Nonprofit Governance: Challenges, Models, and Best Practices

Nonprofit governance ensures that your organization’s activities align with its goals. However, board members who lack experience, awareness, and an understanding of their responsibilities can ultimately harm your mission. 

While this is definitely a problem, there’s nothing you can’t fix. Here’s your fact-packed guide to nonprofit governance with working tips, best practices, and software solutions that can improve it. But let’s start with identifying its models first.

Models of nonprofit governance

Nonprofit organizations (NPOs) use different kinds of nonprofit governance, depending on their structure, the services they provide, and their revenue-generating methods. Your board of directors (BOD) may choose to adopt one of the following models:

  • Advisory model. A volunteer board that helps the CEO with advice on marketing, fundraising, accounting, and other activities.
  • Patron model. The members manage the fundraising events, run promotional campaigns to gain outside contributions, and invest their funds in the NPO.
  • Management team model. The BOD is split into several fundraising, marketing, management, human resources, and finance management committees.
  • Policy model. The CEO has the most power, but board committees are continually evaluating their performance.
  • Cooperative model. The board governs the organization without a CEO, with each member having equal voting power and accountability.
  • Community engagement model. The community takes part in the decision-making. This model is common for organizations that serve specific populations.
  • Hybrid models. The board can combine models. For example, the patron board can seek fundraising from local communities by allowing them to participate in the governing process.

Whichever you choose, make sure it’s a good governance model for your nonprofit. This is your first step to avoiding common oversights. 

What are the common mistakes in governance?

Let’s see what mistakes you may encounter during the governance process.

  • Lack of awareness. Board members may be unaware of their responsibilities and the implications of running a nonprofit. That’s usually the result of outdated documentation and lack of experience.
  • Diversity problems. NPOs often recruit friends and business partners, ignoring their areas of expertise and skills. This can create severe gaps in knowledge and one-sided opinions.
  • Low engagement. Members should know why the organization is effective and what separates it from other nonprofits. If they don’t know how to pitch your NPO, they won’t raise public awareness or attract fundraisers.
  • Conflicts of interest. Unclear regulations and lack of expertise can result in unresolved conflicts of interest and potential legal consequences.
  • Inefficient meetings. Meetings can drag on without suitable results, without an agenda, practical guidelines, and a centralized document exchange platform.
  • Security problems. Without a strict confidentiality policy and robust data security, nonprofits may suffer from data leakages and subsequent reputational or financial damage.

Now that you’re familiar with the mistakes, the next logical question would be, how do you avoid these pitfalls and improve your governance?

Ways to improve governance in nonprofit organizations

Effective control requires clarity, transparency, and expertise. They are the three pillars of every best practice that will strengthen your board’s workflow.

Outline responsibilities

Create detailed job descriptions for board members. Members or committees can be responsible for meeting attendance, volunteering, events, or community outreach. You can also set expectations for how much members should bring to the table (personal investments, new fundraisers, or connections).

Up-to-date descriptions ensure that everyone knows their roles. Additionally, a succession plan will help cement and instill good practices and responsibilities as members of the BOD change.

Prepare supporting documents

Board members are expected to generate revenue, and you can turn your members into effective fundraisers using:

  • Manuals (vision statements, annual reports, marketing materials)
  • Elevator pitches (factsheets about the organization’s top strengths and success stories)
  • One-pagers or business cards (with a link to a landing page or a social media account)

Explore new ways to showcase your organization and teach your members how to market it effectively.

Conduct regular reviews

Good governance requires assessment. Automate this process by letting members provide feedback during surveys and polls.

On top of that, you should:

  • Organize peer-to-peer board member evaluations
  • Let the CEO analyze the effectiveness of the BOD and its practices
  • Hire an outside consultant to conduct a full-scale audit

Regular reviews can strengthen the discipline inside an organization and optimize the governance.

Hire outside help

Do you want to adhere to government regulations and keep the documentation transparent? Legal advisors and accountants can help your NPO mitigate risks, fill gaps in knowledge, and complete the annual IRS 990 forms that accurately reflect your activities.

Streamline board meetings

You can speed up meetings and make them more efficient by following these practices:

  • Build a consent agenda and move pressing items to the top
  • Focus on the outcomes in the meeting minutes (protocols)
  • Streamline assessment and review processes for remote meetings

NPOs can improve management, automate recording, and protect data with virtual boardroom platforms.

Simplify governance with virtual boardroom software

Boards must share large amounts of information to ensure productive governance. However, advanced virtual board portals for nonprofits can help you:

  • Share agendas, regulations, and policies to members
  • Generate meeting minutes automatically
  • Audit logs for each action to ensure compliance
  • Review and approve documents remotely with electronic signatures
  • Find crucial data fast with the full-text search feature
  • Secure your data with military-grade encryption, role-based permissions, two-factor authentication, and dynamic watermarks
  • Improve communications using real-time chats, voting, annotation, and scheduling management features

Virtual board portals can cut needless bureaucracy to let you focus on critical tasks during online and offline meetings.

Conclusion

When done properly, nonprofit governance allows these organizations to be more productive, sustainable, and more inclined to receive donations or bring in money through fundraising. And there is no doubt that with the right software and proven practices, you can maintain an effective workflow for your board.