Nonprofit Governance: An Introduction To Managing Your NPO

If you’re starting out with board governance, join us for this Strategic Nonprofit Podcast episode as host Trista McIver and the CEO of AMC NPO Solutions, Tom Abbott discuss the foundations of nonprofit governance as well as explore the basics of managing your NPO.

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What is NPO governance?

Every organizational decision gets made through a lens of established roles, rules, and practices. Altogether, this process is Governance. In essence, the proper administration of designated policies to achieve an overarching mission and purpose.

A critical element of Governance is deciding how to delegate decision-making power among members. In general. members within a nonprofit association include board management, staff, volunteers, directors, executives, and committee members.

Nonprofit board governance is unique because it focuses on the association’s viability. As well as the social impact and mission. Altogether, accountability and strategic planning are essential parts of the governance process, as is the determination of responsibility and authority.

Discover: Governance Quote Images

What are the general NPO governance responsibility areas?

Governance is a process, therefore, there are three general responsibility areas that every nonprofit has to look at:

1. Planning

Things like:

  • Forecasting sales or member revenue dues
  • Acquiring operating funds
  • Deciding on staff requirements
  • Everything related to organizational planning

2. Implementing 

Implementing the planning mentioned above which could include:

  • Hiring staff
  • Purchasing office supplies and equipment
  • Purchasing raw materials
  • Developing products or services for sale
  • Advertising products or services

Also read: How To Find, Recruit & Retain Dedicated NPO Board Members

3. Monitoring

Monitoring is looking at what you’re doing as an organization. So, this process includes everything from:

  • Tracking sales volumes
  • Tracking production costs
  • Reviewing financial statements

What is the role of the board of directors?

Overall, the board is ultimately accountable for all aspects of the organization’s activities. As a result, the board meets its leadership responsibilities in these five ways:

  1. Approving the strategic direction of the organization
  2. Setting the governing policies of the organization
  3. Providing financial and legal stewardship
  4. Monitoring and evaluating organizational effectiveness
  5. Hiring and evaluating the CEO

What are the responsibilities of the directors?

The board is responsible for establishing governance policies and strategic planning.  As a result, you leave the operational, administrative, and policies to the Executive Director (ED). Otherwise known as the Chief Staff Officer (CEO). Subsequently, they handle recruitment, hiring, firing, and employee relations. So, the board only has one employee and that would be the ED/ CEO.

What is the role of the chair?

Overall, the chair handles board meetings. In general, they ensure meetings are held in a manner that facilitates comprehensive and inclusive dialogue. As well as making sure they’re effective for decision-making that’s required to fulfil the board’s responsibilities and achieve the organization’s mission.

Also read: The Role Of The Board Chair At Meetings

What is the role of the CEO?

The role of the CEO is to oversee the implementation of the board’s policies, as well as effective and efficient management of the organization following the policies and budget established by the board. Although, they’re also responsible for:

  • Ensuring timely, accurate and concise information is provided to the board to fulfil its leadership responsibilities.
  • The CEO is accountable to the entire board of directors.
  • The staff below the CEO level report to the CEO.

What policy areas are governed by the board?

Many boards struggle with knowing what exactly they’re supposed to do, in general, and what sort of policy areas they cover. Therefore leaving their organization open to mistakes, pitfalls and liabilities. Discover three major policy areas governed by the board below:

  1. Strategic goals of the organization: Answer the questions: “What is the organization set up to achieve? And for whom? What are the short-term and long-term goals, and what resources are committed to them?”
  2. Board governance processes: Answer the questions, “What are the processes by which the board will fulfill its leadership responsibility? What is the board’s approach to delegation and its understanding of the roles and expectations of directors, committees, task forces, and staff?”
  3. Ethics: Answers the question, “How does the board define a code of conduct for directors and the CEO? Particularly when looking at issues such as ethical behavior and conflict of interest.”

What is the Complementary Model of Board Governance?

The Complementary Model of Board Governance (Comp Model) was introduced by Thomas Abbott, founder of AMC NPO Solutions. In summary, the board governance model focuses on ten principles influenced by two common board governance models. As a result, they create an effective and rewarding approach to governance.

Watch, listen or read next: Top NPO Governance Model: 10 Principles of Complementary Governance

Need help increasing your nonprofit’s effectiveness?

An efficient board starts with the implementation of an effective governance model. 

AMC’s governance training helps nonprofit boards navigate governance and management to stay focused on their organization’s mission and visions. It includes valuable tools and clear guidance to address many not-for-profit organizations’ governance challenges.

Join NPO Academy’s Online Board Governance Training and implement the Complementary Model of Board Governance to build an effective partnership between the volunteer board, CEO and staff.

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