“Never doubt that a small group of thoughtful, committed, citizens can change the world. Indeed, it is the only thing that ever has.” ~Margaret Mead
Social impact organization executive directors and founders depend on the organization’s board of directors to model the organization’s vision and values while setting the tone for the organization’s operations. Without a supportive and effective board, social impact organizations can easily become dependent on an individual leader. This reliance on one person hinders the organization’s ability to advance its mission. This relationship is why executive directors and founders must assign sufficient resources (including their time and effort) to building an effective board.
Who are the best people to recruit?
A typical response to this question is someone passionate about the social impact organization’s mission. A more effective strategy has been offered by CalNonprofits CEO Jan Masaoka. Her astute observation was that instead of looking for passion about the mission, we should look for enthusiasm for the work you expect the director to do on your board.
Additionally, many organizations seek wealthy, well-connected people who are expected to donate generously. It’s been argued by fundraisers that this is the essential condition of board service. This point of view has some validity because an organization can’t advance its mission without adequate financial contributions. However, it fails to consider two equally essential ideas: (1) whether the director candidate will dutifully fulfill the fiduciary responsibilities of a director and (2) how prioritizing wealthy a well-connected directors creates a significant power imbalance and continues embedded inequities.
A social impact organization’s board should be composed of directors who represent diverse backgrounds, experiences, and skillsets. This approach positions the board to support both the executive director and the organization. It’s not uncommon to hear board leadership declare the board needs an accountant, a lawyer, a program expert, a fundraiser, or other professionals. At the same time, boards seek a composition that reflects the communities the organization serves. Increasingly, boards strive to create greater diversity, equity, and inclusion (DEI). Many boards are expanding their attention beyond a singular focus on race. This more robust DEI strategy includes other, equally important categories like gender identity, disabilities, and sexual orientation and helps the board more effectively engage its community and advance its mission.
What is the correct number of directors on a board?
There’s no single best practice or one answer regarding the ideal number of directors on a board. However, having too few directors will significantly limit the potential ability of the board to contribute to the organization. Conversely, having too many directors may limit the opportunities to participate. Fewer opportunities to engage in discussions may lead to fewer directors participating at board meetings. Imagine a board of 50 directors, each trying to contribute to various matters before the board at a 2-hour meeting. Just a few directors will likely be heard, and others may feel excluded and stop regularly attending meetings.
All social impact organizations are different, and there’s no such thing as a typical organization. We frequently advise our clients to prioritize who they have on their board rather than how many. For startups organizations, we typically suggest a minimum of three to five directors at formation with the intention to increase the minimum to seven within the first year. This guidance isn’t meant to suggest an optimal number. The right number of directors will genuinely differ among social impact organizations for various reasons, including the type of programs, revenue model, the experience of staff, community context, etc.
How should a social impact organization recruit directors?
Usually, founders will engage their networks to recruit the initial set of directors for a new social impact organization. Though a founder may seek people who will support and agree with their decisions, they would be better served to consider directors who will practice independent judgment, bring a different point of view, and add to the conversation.
More established boards frequently use one or more board matrices to identify what backgrounds, qualities, skills, and identities they are pursuing. Using a board recruitment matrix can be effective, but there are a few pros and cons to consider. (see this BoardEffect article). An example of a specific risk that a board should be aware of when using a matrix is recruiting directors for the sole purpose of ‘checking a box’ or filing a category.
For most social impact boards, recruitment should be continuous. Strong prospects who fit the organization’s needs may not be available when needed. So the organization may benefit from implementing a values-based process that consistently recruits a pool of candidates. Having a pool of prospective directors allows for meaningful engagement before formally nominating them for consideration.
There’s a widespread practice of current directors using their networks to find candidates who fit the skills-based needs of the organization. This practice has persisted across a significant number of social impact organizations. Though this is has been a common practice for decades, it’s not an effective or acceptable policy. This half-hearted and ill-considered practice is a crucial factor for why social impact boards have made very little progress on racial (or any other type of) diversity.
Expanding the candidate pool and building greater equity in the recruitment process will involve engaging staff, participants, and other stakeholders, developing relationships with various allied organizations and creating sufficient space for sharing power. (see Leading with Intent 2017 report)
What type of orientation and education should be provided?
Both a solid candidate and a newly elected director should receive robust orientations. The candidate orientation should give the prospect a substantial understanding of the social impact organization’s mission, values, vision, core activities, and culture, as well as the expectations of its directors. It should provide the organization with a clear idea of how the candidate may contribute as a director. The newly elected director orientation should go deeper into the board’s role and give the new director more comprehensive information about the organization’s governance policies, governing documents, financials, programs, committee structures, fellow directors, key staff, and meeting logistics.
Regular workshops (possibly annually) should also be provided to the board on the roles of the board, fiduciary duties and how to meet them best, and relevant legal and policy issues. Additional periodic workshops on financials, programs/operations, and fundraising should be offered.
What are the roles of the board?
A board of directors governs a social impact organization. As a group, the board is ultimately responsible for the management and direction of the organization. One of the board’s primary roles includes, but is not limited to, oversight. Oversight should be considered beyond financial. The board should be engaged with reviews and assessments of the organization’s mission, vision, values, programs, and impact. It should also be concerned with board and executive performance, legal compliance, governance, and other policies. Another area of focus for a board is engaging stakeholders, including funders, donors, supporters, partners, and vendors.
Additionally, the board should actively plan and implement the organization’s future course. Further, the board should protect the organization’s assets from misuse, diversion, or waste through oversight, policies, and accountability.
What are the duties of a director?
Each director on a board must be committed to the fiduciary duties of care, loyalty, and obedience to the organization. These duties require the director to participate actively and stay informed about the organization’s direction and management. The minimum expectations for a director are:
- Attend board meetings regularly;
Ensure you receive ample information before taking board action (request materials and ask questions); - Review all information provided in connection with board meetings, especially information for any anticipated board action;
- Be familiar with the organization and its legal structure, including the articles of incorporation, bylaws; exempt purposes characterized in its exemption applications and governing documents; activities, and key stakeholders;
- Be aware of, and share with the organization’s leaders any external influences that may help or harm the organization;
- Review the mission, vision, and values of the organization with other vital stakeholders;
Maintain confidentiality; - Avoid actual or perceived conflicts of interest that would result in harm to the organization;
- Ensure that all your actions as a director are in the best interests of the organization even ahead of your interests;
- Understand and actively assure the organization’s compliance with all applicable laws.
How does a social impact organization let go of a director?
At times, building an effective board may require removing a director. Removing a director can be challenging, and many boards do not have the stomach to remove a director apart in the most intolerable circumstances.
The board’s power to remove a director varies, depending on state law and whether the organization has a voting membership structure. In California, for example, the Code offers little guidance regarding the board’s authority to remove a director for cause, beyond certain circumstances where the board can declare a director’s position vacant. This type of removal might require the board to prove cause and defend itself from defamation charges.
This lack of guidance and inherent risk is why boards might prefer to remove a director without cause. Removing a director without cause can occur if stipulated in the organization’s bylaws.
A far more appealing option may be a director’s voluntary resignation. In some cases, a discreet, private conversation with a director, sweetened with an advisory committee position or an honorific title like emeritus director, may provide a director a way to resign with a sense of dignity. However, not every parting merits the organization to be cordial. So boards should balance proper governance, public relations, fundraising, board culture, and possible litigation when considering the removal of a director.
How does a social impact organization advance Diversity, Equity, and Inclusion?
To genuinely be integrated into the governance and operations of the organization, the board must embrace these principles and values.
Practical action steps include:
- Identification and evaluation of undesired gaps and discrepancies in policies, practices, and programs concerning certain identity groups;
- Development of plans to address identified gaps or disparities; and
- Allocation of abundant resources to implement these plans consistent with the organization’s core values.
