Article for K&T – October 2012
What is Governance?
By Sue Daniels Whatever its size, scope or funding, every nonprofit organization has a governing board comprised of people who believe in and support the mission. Board members have the pleasure and the responsibility of monitoring, overseeing and providing direction for the organization’s pursuit of that mission. Governance is the board’s legal authority to exercise power and authority over an organization on behalf of the community it serves. The board is authorized to establish policies and make decisions that will affect the life and work of the organization. The board functions in part, to assure the public and all stakeholders that the organization is in good hands. Oversight is a primary duty for all boards. They work closely with management to ensure that goals are met and that ethical principles guide all activities. As overseers, board members also spell out expectations and evaluate the results. A chief responsibility of board members is to maintain financial accountability and effective oversight of the organization they serve. As stewards of the organization’s resources, board members must exercise due diligence to see that it is well managed and that its financial situation remains sound. On all nonprofit boards including here at Leader Dog, each trustee (or board member) accepts personal liability when they sit on a board. Fiduciary duty requires board members to be objective, unselfish, responsible, honest, trustworthy and efficient. They should always act for the good of the organization, rather than for their personal benefit. They need to exercise reasonable care in all decision making, without placing the organization under unnecessary risk. Other key board responsibilities include selecting and supporting the chief executive and assessing his or her performance; ensuring effective organizational and strategic planning; monitoring and strengthening programs and services to ensure they advance the mission; ensuring adequate financial resources, including assisting staff with fundraising by contributing money, offering their time and talent; and building a competent board through quality recruitment, board development and trustee performance evaluation. All actions taken by a board are held to three legal standards: the duty of care, the duty of loyalty and the duty of obedience.
- Duty of care – Each board member is to act in good faith and actively participate in governance.
- Duty of loyalty – Board members put the interests of the organization ahead of their own professional or personal interests or those of another, and they speak in one voice in their decision-making capacity.
- Duty of obedience – Board members comply with applicable federal, state and local laws; adhere to the organization’s bylaws; and remain the guardians of the mission.
Ultimately, everything begins with the mission. Mission is the foremost organizing tool for a nonprofit, helping to build common understanding and ensuring that programs and activities are aligned toward the same goal. As part of their governance responsibilities, nonprofit board members are the keepers, watchers, challengers, revisers and champions of the mission. We are very lucky to have such an engaged, passionate and professional volunteer board here at Leader Dog. So, please be sure to say “hello” and “thank you,” the next time you run into one of our dedicated trustees!