Armanino Blog

How to Be An Effective Nonprofit Board Member

by Dean Quiambao
August 31, 2018

As a new board member, or someone considering joining the board of nonprofit, you might ask yourself, “How can I best help this cause?”

Rest assured: Your fellow board members and executive leaders want to know the same thing. Finding effective board members is a perennial challenge. In fact, a majority of nonprofit directors responding to a Stanford Business School survey said their fellow directors are not very experienced or very engaged in their board work.

So how can you be one of the engaged board members? Ask questions—even when you aren’t sure they are the right ones or fear they may be dumb―advise the authors of a recent McKinsey Quarterly article. If you know how to probe, you can help your board perform better. Keep asking until you figure out what the smart questions are, then demand answers to those.

New board members sometimes hold their tongues because they don’t want to rock the boat, perhaps assuming that the organization just wants their financial contribution. But the most effective nonprofits foster innovation in the boardroom by creating an atmosphere that is welcoming of critical discussion and new ideas.

What to ask

Here are three questions we recommend you ask during your next board meeting.

  1. What is the state of our nonprofit’s “fuel gauges”?
  2. A nonprofit’s board is responsible for making sure the organization has the resources it needs to fulfill its mission—from the right type of people to strong liquidity and cash flow to keep it financially resilient.

    Ask your CFO about the state of the organization’s operating reserves and how they compare to industry standards. Does the organization have enough to get by for at least six months, or even better, for a year or more? Is cash accruing to the organization on an annual basis, or is it draining away?

    The best boards are unapologetic in their adherence to these business fundamentals. However, this doesn’t mean they spend their time combing through the budget. Let the CFO worry about those financial minutiae. Your time and attention should be focused on the trajectory of the organization.

  3. What risks are on the horizon?
  4. Next, engage your board members and executive leaders in a discussion about risks. Explore events on the horizon that could derail the organization and how you will mitigate them. Is a federal grant coming to an end? Investigate new sources of funding that can fill the gap. Is the changing regulatory climate causing your constituents to need more support from your organization? Consider ways to extend your reach, such as through partnerships with other nonprofit and for-profit organizations that serve the same constituents.

  5. How can we improve our mission impact?
  6. As a new board member, the greatest value you can contribute does not come from your pocketbook. It comes from your unique combination of talent, experience and connections. Trust your instincts and bring innovative ideas to the table, even if they’re out of the ordinary.

    For example, one Bay Area school took a chance on a unique investment idea brought up by a board member, and it reaped extraordinary results.

    When venture capitalist Barry Eggers’ kids became obsessed with a new app in 2012, he took notice and decided to participate in the first round of investment in the startup, known as Snapchat. As a member of the finance committee of Saint Francis High School, he also saw the opportunity to help the school achieve its goals—one of which is to make education at the school more affordable to more people in the surrounding community.

    He convinced the high school to invest $15,000 from a school development fund in the company, and that seed money turned into $24 million when Snapchat went public last year. That windfall will fund quite a few scholarships for deserving young students.

What’s my motivation?

There is one more critical question that you must ask yourself: Why did you join this particular board? Taking an active role as a nonprofit board member takes time and effort away from your day-to-day responsibilities, so you must be very clear about your motivation.

If you joined to fulfill someone else’s expectations—your employer, family members or even society at large—you might be less inclined to invest your intellectual and emotional capital. If you passionately believe in the organization’s mission, however, then be willing to ask the tough questions and tap into your unique talent, experiences and insights to find ways to move the organization forward.

August 31, 2018

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