Many boards are active. Few are effective. The difference is usually not intelligence or goodwill, but clarity. Board members need to know what belongs to governance, what belongs to management, and what should be left mercifully alone.
To govern a serious organization with millions in revenue and dozens of employees, the board must structure its oversight into three distinct jobs:
1. Strategy: Looking Ten Years Out
Strategy involves taking a close look at the purpose and mission of the organization. When new to a board, don't worry about trying to amend the charter or bylaws right away. Better to leave that to those who have been in place for a while.
A good strategic plan envisions what you would like the organization to be doing ten years from now:
- How much revenue is feasible?
- What projects should be done?
- What would be the measure of success?
- How much program activity is realistic given what you can raise?
Once you have a ten-year vision, break that out into a clear three-year plan, and then work on next year's concrete objectives. This creates a solid foundation for the annual budgeting process.
2. Safety: Hard-Headed Risk Mitigation
On safety, the board's primary focus divides into two key areas:
- Financial Safety: Ensuring the organization holds adequate Directors and Officers (D&O) insurance, maintains secure cash controls, and avoids speculative investments.
- Physical & Compliance Safety: Protecting employees, volunteers, and constituents from harassment and abuse, maintaining facilities, and obeying labor laws.
The board will necessarily know less about daily operations than the officers. Therefore, the officers must actively inform and instruct the board so that it can exercise appropriate legal oversight. This is particularly vital in youth organizations, where scanning, training, and strict abuse prevention policies must be verified.
3. Audit: Trust, but Verify
Audit is the process of checking to see if the organization is actually following its approved plans, staying within its budget, and keeping its records clean.
A competent staff will come up well on all of these checks. However, if they deviate at all, that deviation should be an immediate concern that the board takes up. The board must investigate and consider what can be done to prevent the deviation from happening again.
The board must maintain an uneasy but necessary balance between trust and verification. You have the CEO in place because you believe in that person and trust them. But that does not mean you just rely on trust. Fiduciary care requires that you get proof and verification along the way.