How Not-For-Profits Can Improve Governance | DDA
Good governance is critical to the success of any organisation. Ensuring the financial viability of an organisation and making sure it’s on track with its purpose and mission are key elements of effective governance for not-for-profits (NFPs). While this may seem simple enough, add in loosely defined roles, expectations and responsibilities – often common to NFP boards – and good governance can be difficult to maintain.
While not all NFPs are the same, there are some proactive measures you can take to make sure your organisation is practising good governance. Here’s how.
Ensure clearly define roles, responsibilities and expectations
A board member can take on many roles in governing an NFP – from advocacy to fundraising, operations and public profile appearances. Members join NFP boards as a way to serve a greater purpose, but often without any knowledge of the role they’re supposed to play. This then can lead to overlapping responsibilities, scoping issues and board ineffectiveness.
Clearly defining the roles, responsibilities and liabilities of board members with documents like a ‘Letter of Appointment’ can be a simple way to curb this. Documents like these set out details such as: duties, how and why they were nominated, the term of their appointment, capacity (e.g. volunteer) and their role on the board.
Diversify your board selection
When it comes to decision making, having a diverse board selection can help bring new solutions to light, and make sure that all voices are accounted for. From a cultural perspective, having community members – that the NFP is serving – onboard can help to unlock resources like donors and networks, while ensuring decisions align with cultural nuances.
From an efficiency perspective, having a good balance of skillsets can help make sure the organisation is thriving in all areas. A well-balanced board should have:
Proficiency in legal and risk management
Be purpose driven
The purpose for an NFP’s existence is usually summarised within the objects of the constitution. With this in mind, the mission and purpose of the organisation should be the backbone for how a board governs and measures success. Being purpose driven will have a trickle down on effect on stakeholders, including donors and volunteers, helping to create a top-to-bottom culture that practises what the organisation preaches.
However, boards shouldn’t just set and forget. It’s important to review whether the mission and purpose of the organisation is still appropriate and relevant, and whether milestones are being met every 3-5 years, ensuring the organisations strategic plan remains relevant and up-to-date.
Don’t be afraid to bring in help
While good governance is important, putting these processes in takes time – a precious commodity at all NFPs. This is where Dickfos Dunn Adam comes in. We understand that NFPs come in many shapes and sizes, and as part of our audit services we provide recommendations for improved governance against acknowledged good practices and principles within your organisation. Get in touch with us today to find out more.