Tuesday, August 30, 2011

Myths About Nonprofit Boards

The “Blue Avocado newsletter,” recently published 10 myths about nonprofit boards from Board Café. Below are a couple of those myths I wanted to share.

Myth#3: The board and the executive director should have such a good working relationship that the board never needs to go into executive session.

Reality: Executive sessions are important for:
• ED evaluation
• Airing of tentative views
• The board’s gaining a sense of itself

And whether or not the executive director is a member of the board, the board always has the authority to go into session without staff present.

Myth #4: The annual approval of the budget is the cornerstone of the board’s financial oversight.

Reality: Budget approval is often a meaningless act. Most of the time board members can’t be familiar enough with details to know whether the income is accurately projected and whether the expenses represent sound choices.

• Give guidelines to staff for where the organization needs to be financially at the end of the year
• Focus on monitoring through the year rather than trying to ferret out details in a complex budget before voting to approve it.

Kathy Grochow, NRS, St. Cloud

1 comment:

Kate Barr said...

I'm glad you highlighted both of these, Kathy! I am on one board that has an executive session at the end of the agenda for every meeting. We occasionally talk about sensitive issues, sometimes about board development, and often don't have anything, but having it on the agenda takes away any alarm that might be implied by having an executive session. No matter how good the ED-board relationship is, it's important to remember that they are different roles. Your myth about the budget is absolutely right. Governing requires looking into the future and thinking about big picture financial questions, not details of expense line items.