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How to Determine the Boundaries of the Nonprofit Board and ED

by Michael Davidson

The Challenge
The distinction between the governance and oversight responsibilities of the board and the management responsibilities of the Executive Director is clear in theory but very unclear in practice.

managementFor every functional area there are both board oversight and management implementation responsibilities. These are, however, overlapping circles. There are areas in which authority and responsibility are clear but areas of overlap which require creative negotiation.

To the extent that one side does not occupy their part of the circle, the other may expand their authority to fill the vacuum. This is the best case scenario. The worst is where responsibility falls between the cracks.

“When boards micro-manage it is almost always because they have not been given the chance to macro-govern.”
Richard Chait, Fisher Howe. The Nonprofit Leadership Team. Jossey-Bass, 2004, p.47

How can we define the different areas of responsibility so that the Board’s oversight role adds value to the pursuit of the mission, in addition to meeting the legally required fiduciary duties?

Conceptual framework
A useful starting point for defining the board responsibility to “set policy” and “provide oversight,” is provided by John Carver’s Policy Governance paradigm. Boards That Make a Difference.

Ends Policies
(Adapted from Carver)

The board will direct the Executive Director to achieve certain results, for certain recipients, at a certain cost, through the establishment of Ends policies.

Only decisions of the board acting as a body are binding upon the Executive Director. Decisions of individual board members, officers, or committees are not binding, except in rare instances where the board gives specific authorization.

As long as the Executive Director uses any reasonable interpretation of the Ends policies, the Executive Director is authorized to make all further decisions, take all actions, establish all practices, and develop all activities.

The Executive Director shall provide regular reports on progress towards the Ends policies. .

Limitations Policy
The Executive Director shall not cause or allow any activity or decision that is either imprudent or in violation of commonly accepted business or professional ethics.

Total Activity Analysis
The devil, of course, is in the details. For any given decision or activity, how do we determine whether it is a matter of “policy” or of “implementation?”

Total Activity Analysis is a way to reach operational agreements between board and staff about their respective roles.

Board and staff are asked to complete the following chart, assigning percentages of board and staff responsibility for each functional area and, most importantly, to describe the specific board activity that this percentage would represent.

image
Adapted from, Harris, Margaret. Exploring the Role of Boards Using Total Activity Analysis. Nonprofit Management and Leadership, Vol. 3, No. 3, Spring 1993

The work
The discussion of this exercise can provide a framework for an ongoing process of determining the governance work and how the board can most effectively advance the mission. 

Michael Davidson, is a consultant specializing in nonprofit board development. He is the former Chair of Governance Matters and lead consultant for the BoardServe NYC program of the United Way of New York City. 

Please note that we will be taking next week off for the Labor Day Holiday.