How Can Nonprofit Boards More Clearly Define Operational Responsibilities?

How Can Nonprofit Boards More Clearly Define Operational Responsibilities?

By Eugene Fram

My experience shows that well functioning nonprofit boards establish and monitor the organization’s policies. The board operates through the president/CEO. In turn, the CEO executes policy and is responsible for the prudent and creative operations of the organization. In this role, the CEO exercises leadership resulting in the effective and efficient use of board and of other volunteer time.

Although defining what are policy issues and what are operation issues is not always clear, for both for-profit and nonprofit organizations, following is a useful set of guidelines which attempts to make the separation for nonprofits by listing the board’s responsibilities.

Directs Management
• Establishes long-term organizational objectives
• Sets overall policy affecting strategies designed to achieve objective.
• Employs the CEO
Judges Management Actions
• Evaluates short-term and long-term performance of management
• Determines whether policies are being carried out and goals achieved.
Approves management actions
• Critically reviews, approves, or disapproves proposals in policy areas. Examples: major capital needs or expenditures and major contracts)
• Provides formal recognition and acceptance of executive decisions when related to operational concerns, for example staff hiring or routine contracting
Advises Management
• Acts in an advisory or consultative capacity on operations when sought by management
Receives information from management
• Regularly receives reports on the organization, e.g., performance, program development, external factors, major operating concerns
Acts as a public and community relations resources to management
• Keeps the organization attuned to the external environment in which it operates and forms a strong partnership with the CEO for fund development

Although in decision-making, both boards and CEOs will overstep these guidelines from time to time, persons of good will should be able to resolve the issues and articulate the differences between policy development and operations more clearly.

Source “Policy vs. Paper Clips, Third Edition, 2011

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