Why Have a Board?

by Simone P. Joyaux for The Non-profit Quarterly, January 4th, 2011.

Because you have to. That’s what the law says.

Why else? Because having a board does add value – more value than raising or giving money.

Fundraisers and executive directors must be experts in corporate governance. It’s your job to understand corporate governance and explain it to your board members.

Go to workshops. Read books. Visit my website for lots of information about corporate governance.

First, keep in mind that corporate governance is a collective activity. No single individual board member matters – only the group (called the board) matters.

Second, remember that corporate governance only happens when the board is together at its meetings.

So what, exactly, is corporate governance? The process whereby a group of individuals (typically called a board) ensures the health and effectiveness of the organization (whether for-profit or nonprofit).

What does a board do at its meetings? The board talks about information – the trends and implications. The board asks essential and cage-rattling questions. With the support of staff, the board explores and argues. And, as appropriate, the board decides. And the board usually decides by voting.

What does the board talk about? The board talks about its core areas of responsibility. And what are those? Things like:

·         Relevancy, mission and impact

·         Financial sustainability

·         Legal and regulatory compliance

·         Risk management

·         Governance effectiveness and board member performance

Review the role of the board, posted on my website. Make sure your board adopts a policy defining the board’s role. And your policy must cover everything in my example. Corporate governance is corporate governance. There’s no distinction between different types of organizations. There’s no distinction based on size. (continue reading… )


1 Response to “Why Have a Board?”

  1. 1 Brian Finch January 7, 2011 at 3:25 pm

    I would like to persuade you to broaden your definitions a bit. Firstly that it becomes a more useful idea if we recognise that corporate governance extends beyond the boardroom. To test whether this seems reasonable ask how we would feel if senior staff below the board conducted themselves in an unethical way or committed the organisation without authority. I reckon such behaviours count as poor governance.

    To accomodate this a more useful definition of corporate governance is “the systems, procedures and behaviours by which an organisation is directed and controlled”. This would also suggest adding ‘control activities’ to the sort of things a board should talk about – because what subordinates do is part of corporate governance.

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