Research shows that too often nonprofit board members lack the skill set, depth of knowledge, and engagement required to help their organizations succeed.
Becoming a Nonprofit Board Member Can Be Challenging and Rewarding
The nonprofit sector is the third largest industry in the United States, with over 1.5 million tax exempt organizations registered with the IRS. These organizations account for close to 10% of all wages paid in the US and are responsible for 5.3% of gross domestic product (GDP). Most of these nonprofit organizations have a volunteer board of directors, a very challenging and hopefully a rewarding experience for the nonprofit board member and organization.
What Does It Take Become A Nonprofit Board Member?
Being on a nonprofit board is an honor, there are important obligations and responsibilities that each member must understand. Each board member should bring unique skills, talents and resources to contribute to the board as a whole. By working together for the good of the organization , the board can support the organization’s work in the community, provide necessary resources, advise the organization on financial and legal matters and help the organization be more sustainable through investment in infrastructure and fund raising.
Nonprofit Board Members Have Shortcomings
Unfortunately, a new survey conducted by the Stanford Graduate School of Business shows that nonprofit boards often lack the skills, resources, and experience required to meet the needs of the organizations they serve. The survey of about 900 nonprofit board directors, conducted in collaboration with BoardSource and GuideStar, found that a significant number of directors (27 percent) don’t believe their fellow board members have a strong understanding of the organization’s mission and strategy. Sixty-five percent reported they don’t think their board is very experienced, and about 50 percent don’t think their colleagues are engaged in their work.
Our research finds that too often board members lack the skill set, depth of knowledge, and engagement required to help their organizations succeed.
David F. Larcker
Stanford accounting professor and lead researcher
Game On for Nonprofits to Succeed in Fulfilling Its Mission
In the current economy, there are increasing demands on nonprofits that outpace their ability to provide services and fulfill their mission. First and foremost, the board must develop a strategic plan that addresses the feasibility of the organization’s mission and what it will take to execute that mission.
Board members must understand what the total costs of doing business are, including overhead, program and fund raising costs. This is where board members can shine. They have the opportunity to replace the myopic thinking that they can’t spend money on administrative needs. Bob Ottenhoff, former President of Guidestar likened this thinking to “choosing a nonprofit for low supporting costs is like choosing an airline for low maintenance expenditures.”
Requirements for Nonprofit Board Members
- Board members need to convey to donors and funding sources that contributions to cover general operating costs are not necessarily a bad thing. In fact, they are more beneficial than some restricted grants, and that “overhead” is essential for the efficient operations of the organization.
- Board members must be able to convey the importance of funding an investment in overhead is essentially the same as funding the mission.
- A nonprofit board member must be active, involved and invested in their role as overseers of the organization.
- They need to be motivated by the nonprofit’s mission’s and its impact on the community.
- They need to bring special skills and strengths to the board governance. If your profession is accounting, then you should have an in-depth understanding of nonprofit accounting and how it is different from for profit accounting.
- Nonprofit board members need to set specific goals on what you want to accomplish. A board member cannot be complacent to accept the status quo, they need to set goals for strategic planning, raise the bar on fund raising and engage in community outreach on behalf of the organization.
Having a effective board will ultimately strengthen, and transform the entire community.
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