As a charitable organization grows from a handful of volunteers to a full-fledged institution, it must examine its governance. You want to be sure that your organization is run in a way that will inspire trust and confidence from potential donors and supporters. For large nonprofits there are charity watchdogs like Charity Navigator and The Better Business Bureau’s Wise Giving Alliance, which rate charitable organizations. However, for smaller organizations these official rankings may still be years away.
What can your organization do to inspire confidence and work toward positive ratings in the future?
The Better Business Bureau’s Wise Giving Alliance has set out Standards for Charity Accountability for organizations to receive their prestigious Charity Seal. The Alliance suggests that a governing board should have at least five members, and that no more than one or 10 percent (whichever is greater) of your board should be a paid member of the nonprofit’s staff. You must also make certain that your board acts in ethically responsible ways; for example, none of your board members should stand to gain from the work of the organization.
A board member’s good intentions may not be enough to make him/her a good board member. Good governance requires your board to be active and engaged in the following ways:
– The board should meet regularly; The Alliance recommends at least three meetings per year, two in person.
– Make sure that your board knows what is expected of them and hold them accountable to those expectations. (Note: It’s important to lay out these expectations before you invite anyone to join the board.)
– Implement what is often called a “Give, Get or Get Off” policy, meaning all board members must donate and raise funds for the organization.
Your board, in a sense, owns the organization. It has a fiduciary and ethical responsibility to run and manage the institution. So, make sure your board is filled with individuals who appreciate and respect this duty.
EXTRA CREDIT: For more in-depth information about improving governance check out Good Governance for Nonprofits: Developing Principles and Policies for an Effective Board.
TIP: Purchase directors and officers insurance to protect the board from financial liability–any board member worth his salt won’t serve on a board without it.
Originally Posted: June 19,2008 on NJ.com