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.
|Function||Board role||Staff role||Board role||Staff role||Board role||Staff role|
|Strategic Planning||Approves||Provides limited input||Approves||Provides input||No role||Prepares|
|Budget||May prepare completely||Prepares for approval by the board||Approves||Prepares for approval by the board||No role||Prepares|
|Day-To-Day Operations||May have a role||Has a role||No role||Makes all management decisions||No role||Makes all management decisions|
|Review of Financial Statements||Reviews Balance Sheet and Income Statement||Prepares for review||Reviews periodic financial report that highlights variances from approved budget||Prepares the financial report that highlights variances, for board review||May have little or no role||Prepares for staff review|
|Financial Policies||Establishes all policies||Provides advice on policies||Sets some financial policies||Sets subsidiary policies||Sets some financial policies||Sets subsidiary policies|
|Personnel Policies||Establishes all policies||Provides advice on policies||No role||Exclusive role||Sets some personnel policies||Sets subsidiary policies|
|Administration Policies||Establishes all policies||Provides advice on policies||No role||Exclusive role||Sets some administration policies||Sets subsidiary policies|
|Hiring of Staff||Hires CEO and perhaps others||Has a role below CEO level||Hires only the CEO||Hires subordinate staff||Hires only the CEO||Hires subordinate staff|
|Staff Salaries||May set individual salaries||Recommends||Sets global budget and CEO salary||Sets subordinate salaries||Sets global budget and CEO salary||Sets subordinate salaries|
|Firing of Staff||May have a role||Has a role||No role except with regard to the CEO level||Exclusive role below the CEO level||No roleexcept with regard to the CEO level||Exclusive role below the CEO level|
|Staff Evaluations||CEO appraisal often verbal or not done at all. May evaluate non-CEO staff||Has a role in evaluating subordinates||Evaluates against CEO Code of Conduct and annual goals||Exclusive role below the CEO level||Evaluates CEO against Ends and Executive Limitations||Exclusive role below CEO level|
|Staff Grievances||May have a role||Has a role||No role||Exclusive role||Court of last appeal||Handles- 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|
|Committees||All report to board||None report to Exec. Dir.||Some report to board||Some report to CEO||Some report to board||Some report to CEO|
|Board Manual||Lengthy – includes board policies and staff office procedures||Short – contains governing policies, mission, history, governance description, committee terms of reference, and legal documents||Two separate documents: Board Policy Manual, andStaff Policy & Procedures Manual||Short – four types of policies:
1. Ends2. Executive limitations3. Board/Exec. Dir.4. Board governance process
|Conflict of Interest Policy||Maybe||Yes||Maybe|
|Volunteer Appraisal System||No||Yes||Maybe|
|Executive Committee||Yes||Maybe. If yes, its role is clear and limited||No|
|Board Meetings||Deal with policy and admin. matters||Shorter – deal only with policy matters and performance monitoring||Shorter – deal only with policy matters and performance monitoring|