Best Practices in Nonprofit Board Governance in Canada
(May 5, 2006) The first national study of Canadian nonprofit boards of directors provides an overview of current practices and identifies key strategies in creating a fully engaged board.
Conducted by Strategic Leverage Partners Inc. in conjunction with the Centre for Voluntary Sector Research and Development, The National Study of Nonprofit Governance Board Practices in the Nonprofit and Voluntary Sector in Canada provides a wealth of data about how nonprofits across the country approach board governance.
The study also addresses the key challenges nonprofits are facing and their impact on board governance, as well as current governance trends and their implications for nonprofit boards.
The study is not meant as a performance tool for nonprofits, given their diverse nature and widely disparate group of stakeholders. However, several clear themes emerged in the areas of leadership, recruitment, succession planning, role clarity, education and development, accountability and stewardship, culture, board meetings, strategic planning, performance measurement and risk management. The study includes strategies and tactics, as well as examples of best practices.
Surprisingly, a couple of concerns that have been discussed recently in the sector did not emerge as larger issues: the challenges that boards face with regard to the long-term sustainability of their organizations and the importance of liability as an issue in recruiting board members.
Fully Engaged Boards
One of the key themes that emerged from the study is the difference in responses from organizations with fully engaged boards and those with a number of board members who were not engaged. Some of the characteristics of fully engaged boards include:
- Their policies provide sufficient guidance to the board to govern the organization properly, are reviewed on a more regular basis and are publicly disclosed.
- Their board members are better able to read and understand financial statements, are required to sit on at least one committee and require less lead time to carry out their responsibilities effectively.
- They spend more time on board education and development, and the person responsible for briefing the board is effective.
- They conduct formal board evaluations and evaluate their CEOs based on preset criteria.
- They have formal risk management and crisis management policies and have assigned risk management and crisis management responsibilities to a specific individual or group.
- They have a strategic vision for the organization and have translated their strategic goals into measurable objectives and benchmarks for the board to monitor.
- They set annual objectives for the board, and the board or its committees follow a well-delineated work plan that outlines how the board will achieve its goals. The work plan becomes the board’s agenda for the year.
- They spend more time at board meetings in lively debate of strategic issues.
- Their board meetings are not dominated by one or two people.
- They operate with a balanced budget.
The study goes into greater detail on each of these best practices and provides specific strategies for large and small organizations where applicable.
About the Study
The National Study of Nonprofit Governance Board Practices in the Nonprofit and Voluntary Sector in Canada used a variety of different methods to survey nonprofits and gather information:
- A nationwide web-based survey distributed to 15,000 nonprofits, with more than 1,300 responses
- Focus groups in Toronto, Ottawa and Halifax that included nonprofit leaders
- Key informant interviews (discussions with five governance experts)
- Leadership commentaries (individual interviews with nonprofit, academia and governance experts)
- Community roundtables in Edmonton and Montreal focusing on smaller, grass-roots and community-based nonprofits
The study and an executive summary are available on the Strategic Leverage Partners website. The documents are free, but individuals must submit information about themselves (organization, title, email) in order to download them.
Strategic Leverage Partners Inc., based in Toronto, Ontario, is a boutique management consulting firm specializing in board effectiveness.
The Centre for Voluntary Sector Research and Development is a partnership of the voluntary sector, the Faculty of Public Affairs and Management at Carleton University and the Centre for Governance at the University of Ottawa. The centre is committed to encouraging original and applied research that is dedicated to the voluntary sector; founded on practical co-operation between practitioners in the sector and members of the research community; sustained by a commitment to social justice, democracy and diversity; and designed to produce rigorous inquiry and work of the highest quality.