Now Is a Good Time to Reassess Your Nonprofit’s Governance Practices
The current pandemic has ushered in a very tenuous period of hyper-change and disrupted planning for most nonprofits. This crisis has required organizations to be laser focused on survival, continuity, and operating with maximum efficiency.
As a result, nonprofit Boards of Directors have had to adapt, shifting quickly to virtual Board meetings and evaluating the organization’s priorities with an eye on protecting and managing precious financial resources and the organization’s brand, legacy and reputation. For many organizations, these challenges have shed light on old or outdated governance practices that may have been taken for granted in years past and most likely should have been changed years ago.
Reassessing these governance practices now will help an organization weather this storm more effectively, and perhaps end up stronger and better positioned as recovery takes hold. The following are three key governance areas that should be reassessed and updated during this time of uncertainty.
1. Virtual Board Meetings
New social distancing requirements (including shelter-in-place orders and restrictions on public gatherings) have made in-person Board and Committee meetings impossible for now, and likely for an extended period of time into the future. As organizations have had to adapt to virtual Board meetings (some for the first time), many are finding that virtual meetings are more efficient, orderly, and focused, and lead to better attendance and participation.
Organizations should evaluate whether to make virtual meetings of all kinds (including meetings of the Board, Committees, task forces, and members) a standard practice for the future, even after social distancing requirements are lifted. While virtual meetings may have seemed too awkward and impersonal in the past, many organizations are now viewing this option more favorably, as Board members have learned how to use the technology and gotten accustomed to these new forms of communications. Plus, organizations may find that virtual meetings allow for greater engagement and a wider pool of potential Board and Committee members from across the country and abroad, with travel time and costs no longer restricting selection and participation.
Planning Tip – Make sure that the organization’s governing documents are aligned with these new virtual meeting methods. Review and, if necessary, revise the Bylaws to make sure that virtual meetings (i.e. meeting by teleconference and similar technology) are clearly permitted. To the extent that the Board utilizes voting by email and other written methods (which are technically different than “virtual meetings”), make sure that the Bylaws reflect the requirements of the applicable state nonprofit corporation law (which often requires that written Board actions in lieu of a meeting must have unanimous approval of the entire Board).
2. Committee Structure and Duties
Many organizations are finding their current Committee structure ill-equipped to deal with the financial and operational disruptions brought on by the pandemic. Now is a good time to evaluate whether your organization’s Committees are working as well as they could be.
Certain standard Board Committees are essential in all circumstances (including a crisis) and should continue running as normal or with added responsibilities relevant to the crisis. These are typically “Standing Committees” (in other words, permanent Committees established in the organization’s Bylaws), although the precise Committees used varies widely depending on the organization. For example, to the extent your organization has an Executive Committee, Finance Committee, Nominations Committee, or Investment Committee, these Committees should be retained. During these uncertain times, it is very common for the Executive Committee and Finance Committee to take on expanded roles and responsibilities and to meet more often.
Other Committees may not be as useful, and these Committees and their members could be more effective if focused on other tasks. If your organization has any Committees that aren’t meeting regularly or comprise just 1 or 2 members, your organization should consider disbanding these Committees and reassigning these duties to other Committees. To the extent that any of these non-essential Committees are “Standing Committees,” your organization should consider amending your Bylaws to change this status.
Organizations might also consider alternatives to the standard “Committee” structure. Short-term assignments that need not be addressed every year (for example, researching COVID-19 financial relief programs) may be more effectively carried out through “task forces” and “working groups” rather than Board Committees. Task forces and working groups are advisory in nature and tend to include more non-Board members (which can bring valuable new perspectives and resources to the organization). They are also generally more flexible and have fewer formalities than Committees (such as notice and quorum rules and the requirement to have meeting minutes). As we’ve explained in depth before, a COVID-19 Task Force can be especially helpful right now.
Planning Tip – Consider changes to how advisory Committees, task forces and working groups are Chaired. Empowering non-Board members to serve as Chair (with a Board member acting as liaison rather than Chair) not only helps to bring different perspectives and insights, but can also be a powerful tool for recruiting future Board members.
3. Board Composition and Onboarding
This crisis has vividly illustrated the need for Boards of Directors to have diverse skill sets. For example, Boards that already had (or were able to add) Directors with financial literacy, knowledge about insurance, and ability to navigate the various federal and state COVID-19 financial relief programs have been able to respond more quickly to the crisis and more effectively navigate a sustainable path forward.
Consequently, now is a good time to examine the breadth and depth of your Board and begin working to add other areas of expertise. A diverse Board with both traditional and non-traditional skill sets across a variety of different areas will be better equipped to govern the organization into the future. Organizations should consider adjusting the Board nomination process to prioritize composition and diversity, and take a more proactive approach to recruiting new Board members over a longer time period. If the Board does not currently have a formal Nominations Committee, you should consider adding one, as a Nominations Committee will be most helpful to this process.
Planning Tip – Organizations that have had many of the same longstanding Board members (with few new Board members joining) may need to consider adding term limits to bring new skill sets to the Board over time. For an organization that has never had term limits, this can be a sensitive subject. If your organization is ready to make this change, consider moving longstanding Board members who would roll off to special advisory Committees, task forces, and/or working groups. This will help the organization to retain their loyalty and expertise, and gain their buy-in for the change.
Additionally, the process of onboarding new Board members has never been more important, especially as the crisis has made it necessary for new Board members to get up to speed quickly. Organizations should evaluate their Board orientation process to make sure that new Board members are receiving adequate education about their role and duties as well as the organization’s programs and operations. An extended virtual board retreat or dedicated meeting for this purpose is optimal, as merely sending a stack of documents for new Board members to read is generally not effective. Consider including existing Board members in this orientation, as even longstanding Board members often need a refresher from time to time.
Governance changes like the ones described in this article can be intimidating, especially during a crisis. But organizations that embrace the process of self-evaluation and making necessary changes will invariably end up stronger and more sustainable than organizations that are resistant to change.
