Nonprofit Board Governance Models

If you’ve ever wondered what the fundamental differences are between the Nonprofit Board Governance Models: Traditional, Policy (Carver) and Complementary Models of Board Governance, we have broken down the differences for you in the below comprehensive chart.

Also Read: 6 Tips for Dealing With an Indecisive Board

What is Governance?

Whether you run a for-profit business, a nonprofit association, a nation, or even a household, every decision is made through the lens of established roles, rules, and practices. This is governance; the proper administration of designated policies so that an overarching mission and purpose can be achieved.

One of the key elements of governance is deciding how to delegate decision-making power among the different members of an organization. Within a nonprofit association, those members include the board, staff, volunteers, as well as directors, executives, and committee members. 

What is Nonprofit Board Governance?

Nonprofit board governance is unique in that the members of a nonprofit mostly focus on both the viability of the association and the social impact and mission. Accountability and strategic planning are an important part of the governance process, as is the determination of responsibility and authority.

Traditional Model of Board Governance

The traditional model of governance has been in practice for over 75 years and is still often used as the foundation for determining governance in many nonprofits, especially smaller ones. In this model, the board is responsible for strategic planning, budget, all policies, and oversight of committees. They delegate most day-to-day responsibilities to the Executive Director who they are responsible for hiring. In this governance model, staff, volunteers, executives, and committees report back to the board. 

The model is also often called a working board.

Policy Board Model (Carver Board Governance Model)

The Carver Policy Governance model was introduced by Dr. John Carver in answer to some of the weaknesses of the traditional model. In the Carver model, the board is focused on determining the overarching policies of the organization, the “ends,” while responsibility is delegated to the CEO and other members to establish the “means,” or the implementation of the policies. The board is only responsible for hiring the CEO and establishing executive limitations. The CEO reports back to the board, but board meetings are mainly focused on policy and executive-level performance. 

Some organisations find this model to be too restrictive, leaving the board disengaged.  The Policy Board Model ends up being the extreme opposite of the Traditional Model of Board Governance.

Complementary Model of Board Governance

Introduced by AMC NPO Solutions (formerly known as Association Management Consultants) founder Thomas Abbott, the Complementary Model of Board Governance focuses on ten principles, some of which are similar to the previous two models, but all of which combine to create an effective and rewarding approach to governance. The essential difference in the complementary model is that the board is held responsible for both the governance and management of the nonprofit. The Executive Director is designated the title of CEO and is held accountable to the board for the implementation of overall management, which removes confusion about management responsibility that is present in other models of governance. 

The lines are very clear in the Comp Model, giving many organizations the clarity they need.

The chart below clearly delineates the fundamental differences of each model of board governance as it relates to each aspect of your nonprofit organization. 

 TraditionalTraditionalComplementaryComplementaryCarverCarver
FunctionBoard roleStaff roleBoard roleStaff roleBoard roleStaff role
Strategic PlanningApprovesProvides limited inputApprovesProvides inputNo rolePrepares
BudgetMay prepare completelyPrepares for approval by the boardApprovesPrepares for approval by the boardNo rolePrepares
Day-To-Day OperationsMay have a roleHas a roleNo roleMakes all management decisionsNo roleMakes all management decisions
Review of Financial StatementsReviews Balance Sheet and Income StatementPrepares for reviewReviews periodic financial report that highlights variances from approved budgetPrepares the financial report that highlights variances, for board reviewMay have little or no rolePrepares for staff review
Financial PoliciesEstablishes all policiesProvides advice on policiesSets some financial policiesSets subsidiary policiesSets some financial policiesSets subsidiary policies
Personnel PoliciesEstablishes all policiesProvides advice on policiesNo roleExclusive roleSets some personnel policiesSets subsidiary policies
Administration PoliciesEstablishes all policiesProvides advice on policiesNo roleExclusive roleSets some administration policiesSets subsidiary policies
Hiring of StaffHires CEO and perhaps othersHas a role below CEO levelHires only the CEOHires subordinate staffHires only the CEOHires subordinate staff
Staff SalariesMay set individual salariesRecommendsSets global budget and CEO salarySets subordinate salariesSets global budget and CEO salarySets subordinate salaries
Firing of StaffMay have a roleHas a roleNo role except with regard to the CEO levelExclusive role below the CEO levelNo roleexcept with regard to the CEO levelExclusive role below the CEO level
Staff EvaluationsCEO appraisal often verbal or not done at all. May evaluate non-CEO staffHas a role in evaluating subordinatesEvaluates against CEO Code of Conduct and annual goalsExclusive role below the CEO levelEvaluates CEO against Ends and Executive LimitationsExclusive role below CEO level
Staff GrievancesMay have a roleHas a roleNo roleExclusive roleCourt of last appealHandles- unless the staff grieves to the board
Title of Senior Staff Person Varies widely– often but typically not President or CEO CEO, sometimes also called Executive Director, Registrar, or President Varies widely– CEO, Executive Director, Registrar, or President
CommitteesAll report to boardNone report to Exec. Dir.Some report to boardSome report to CEOSome report to boardSome report to CEO
Board ManualLengthy – includes board policies and staff office procedures Short – contains governing policies, mission, history, governance description, committee terms of reference, and legal documentsTwo separate documents: Board Policy Manual, andStaff Policy & Procedures ManualShort – four types of policies:
1. Ends2. Executive limitations3. Board/Exec. Dir.4. Board governance process
 
Conflict of Interest PolicyMaybe Yes Maybe 
Volunteer Appraisal SystemNo Yes Maybe 
Executive CommitteeYes Maybe. If yes, its role is clear and limited No 
Board MeetingsDeal with policy and admin. matters Shorter – deal only with policy matters and performance monitoring Shorter – deal only with policy matters and performance monitoring 
About Tom (TJ) Abbott

Tom (TJ) Abbott, CSP is the Managing Director of AMC NPO Solutions and an authority on Governance. He has over 25 years experience as CEO, President and board director of several not-for-profit organizations. Tom has also spoken in over 20 countries.

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