Governance provides non-profit board of directors with the ability to monitor an organization’s mandate, its reputation, its legal and fiscal accountabilities, its ethical obligations, its risk management, as well as its overall performance as a board.
What is good governance?
Although there are several definitions for governance, non-profit cultural organizations often see governance as the processes, structures and relationships used to direct and manage their organization’s operations and activities. According to Deloitte & Touche, from The Effective Not-for-Profit Board – Governance of Not-For-Profit Organizations (2013), good governance models will define the division of power between board and staff, help guide decisions on resources and establish mechanisms of accountability for all areas of the organization.
Why is governance important? Governance provides non-profit board of directors with the ability to monitor an organization’s mandate, its reputation, its legal and fiscal accountabilities, its ethical obligations, its risk management, as well as its overall performance as a board. Good governance will help ensure all board members have a means of evaluating the work of the organization and the ability to recognize issues before crisis management is required. Good governance reinforces good leadership.
There are a number of different governance models in use today, including the Advisory Board, Patron, Co-operative/Collective, Management Team or Policy/Policy Governance models. As far as these models go, one size does not fit all and some tailoring or merging of models may be required. According to Barbara Laskin, author of Governance Works (2007), organizations should be encouraged to devise their own approach and create a tailor-made system based on the organization’s mission and unique characteristics.
According to the United Way of Canada’s Importance of Board Governance, in order to choose, a Board can ask itself three basic questions to help determine its role: What level of decision-making does the board want to make? How much involvement does the Board want in the organization’s operations? And, what type of reporting relationship is needed between the board and staff? These decisions should provide a clear distinction of the board’s role from the executive director’s role and their reporting relationships.
Whichever model or format is used, an organization’s approach will require what Laskin refers to as a governance framework that includes core documents, policies and systems and traditions based on its organizational culture that shape how big decisions are made, relationships are maintained and the overall health of the organization is assured. Based on the framework, the Board of Directors will then determine its governance tasks that include developing a long-term perspective, supporting a strategic plan, ensuring financial health, communicating and advocating effectively with stakeholders, anticipating and managing risk, as well as evaluating progress on an annual basis. From these areas, the Board of Directors can more effectively develop its structure including meeting formats, the development of committees, as well as identifying expectations of an executive director.
Bringing new members onto a board is a good opportunity to add new skills and fresh ideas. Boards should include succession planning into their discussions at least once a year prior to collecting nominations and holding elections. Providing a formal board orientation helps to ensure that all board members have the information they need to participate fully. Going over the governance process with new board members is good for new and senior board members alike – it is a good opportunity to evaluate what ‘good’ governance means for a particular organization.