In 25 years of assisting charities in getting started and in continued operations, we have noticed a remarkable pattern: the single most important factor in determining whether a charity will succeed is whether the founders can assemble a strong, diverse board of five or more people who are not related to each other.
The Leadership Bellwether
We have seen founders who have put together astounding business plans of over 40 pages, detailing every market challenge and operational resource. But when those founders state that they cannot locate five unrelated people willing to dedicate a few hours a month to make the project work, failure is nearly inevitable.
The ability to assemble a board is a bellwether for the leadership skill of the founder. A true leader must have the ability to inspire others, reaching beyond relatives and close friends to mobilize people to action.
Why Small Boards Fail
While smaller boards (three or four people) may seem nimbler and easier to organize, they are highly risky:
- Quorum Issues: A quorum consists of more than half the board. If you have only three directors, you need at least two present to vote. If one of those two is the president, there is no real deliberation—just a casual discussion.
- Formality Deficit: Small boards lack the formality necessary to remember that they are executing a serious corporate business function.
- Committee Insufficiency: Boards get their real work done in specialized committees (Audit, Finance, Programs). You cannot staff committees without enough independent board members to distribute the load.
Board Size Scale by Revenue
We recommend starting with five independent directors, but increasing the size once annual revenues hit specific thresholds:
- Under $650,000: Minimum of 5 directors
- $650,000 to $800,000: Add 1 director (6 total)
- $800,000 to $950,000: Add 1 director (7 total)
- $950,000 to $1,100,000: Add 1 director (8 total)
- Over $2,000,000: Build toward 15 directors to staff active committees (Executive, Audit, Nominating).