Nonprofit board service creates stronger communities. However, it’s common for board members to unknowingly commit “board blunders:” well-intentioned mistakes that cause poor outcomes.

At face value, the top 10 “board blunders” seem like good things boards should do but upon closer examination, they can be barriers to success. Here’s how to recognize blunders and work to avoid them.

Fiduciary Responsibility

Recognize Blunder: Many think fiduciary responsibility is only financial stewardship. When viewed more broadly, the board is responsible to ensure that the mission continues as long as the need exists.

Avoid Blunder: Mission statements should be reviewed for relevance every three years. Boards should fundraise to ensure adequate resources and/or identify collaborative strategies to sustain the mission.

Financial Management

Recognize Blunder: While good financial stewardship is important, a “we can’t afford it” mindset limits good decisions, hindering appropriate planning and leading to poor outcomes.

Avoid Blunder: Boards should ask, “what do we need?” Then, build a case for support for the resources needed and raise the funds required. Serving the needs of your organization is more important than following a strict budget.

Conflict of Interest

Recognize Blunder: Conflicts are acceptable when they are managed appropriately. Board members should not disclose confidential information or participate in discussions/decisions where conflicts of interest exist.

Avoid Blunder: Every organization should have a conflict of interest policy. Making Conflict Disclosure a standing agenda item at the beginning of each meeting, while documenting the names, nature of conflicts and abstentions in the minutes are effective strategies to manage conflicts when they occur.

Relationship with Staff

Recognize Blunder: Misunderstanding the board and staff relationship often keeps organizations stuck wondering who is supposed to lead. This can cause overstepping or lack of action entirely.

Avoid Blunder: The Executive Director (ED) or CEO should articulate an institutional strategy for the organization and provide board support, ensuring that board members’ attention is on policy and strategy. The board should work effectively with the ED, set performance criteria, react to the ways staff expects to achieve goals and monitor agency performance as a whole.

Management Authority

Recognize Blunder: When roles are blurred, confidence in an ED wanes or during times of crisis, it’s easy for micromanagement to occur. Some board members believe they serve to share their expertise and perform technical/management functions the organization can’t afford. Others believe it’s their job to tell the ED what to do and how to do it.

Avoid Blunder: Board members should provide oversight, not micromanage. When they act as management service volunteers, they are individuals who just happen to be board members; it is not a board role. Additionally, the work should be requested by the ED. Hiring a consultant or asking an expert for a few hours of pro bono consulting is often a better approach and can help ensure members are properly performing their governance role.

Encouragement & Support

Recognize Blunder: While boards should support strategies developed by staff, “rubber stamping” (approving without proper consideration) sometimes happens when board members are disengaged.

Avoid Blunder: Boards should challenge ideas and ensure the right decisions are being made, even when using consent agendas.

Honoring Tradition

Recognize Blunder: Honoring tradition is important, but it can easily excuse the fear of change. “We have always done it this way” are the seven most expensive words when they become a barrier for success.

Avoid Blunder: Boards should encourage innovation and ensure that the organization appropriately adapts to changes in the environment.

Contributions

Recognize Blunder: Nonprofit board members volunteer their personal time to serve on the board and are not compensated, therefore, they don’t believe they need to give a monetary contribution as well. Board members may express, “I give my time, I don’t have to give my money.”

Avoid Blunder: Today, funders and donors evaluate organizations on the financial commitment of board members. Boards should create a culture of commitment to financial support, each giving an annual “stretch” gift based on financial means, even if it’s only $5.

Understanding Nonprofit Tax Status

Recognize Blunder: Some erroneously believe that all nonprofit funds must be spent every year and that the organization isn’t allowed to have an excess of revenue over expenses.

Avoid Blunder: Nonprofit is a tax status, not a business strategy. Boards should ensure that the agency generates enough margin (excess revenue over expenses) to operate all programs and services, run the “back office operations” with required technical expertise, fully fund depreciation and invest in new program/service development.

Respectful Behavior

Recognize Blunder: While debate and even conflict should occur around strategic issues, board members are often “too polite” to hold others to participation and behavior standards for fear of hurting feelings.

Avoid Blunder: The board’s Governance Committee should conduct self-evaluations every two years and talk candidly about needed performance improvements.

Many boards will experience some or all of the top 10 “board blunders”. Although well-intentioned mistakes can wreak havoc on your organization, it’s possible to turn them around and achieve high performance.

Do you feel like you need help following appropriate governance strategies? Strategy Solutions is here! With more than 20 years of experience, we’ve worked with both nonprofit and for-profit sectors through organizational change and growth.

Debra Thompson and Jacqui Catrabone are licensed consultants, trainers and peer reviewers for the The Standards for Excellence:® An Ethics and Accountability Code for the Nonprofit Sector. Contact us with any questions today.