Reviewing Governance Part 1 - When and Why
People frequently ask me to give them one simple red flag issue to help them determine if their governance needs reviewing. I ask them, “Do all your board agendas look the same?” Unfortunately, they often admit that only the dates change. The agenda is a tool designed to let all directors determine in advance of the meeting which issues they need to be well prepared to discuss in detail, and which issues they need to be well prepared to vote on. Fixing the agenda so directors can do this is one of the simplest and fastest ways to improve your governance – there, part of the review done already!
Generally, how do you know if your organization’s governance is good enough? If you haven’t reviewed it in the last few years, you simply do not know. More and more organizations are conducting governance reviews, and finding the reviews worthwhile even if they decide against major change. The discussions about why you lead as you do will still be worthwhile, and you are certain to find some change, however small, that really makes a difference. I now find good organizations reviewing their governance as needed or at least every five years.
Here are some other warning signs that it may be time to review your governance:
- Feedback from community and staff indicates a growing dissatisfaction with the board’s decisions and/or composition.
- The bylaws no longer reflect how the organization operates, but there is no consensus on whether to fix the bylaws or bring operations in line with the bylaws.
- Board members have ongoing conflicts of interest.
- You see checklists of good nonprofit governance practices but can say yes to fewer than half the items.
- Timely decisions are so difficult to make at board meetings that a smaller group makes most of the decisions for the board.
- Candidates for an executive director or board vacancy inquire about the governance style and are clearly unhappy with what they hear.
- Board members resign or refuse second terms, citing issues such as poor use of their time or skills.
- Board recruitment is difficult or board attendance is poor; meetings are cancelled for lack of quorum.
- Committees and senior staff either exceed their authority or fill up the board meetings with administrivia and operational matters.
- Executive director evaluation is problematical since committees reporting to the board have responsibilities that overlap the ED’s responsibilities.
- Your auditor, lawyer or major funder expresses concern about the lack of oversight.
This list should also give you a good idea of what improvements you might expect to achieve from enhancing your governance. But let’s continue with when to do a governance review.
When Not to Start
Here’s the biggest reason for delaying a governance review: no up-to-date Vision, Mission and Values statements. Without these, what criteria would drive your primary governance choices - or any other important choice in your organization, for that matter? The discussions about the kind of community you want to create, your role in creating it, and your priorities may significantly affect governance decisions such as board composition.
I used to think that organizations lacking a strategic plan AND dissatisfied with their governance could address those issues in either order. Whichever was done first would lead to the other, and that in fact happened many times. However, I now firmly believe that that approach was wrong. It is essential to at least have Vision (externally focussed), Mission and Values Statements in place before conducting a governance review. How do you even know the review is a top priority if you haven’t set strategic priorities?
A governance review requires considerable time on the part of the board, the Governance/Board Development Committee (or task force if there is no regular committee supporting board operations) and executive director if any. If there are other senior staff, they will often get involved, along with whoever provides the primary administrative support to the board and executive director. Additional key volunteers such as task force chairs may participate as well, especially in all-volunteer organizations.
Over several months, you will need to make board and committee time available for research, discussions and decisions. It is not appropriate to start a governance review during a financial crisis or major project that is already preoccupying the board and staff.
Also, if you have new board members starting soon, or have just hired a new executive director, you might wait until they have a least a couple of months experience with you in order to receive their orientation, settle in and see what “normal” is at your organization. Governance choices that seem quite weird to an outsider may have a sound basis in the special needs of an organization, and should not lightly be tossed aside in favour of some generically "wise" practice.
Most organizations involve a specialist in nonprofit governance in the review, so resources may also be an issue. If monies are really tight, you may not be able to start until you arrange for one-time funding for the review from one of your funders or another grant-maker. Use pro bono help only if you can find a person who specializes in nonprofit governance.
So Why Do a Governance Review?
That’s easy. The governance review will help ensure your leaders are working together effectively to govern the organization so it can create a better community and a better world. It may identify barriers you can remove and small changes that can make a big difference. It should help you attract the kind of leaders you want and need for the future, and retain them because you are using their time, passion, knowledge and skills well. It should help you assure funders, stakeholders and partners that you have the right governance structure.
Best of all, it may be able to accomplish all of that without major change, depending on how well your current structure fits your needs. If you decide to retain the existing governance structure, the governance review discussions will help you explain why your existing governance structure works well for you. Being able to articulate the reasons can be invaluable when seeking supporters and recruiting leaders.
Part II of this article will talk more about how to conduct a governance review, including choosing criteria, what to compare, and what your options are for who should conduct it.
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