By Mark S. Anshan
In following several not-for-profit and charity mailing lists, I have noticed there are discussions taking place among individuals serving as directors of charities and foundations expressing concerns about governance and apparent lack of proper controls and accountability. With news of charities coming under review and being subjected to government audits, directors are right to be concerned about their fiduciary obligations and potential risks they may face serving on a board of directors.
Directors are asking how they can bring to the attention of fellow board members the need for governance review and training. Some comment on the control of the chair of the board in furthering personal objectives. Others express concern about the lack of accountability and collaboration among board members. In some cases, the lack of a team effort to work together in the best interests of the organization leads directors to feel alienated from the board and unsure of whether they should continue to serve.
Charities and not-for-profits require committed and highly skilled individuals to serve as directors working together and in collaboration with staff. Charities that do not have well-functioning boards with strong and purposeful leadership risk being exposed to serious errors of judgment and not receiving the information necessary to make sound decisions. This can lead to serious problems of misappropriation or misuse of charitable assets. Legal consequences can be enormous.
To mitigate these potential problems, organizations should have in place a robust process for recruiting and training board members. Ongoing evaluation of board members and how they have contributed to the work of the organization should be an essential feature of board development.
Critical to any good governance model and its implementation are the organization’s by-laws, which set out (among other things) the rules and procedures for electing board members. In the past, by-laws have generally taken a minimalist approach to board selection. In light of current trends, organizations should consider reviewing the procedures set out in their by-laws and adding features that require board training, annual reviews and board retreats (at least annually) to review priorities, programs, structure, management and future planning. Rotation of board members and term limits is an important approach to ensure renewed energy and focus of board members.
A good place to start a governance review is for the board to hold a session devoted to governance and identifying the issues to be addressed in formulating changes to procedures, including by-law amendments. A third-party neutral facilitator can be very helpful in achieving positive results from such a session and will allow all board members to actively participate in the discussion.
Please contact Mark at manshan@drache.ca for further information on governance review.