps to create an effective board – executive director relationship. At Capital CFO+, we become part of your organizations’ fabric. We are woven in and part of the solution. Whether you need strategic planning, grant management, board development, training and workshops, help with philanthropic efforts, or are in a leadership transition, we can help.
About Capital CFO+
Capital CFO+ LLC is based in Saratoga Springs, New York, providing bookkeeping, accounting, and CFO services. Capital CFO+ helps small firms access the economies of scale, efficiency, and expertise that large companies enjoy. Visit Pearl, our branch manager at capitalcfollc.com, or LinkedIn for more information.
