Commonfund Shares Best Practices for Nonprofit Boards

May 1, 2014 ( - In addition to the mission-related and financial issues with which fiduciaries have always dealt, trustees of nonprofit organizations are now regularly required to make decisions in response to many other factors.

In a white paper, “Strive for the Best: Building and Maintaining an Excellent Board,” John S.Griswold, executive director, and William F. Jarvis, managing director, of the Commonfund Institute, contend excellent nonprofit boards of trustees are made, not born. They say four critical underpinnings must be in place to achieve excellence in board governance: capable leadership, sound organizational structure, attention to fiduciary duties and an overall culture that binds board members into a cohesive unit.

In the white paper, Griswold and Jarvis say the board’s role is strategic, not tactical. Its main task is oversight, in which it reviews and assesses management’s success in carrying out its job.

According to the paper, the board engages in active supervision of management and staff. This means setting standards that are clear and objective; being sure that position descriptions are known and understood; and ensuring that the actual running of the organization is well supervised by senior staff members.

Fiduciary principles require that the board guard the organization’s mission as it has been defined in its charter and bylaws, and not allow the organization to diverge from its original charter in impermissible ways. It is in defining the mission and monitoring progress that the board provides purpose and direction for the staff, while in its oversight duties it remains focused on governance and avoids becoming involved in operations, the authors of the paper say.

If conflicts of interest occur—whether with the trustees’ own interests or with the interests of another organization with which they are involved—policies must be in place to ensure that the conflict is disclosed and neutralized.

The structure of a board can help or harm its effectiveness and is important to improving a board’s performance. While there is no “right” size for all organizations, a guiding principle has become that smaller boards are generally thought to function better, particularly with respect to efficient workflow and process management, the paper says. The authors contend the single most crucial factor in the success of this model is the selection of the individual who will serve as the board chair, and perhaps the most critical task for the board is to select, hire, support, evaluate and, if necessary, replace the president or executive director of the organization.

Board orientation is the first crucial step. One highly useful practice is for an incumbent board member to be assigned to mentor an incoming trustee, thereby accelerating and smoothing the transition to a comfortable role on the board.

“The nature of trusteeship has changed in the new century.  Boards are being held to an ever-higher standard where getting by, muddling through or preserving the status quo no longer suffice”, says Griswold.  “How well a board functions determines, in large measure, the fortunes of the organization it governs. Mediocre or middling performance can allow an organization to survive, but rarely to thrive. Weak or dysfunctional boards may jeopardize the organization’s very existence.”

The white paper is available here.