Financial Factors Embodied by a Strong Board

Financial Factors That a Strong Board Embodies

A recent article by governance guru and author of Leveraging Good Will Alice Korngold had me nodding my head vigorously. “The Role of the onprofit Board: Four Essential Factors for Effective Governance” is an essential reminder for nonprofit leaders and board members of the important relationship between executive director and board as well as their linked responsibility in moving the organization forward rather than maintaining the status quo.

Korngold discusses the following four factors for superior governance:

1) achievement

2) accountability

3) ownership

4) oversight

While achievement, in particular, seems obvious, our characteristics that define us as nonprofits sometimes cloud the issue. We don’t pursue profits (by law), we serve “customers” who don’t actually use our services (funders) and the mission must preempt any profit maximization. It’s no wonder boards feel reined in. However, exemplary boards can see past these nonprofit qualifiers and pursue opportunities that improve their mission, increase impact and improve the greater community. More specifically, Korngold explains achieving boards and their CEOs create a winning revenue model that presents the most viable mix of funds (earned revenue, raised revenue, etc.).

The second factor, accountability, also resonated with me because boards often fail to ask the question Korngold emphasizes, “How do we know?” She adds the board and staff should collaborate on creating a meaningful dashboard that not only provides specific metrics and financials, but sheds light on initiative progress. With great data, a board is empowered to make informed decisions. My recent blog about the Hull House is a prime example of an accountability problem. The board and staff didn’t have the systems in place to access good, honest and timely financial information. The result was the tragic loss of a 123-year-old voice for public health in Chicago.

Ownership is an appropriate descriptor for a board member’s personal investment in an organization— a commitment to the organization’s financial stability and vitality. Korngold personalizes this factor by suggesting a board member who truly takes ownership of the nonprofit he/she governs asks: “How can I add value that is meaningful and productive in helping to advance this organization?”

I think Korngold’s word “oversight” needs to be stronger, and I recommend “obligation” in its place. The critical board role of fiduciary responsibility can’t be overstated. Korngold stresses a great point: “If all the board does is provide oversight, then the board is not proactively advancing the organization toward greater potential.”

by Erica McGeachy Crenshaw, Execute Now!

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