Reviewing Governance Part 2 - The Process
Part 1 of this article was about the when and why of governance reviews in community, public and mutual benefit organizations. It mentioned some warning signs that indicate a governance review might be warranted, noted some times when such a review should be deferred, and spoke to the benefits. So let’s now help you get on with carrying out a governance review. What is the process? Who does what? What happens afterwards?
How does governance get reviewed?
The usual first step would be to set up a Governance Task Force or assign oversight to the existing Governance Committee. That group then selects and manages a consultant who is very knowledgeable about governance in community, public and mutual benefit organizations. That person should review your governance documents, including confidential ones, and interview key people to gain an understanding of how your governance works now. He/she interviews key stakeholders about their perception of your governance. In the past, the external interviewees were primarily organizational stakeholders such as funders, regulators and partner agencies. The emerging practice is to also include, or even primarily focus on, members of the community you serve.
A Governance Review is not limited to the legal framework, although issues such as who can vote for directors, board size and terms of office are very important. The Governance Review should also look at how the board functions, such as use of group time, use of committees to support the board, how decision support is provided, and the partnership with senior staff. Those issues, however, are still somewhat structural, and the Governance Review should also address “softer” leadership items such as the level of decision-making, the quality of strategic thinking, the range of relevant knowledge at the board table, the accountability for results achieved for the community and the willingness (or not) of others to partner with you. And it should consider the existence and quality of important governance processes such as board and Executive Director assessments and succession plans, codes of ethics or conduct (including Conflict of Interest), and orientation programs.
Optionally, the Governance Review’s initial stage can include research into governance of comparable organizations, particularly if you know of some that seem to function well. Knowing how they are different or similar can help generate options later in the review.
Who should conduct a Governance Review?
It is extremely difficult to conduct a Governance Review without fresh eyes and a lack of personal stake in the outcomes. I have seen Governance Reviews simply confirm the current system, sometimes without even describing it, because the reviewer was an insider and against change. Or the person who commissioned the review was quite explicit up-front that the review was a formality that was not to lead to major change, and so the review was an unethical sham. Such reviews waste everyone’s time, and so do reviews done by those who only know how for-profit businesses work. Volunteer boards not only are, but also should be, different from corporate ones.
You need someone who keeps current with governance thinking in community, public and mutual benefit organizations through professional development in the form of extensive reading, conferences, workshops and discussions with colleagues. I would ignore anyone whose professional development is not being maintained. None of the books on my current list of recommended resources in nonprofit governance are more than ten years old and most are less than three.
Many Executive Directors take this field seriously so they can properly support their boards. You may be able to find a recently retired one who will do the work pro bono if you cannot afford a governance consultant. Or, your community may have a nonprofit support organization that can make a knowledgeable consultant available to you.
Although a fully independent review is preferable, a few boards manage to recruit someone trained in nonprofit governance to their board or Governance Committee. If you are in that position, make sure the individual leads the Governance Review before they get too comfortable in the way things have always been done. And remember that passion for the cause is more important in your recruitment for your board than this or any other skill set.
How do we set out a range of choices?
Let’s start with what doesn’t work. You cannot just choose a few models and find out which one works for you. That’s because there aren’t a few models out there in any sort of common use or general acceptance. There is only formal model one, published in 1990, by John Carver. His groundbreaking ideas tremendously improved governance in the nonprofit sector and thankfully many of those ideas are in common use today. However, most governance consultants, academics and writers now prefer to support more flexible governance frameworks customized to the needs of each organization. Community Engagement Governance, from the Governance Affinity Group of the Alliance for Nonprofit Management, is an example of such a framework.
You can find countless publications attempting to tell you that you can choose to be a ‘working’ board, a ‘policy’ board or some kind of hybrid, but such choices will be of little help to you in figuring out specifics such as how many directors you need. “Working boards" have become associated with micromanaging, but in Canada many nonprofits have no staff, so that distinction is not meaningful. And the term ‘policy board’ has become a pejorative in its own way, as some boards spend years writing complex policies and doing very little else–akin to fiddling while your community burns.
So what do we use to help us decide?
First, since there is no overall model I can recommend, look at each aspect of governance separately. Analyze each, with options. For example, what choices do you have for an Executive Committee? The main choices are none (now a very common choice), one with severely limited authority (also fairly common), or a broad-scope one that can generally act for the board (becoming rare).
Then analyze the options in terms of the criteria you use for any important organizational decision. The first one could be: Does it help achieve our Vision and Mission? You can split this out into sub-questions such as: Will it help us make timely decisions for our community? Will it help us make high quality decisions for our community? Will it support sustainability (at least until we achieve our vision and are no longer needed)?
The second question should be some variation of: Is it consistent with our principles and ethical values? You may want to list each separately. For example, if you highly value democracy and civil society, how well will a closed membership, closed meetings and a self-perpetuating board fit? If the reasons for continuing to operate that way are valid, how then can you add structures or processes that support democracy?
You would also ask questions about risk management. For example, frequent meetings create a risk to resources if you have a large geographic scope and there is overspending on board travel and accommodation. The board has to add more value than it costs. However, infrequent meetings may create a much bigger risk through delayed or inappropriately delegated decision-making. Many organizations now manage such risks through smaller boards and increased use of technology. Remember when doing risk assessments that your biggest risk area is usually reputation, not tangible assets.
Also ask questions about relationships. Of your stakeholders, who will care? Who might gain too much power? Who might feel disenfranchised by changes in board composition, and need another way to have their views heard at the board table? Will the changes increase staff workload, even temporarily, and how can this be offset?
The review will take into account current wise practice thinking in nonprofit governance, and the reviewer’s extensive experience of what has and has not worked in other organizations.
Where does the Governance Review go from here?
The reviewer should make recommendations to address each aspect of governance, and ensure some level of consistency and coherence among the recommendations. The recommendations can then be discussed in detail at the Governance Committee and then brought to the board for discussion and decisions. Keep these discussions high level. Each agreed-upon change will be an action item for the Governance or Board Development Committee to flesh out later.
An Action Plan is then needed to set out responsibilities, timing and resources to implement any changes that are chosen. A new style of board agenda, for example, can be in place next month; major bylaw revisions may take more than a year.
As with any review, it will need to be monitored, adapted over time and reviewed again. Governance thinking will continue to change, likely increasingly towards bringing the community in. The community will change. The organization may change its scope or direction, and need different leadership. With one well-conducted Governance Review in hand, subsequent ones should be easier to conduct, but the decisions arising will never be easy.
Separately, there is research showing that one-time intervention by governance consultants is far less effective than longer-term involvement. Consider at least an annual refresher with your consultant, to remind the board why it decided to change, orient new board members to the changes, build awareness of the newest thinking in the field, and address unforeseen barriers to completing the Action Plan.
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