A brief discussion on the board of directors of non-profit institutions
[Workplace Interpersonal Relationship Series]
▲The author of this article, Elder Lin Fengliang, is also a director of the Christian Messengers Association. Pictured is the board meeting of the Christian Messengers Association.
Preface
Over the years, I have had the opportunity to serve on the board of directors of several for-profit and non-profit organizations. From continuous observation and learning, we have discovered that whether it is a for-profit or a non-profit institution, whether an organization is sound or not has a great relationship with the board of directors; only a good board of directors can promote the healthy growth of the organization.
Non-profit organizations cover a wide range of areas, including general charities, religious groups, hospitals or cultural and educational organizations, as well as various types of foundations. The biggest difference between a non-profit organization and a for-profit enterprise is that its income does not come from making money from business, but relies on donations from the public or income generated from business related to the purpose of the organization. Therefore, the organization’s vision, mission, and operating model must win the recognition and support of society.
The Board of Directors is responsible for the governance of this organization. Not only must policies be formulated, but a suitable President or Chief Executive Officer (CEO) must be selected to implement the decisions. The board of directors must also supervise the business execution of the administrative department to ensure that everything is legal and consistent with the organization's founding mission and purpose, and to win the trust and continued support of donors. Therefore, the board of directors has a very important responsibility.
Nonprofit Board Overview
Non-Profit Board Rights and Responsibilities
Richard Ingram comprehensively studied various non-profit organizations and proposed the following ten important responsibilities of the board of directors, which are worth your reference:
1. The board of directors confirms the mission and purpose of the organization.
2. The board of directors should select the most suitable president (or CEO) for this organization.
3. The board of directors should establish an appropriate financial supervision mechanism.
4. The board of directors ensures that the organization is adequately resourced.
5. The board of directors must ensure that the organization fully complies with the law and upholds ethical standards of integrity.
6. The board of directors should confirm that the organization's plans are realistic and can be effectively implemented.
7. The board of directors should find and train suitable new directors, and also regularly evaluate the performance and performance of current directors.
8. The board of directors should enhance the public image of the organization and win support from the public.
9. The board of directors should confirm, supervise and strengthen the effectiveness and service results of various activities of the organization.
10. The board of directors should fully support the president (or CEO) and review his/her performance regularly.
▲The board of directors should supervise the business execution of the administrative department to ensure that everything is legal and consistent with the organization's founding mission and purpose, and to win the trust and continued support of donors. Therefore, the board of directors has a very important responsibility.
Director qualifications for non-profit organizations
Although the purpose of a non-profit organization is not to make a profit, it must still balance its expenditures, or have its income exceed its expenditures, in order to maintain the organization's survival and sustainable development. The main income of non-profit organizations comes from donations from the public, so they must first win the trust of donors. The board of directors has the power and responsibility for governance, and every director must be blameless in character. Being a director of a non-profit organization is an unpaid position, which is a kind of dedication and an honor.
Therefore, directors cannot just appear in name or just attend meetings; directors cannot just tell stories and pay half-heartedly. Every director must clearly understand the articles of association, know his or her rights and responsibilities, and strictly abide by disciplines and boundaries. He must not interfere in administration but also fulfill his supervisory responsibilities. Directors should be good, loyal, and knowledgeable stewards with a passion for service, uphold the purpose of the organization, supervise the administrative departments, and work hard to assist the organization in raising funds, and constantly seek out suitable resources to support the development of the organization. .
Ideal board member
Since the board of directors is so important, finding suitable director candidates is a key factor for the successful operation of non-profit organizations. Not only must the candidate's character, reputation, and ability be considered, but also his/her knowledge and enthusiasm for the organization, and his/her willingness to commit. Be willing to devote time and money; you must let him/her understand the vision, mission, purpose, history, charter, and business of the organization in advance. You must also let him/her know that directors must assist the organization in raising funds.
After all, nonprofit organizations rely on donations from supporters for their income, and directors share this responsibility. Although every director may not necessarily be able to make a large donation, he or she must always try his best to use his wisdom and influence to assist the organization in raising funds.
Acts Chapter 6 sets out three essential requirements for deacons in the early church: to have a good reputation, to be filled with the Holy Spirit, and to have sufficient wisdom. I think this is also what makes a good director. Some people have also proposed the 3W principles of good directors (well-known, wisdom, wealth; famous, wise, and wealthy). I think wealth can refer to a person with wealth or a person who is spiritually rich.
In her book, Starting & Building a Nonprofit, Peri Pakroo proposes the following qualities of a good director:
1. Extremely passionate about the organization’s mission.
2. Very willing to help the organization's business development.
3. Have a close relationship with the community or group the organization serves.
4. Complementary roles with other board members in terms of age, gender, ethnicity, and faith background.
5. Very enthusiastic about assisting organizations in raising funds.
The first tasks of a director after taking office
Directors must understand the following issues before taking office:
1. What is this non-profit organization? What to do?
2. What is the difference between a non-profit organization and a for-profit enterprise?
3. What are the different responsibilities of board members and executive branch? What is the relationship and distinction between each other?
4. What conflicts of interest may arise for directors? How to avoid it?
5. Where does this nonprofit’s revenue come from? How are expenses used?
After every director takes office, he must get into the situation as soon as possible, get to know the officials of the relevant administrative departments, and fully understand the business development plan and current status. It is best for the chairman of the board of directors to assign senior directors to assist new directors and play the role of guidance and confusion, so that new directors can become familiar with the business and the operations of the board of directors as early as possible.
Sharing experience and insights
The following part is some of my experience and learning experience in recent years. I would like to provide it for everyone's reference and discussion. It is not a golden rule or set in stone; sometimes it is necessary to adapt to the times, local conditions or people's conditions, and it is necessary to adjust wisely in order to achieve success. To maximize the effectiveness of the organization's functions.
Board composition
The board of directors should have at least 3 people, and the ideal number is 5 to 13 people. Too many people is not conducive to effective meetings. The board of directors must have a chairman, vice-chairman, secretary and secretary. It is best for the members of the board of directors to recruit talented people, be inclusive, and have different gifts and professional abilities to help the healthy development of the entire organization. In addition to professionals related to the organization's main business, it is best to have finance, accounting, legal, human resources, public relations, marketing and computer professionals. The directors brainstorm and cooperate, just like limbs working together to exert the functions of a healthy body.
Director's term
Directors should have a term of office. If the term is too short, it will be difficult to perform their functions; if the term is too long, they will lose motivation. The ideal term is three years, renewable once. After serving for six consecutive years, a director should take at least one year off before taking office again. This allows the organization to metabolize and grow healthily without being dominated by anyone for a long time, and also allows all directors to have the opportunity to rest and recharge.
▲The vision, mission, and operating model of non-profit organizations must win the recognition and support of society.
committees of the board of directors
The board of directors can establish several committees based on business needs, such as finance committee, development committee, missions committee, training committee, advancement committee, executive committee, etc.
Each committee is responsible for different ministries, and each director participates in at least one or two committees. Each committee has its own chairperson, and directors with responsibilities and gifts are invited to participate to conduct in-depth discussions on the ministries of relevant departments.
The Advanced Committee is composed of the chairman, vice-chairman and president (or CEO) of the board of directors, and is responsible for arranging the organization of the committee and selecting future director candidates for discussion by the board of directors. The management committee is composed of the chairman, vice chairman, secretary, treasurer and president (or CEO) of the board of directors. It meets regularly to discuss and review the progress of business development and improvement measures.
Number of board meetings
The Board of Directors shall meet at least twice a year, six months apart. Each committee will hold a conference call every quarter. Two weeks before the semi-annual board meeting, each committee should propose committee resolutions for the board of directors to make a final decision. The chairman of the board of directors and the president (or CEO) should have a face-to-face or telephone meeting once a month to facilitate communication of opinions and understanding of business progress.
How to deal with unfit board members
We all hope to find the most ideal candidate for director, but sometimes we make mistakes in judgment and trust others, which causes a lot of trouble. If there is an incompetent director, in addition to actively correcting it, it is even necessary to immediately cut off his/her strength and remove him/her from the directorship as soon as possible to avoid causing disaster and regret.
Perry Parker mentioned in her aforementioned book: If there is an unfit member on the board of directors, the chairman of the board of directors should quickly take appropriate measures, make corrections immediately with wisdom, encourage him/her to improve quickly, and even try to remove him/her if necessary. /Her position.
She recommends considering the following:
1. Common problems are: the new director likes controversy, even bullies others rudely, likes to make long speeches, or often does not come to meetings, and lacks interest in the organization.
2. Relevant provisions should be included in the board of directors' charter to clearly specify the responsibilities and general behavioral requirements for directors and determine term limits. Members who behave inappropriately may be required to resign accordingly, or their duties may be removed by a vote of more than two-thirds of the board of directors.
3. Organize directors’ retreats to enhance mutual understanding among directors, build mutual affection, and thereby boost morale and build consensus. The chairman of the board of directors should designate appropriate directors to assist directors who may have problems to avoid unnecessary misunderstandings and confusion.
This article is intended to share learning experiences based on personal experience, hoping to inspire discussion and gain feedback and advice.
1. Richard T. Ingram, Ten Basic Responsibilities of Nonprofit Boards (Governance), Third Edition, BoardSource, 2015.
2. Peri Pakroo, Starting & Building a Nonprofit: A Practical Guide Paperback, Eighth Edition, Nolo Law For All, 2019, Chapter 4, Your Board of Directors.
3. The situation described here refers to the situation in the United States. If it is a non-profit organization in Taiwan, it must comply with the relevant regulations of the Ministry of the Interior, including the number of directors and supervisors, terms of office, and meetings.