Q&A #165 – How often should a nonprofit CEO provide updates to the Board of Directors?
Question: I am the new CEO of a nonprofit organization, replacing a prior CEO who had served for many years. My predecessor was not in frequent contact with the Board, relying mainly on the quarterly Board meetings to communicate with the Board and provide progress updates and financial reports. I plan to start making a lot of changes and I want to keep my Board fully informed with more frequent communications, but I am sensitive to the fact that they are busy and are not accustomed to communications from their CEO between Board meetings. What is the right balance?
Answer: Providing monthly Board reports that include financial reporting and progress updates is an established best practice, and this is especially recommended during periods of change and for organizations whose Boards meet quarterly or less frequently. However, CEOs and Executive Directors must be thoughtful about the frequency and their method of communicating with the Board. Providing updates more often than monthly is usually only recommended in unusual situations.
Most Board members understand that financial reports must be prepared and distributed on a regular monthly basis. However, that same level of acceptance does not always exist for the ocean of other information that needs to be communicated to Board members. Unlike financial reporting, where it is hard to be accused of overreporting, other forms of communication can be overdone. Sending frequent reports, emails, making phone calls, and other updates to the Board can quickly turn cumbersome, and even annoying, if respect for people’s time and interest is ignored. Consequently, effective CEOs and Executive Directors must give careful thought to how they are reporting to the Board, how Board members are contacted, and how often regular progress updates are sent.
To help you decide whether information is important enough to merit an update to the Board, try focusing your messaging on “key assumptions.” To be considered a key assumption, the information must be significant to the organization’s operations and mission, unexpected in nature, material related to financial impact, and require the fiduciary oversight of Board members. All four factors do not need to be present at the same time, but should always be considered when deciding whether the information or new circumstance rises to the level for additional communication to Board members.
I like to maintain a top ten list of important key assumptions. However, I limit my communications to the Board to only the top three or four high priority key assumptions that require Board member attention. Update the key assumptions list monthly and re-prioritize the list to keep the focus on the most significant issues that need Board member awareness and consideration.
Another important consideration is selecting the appropriate communication pathway for approaching Board members. In general, this comes down to three choices:
Through the Board chair
Through the officers, and
To all Board members.
Deciding which pathway to use can be a tough call, but you usually cannot go wrong by first reaching out to the Board chair and getting their insights and even approval to go to the next level. Bringing the Board chair into the decision-making process will help not only with strategy but also with assessing the significance of the communication.
Regarding the frequency of Board updates, the regularly monthly financial reporting schedule provides an excellent framework for reporting non-financial information. As discussed in Q&A #22, my favorite best practice is to distribute regular month-end financial reports to the Board that also contain major program and departmental performance and progress reports, including a report from the CEO. These reports provide an opportunity to include additional information, alerts, and progress updates that might not otherwise be there every month but takes advantage of a regularly recurring reporting schedule.
Regular monthly reporting (both financial and non-financial) in between Board meetings is appropriate for most circumstances. Communicating more often than monthly should be reserved for unusual and/or unexpected circumstances, and to expand information sharing with key officers like the Board chair or treasurer.
Planning Tip – When communicating with the Board, the selected method of communication (verbal, formal written report, or less formal email or text) will directly impact the effectiveness of the message. Select verbal when speed is of essence and immediate feedback is needed (for example, a key employee leaving). Use formal written memos and reports when the information is complicated with many details (for example, lease options for a new headquarters). Use emails and text messages when you just want to provide alerts and raise awareness about changing conditions, but no immediate action is needed (for example, an update that health benefit costs will be rising more than expected).
Finally, observe Board member attention patterns and periodically ask Board members whether the frequency of Board communications is appropriate. Strive to determine whether Board members feel overburdened (too much information) or in the dark (too little information). It is a good idea to selectively seek out opinions from individual Board members on this important topic to gauge their comfort zone. Board members will appreciate the interest and their feedback will be useful.
If you have a question you would like to submit to SE4N, send it to us using the contact form and we will consider answering it in a future post. Please do not send confidential information.
