What difference do boards really make to nonprofit organizations? What is governance anyway? How can boards add value to organizations? How can we evaluate their performance? What do you think about the “policy governance” model? What are the alternatives? These are some of the questions about boards repeatedly expressed since the early nineties.

In 1999, I embarked on research to explore these and related questions in more depth. Numerous scandals in high profile organizations in North America over the previous decade had been attributed to failed governance and spurred demands for more effective and accountable governance.

Aggressive promotion of the Carver “policy governance” model had prompted many boards and executives to attempt to implement it. Many found that it was simply not a comfortable fit for their organization, so they “mixed and matched” with other models, without a systematic rationale.

In fact, the Broadbent Panel reported in 1999 that it was “rare to hear from an organization that had not reviewed or redesigned its governance and that most saw improving organizational governance as an ongoing concern”. However, the report went on to say that “such redesign was often approached as trial and error since there are few standards, published best practices or guides to assist organizations.”

Approximately 9% of the two billion volunteer hours that Canadians provided to nonprofit organizations in 2003 was devoted to governance, according to Statistics Canada. That’s a lot of folks in some 160,000 nonprofits across the country engaged in seeking improvements to their governance, which is too important a function to trust to trial and error.

A review of the literature led me to conclude that alternatives to the Carver “one size fits all” model were not broadly known nor lodged within a coherent framework that would guide their appropriate use. During 2000-2001 I conducted indepth case studies on the governance practices of 20 nonprofit organizations across Canada to identify commonly used governance models, factors that influenced their approaches to governance, common indicators of boards in trouble, and common keys to successful governance and organizational performance.

My research identified several theoretical models currently used by nonprofit boards in Canada. They fall on a continuum of heavy involvement in operations (usually in small organizations with little or no staff) to those with little or no operational involvement (usually in larger organizations with a CEO).

They also differ in the distribution of responsibilities and decision-making power, their primary focus, how members are selected, and their use of committees. It is important to note that these models are descriptive rather than prescriptive, and that their characteristics are not always mutually exclusive.

Many boards have hybrid approaches that draw on two or more of these models or, as I prefer to call them, board types. Nine basic board types were identified: operational, collective, management, constituent representational, traditional, results-based, policy governance, fundraising and advisory.

Description of a core of generally accepted best practices also provides useful guidance for boards. However, an important caveat is that many behaviours that could be considered best practices for one type of organization might not be so for another.

For example, the success of smaller organizations may depend largely or entirely on board involvement in management or staff functions, while the complexity of larger organizations, many with professional mandates, makes such direct hands-on involvement by board members inadvisable and impractical.

Local organizations are usually more directly accessible to board members, allow for more frequent meetings and a closer proximity to operations. Geographic distance (and budgets) may limit the frequency of board and committee meetings in provincial or national organizations, which in turn may limit direct involvement in staff work, though many CEOs of national organizations report frustrations with boards that drift into micro-management because they understand (or prefer) management and staff functions better than the governance role.

There is ample anecdotal evidence that the work of nonprofits usually continues in spite of flawed governance. The job still gets done. Yet there is also evidence that governing boards can enhance organizational performance by understanding and undertaking the governance role in a manner suitable for their particular organization. They carry the public (or membership) trust and provide an accountability structure for management.

The traditional board with delegated management and board committees structured to parallel management functions was the most common discovered in my research. However, most of the remaining organizations used hybrid approaches created by applying practices drawn from two or more board types to different aspects of their mission (eg public or member service, research, education, advocacy, etc) or responsibilities.

They typically drew on the Carver “ends/means” distinction to assist them in clarifying the respective roles of board and staff, but superimposed this on the traditional or other models. This clearly indicates a very dynamic process for governance design. But the outcomes often lacked focus and coherence and often didn’t provide sufficient clarity of roles and responsibilities to ensure that the boards added value.

Most nonprofit leaders know that every organization has its own culture and unique set of circumstances. The challenge is in understanding the factors that need to be considered in designing a governing system that works best for an organization. The case studies revealed that determination of an approach that’s right for a particular organization clearly requires more than selection from a menu of available alternatives. It requires a creative application of practical knowledge, knowledge that many directors and CEOs don’t have.

The factors most important to determining an organization’s approach to governance (and degree of board involvement in operations) appear to be its “ownership” structure, the size and complexity of the organization, the timing and nature of critical events, transitional phases in organizational development, and personal or political agendas of board members.

Identifying “owners” is essential to establishing proper accountability mechanisms and open lines of communication with stakeholders. Primary owners are those who elect or select the board, those with the right to hire and fire the directors. There are, of course, other key stakeholders such as funders, donors, consumers, staff, volunteers and the broader public, who are owed varying types of accountability.

As organizations grow in size and complexity, they must necessarily become more formally structured. Some form of hierarchical management must be introduced in order to make management manageable. This will inevitably create some distance between the board, staff and clientele of the organization, requiring the board to adopt proxy measures of organizational performance rather than relying on direct observation.

Failure to make a successful transition to new governance practices as an organization increases in size inevitably leads the organization into serious problems.

Critical events (eg financial crises, serious public controversy or labour relations disputes) and transitional phases (eg departure of the CEO, significant board turnover, major budget expansion or contraction) tend to draw boards into operational and management functions from which subsequent withdrawal is difficult. Experience suggests that boards that intrude upon key management functions during crises seriously risk undermining the CEO.

A director’s pursuit of a personal or political agenda at odds with the best interests of the organization tends to cause board interference in management.

Perhaps the most difficult thing for volunteer board members to do is confront board colleagues who may be in conflict of interest or in interpersonal conflict with other directors or who are pursuing personal/political agendas that may interfere with the nonprofit’s best interests. The board chair is responsible for managing the board’s conduct and facilitating the resolution of conflicts. Failure to address such issues doesn’t mean that the problem will go away. It’s more likely to lead to an exodus of productive directors and competent senior managers.

Operational, collective and management boards may be functional for smaller organizations but they are inappropriate for any board that has delegated management responsibility to a CEO.

While constituent representation is a discrete model in itself, it is also often a dynamic within other board types that can deflect directors from their primary responsibility to the overall interests of the nonprofit for which they carry stewardship responsibilities.

The advisory approach to governance is fraught with risks to personal liability of directors and the organization itself. Others have referred to this as a rubber-stamp board. None of these approaches is recommended for the typical mid-sized nonprofit.

So what choices are left for mid-sized and larger non-profits?

Many of the traditional boards in the research sample suffered from absence of a clear delineation between governance and management roles. Committee structures (finance, HR, programs, PR, etc) that parallel management and operational functions invite board intrusion into operational detail. Meeting agendas typically mimic this structure. The absence of a clear focus on results impairs board ability to add value to the organizational purpose and account meaningfully to key stakeholders.

Many boards that have attempted to implement or adapt the policy governance model have found it is too complex to understand and implement, requires too much time and training, creates too much distance between the board and organization and erodes board control and accountability.

Many have expressed concern that it creates a dichotomy in the full board/CEO partnership that is essential to effective governance and organizational performance. Nevertheless, Carver’s distinction between ends and means has assisted many organizations in clarifying the respective roles of board and management.

A dynamic hybrid of these models is what evolved for most boards in the sample. In one case, the board shared with staff operational responsibility for development of public policy positions, public education and policy promotion, while respecting the ends/means distinction in matters of financial, human resource and program administration. In others, the board was active in

collective bargaining and personnel selection, typically a management domain in larger organizations.

The results-based approach to governance is an emerging hybrid model. It addresses weaknesses identified in other models through limited use of committees structured around board rather than management responsibilities.

The Executive Committee (poorly used in many nonprofits) carries responsibility for leading strategic planning and evaluating CEO performance. A Governance Committee is responsible for regular review of bylaws, governance policies and practices as well as board (member) recruitment, development and evaluation.

Risk Management and Quality Audit Committees ensure establishment of clear measures of organizational performance in key areas, monitor and audit performance, and report on results. The board ends/management means duality is maintained in relationship to general management of finances, human resources and program operations.

Drucker suggested that a board cannot do its job without meddling, “so it had better be organized to meddle constructively”. The emergent results-based board appears to be evolving to assist boards in meeting this challenge. It acknowledges a legitimate board role in operational activities such as development of public policy positions or fundraising. It also legitimizes board activities in support of management functions that might be necessitated by critical events or transitional phases. It reorganizes board structure to focus on clearly defined board responsibilities and the measurable results of organizational activities and management processes.

There is no single approach to governance that is suitable for every organization. The factors discussed here are important considerations both in determining what drives boards to adopt certain practices and to understanding what practices might be appropriate for a particular nonprofit at a particular stage of its evolution.

Some general insights can be derived from an analysis of the strengths and weaknesses of specific theoretical models. But practical adaptation to your particular circumstances is essential to effective application of any approach to governance. Clarity of roles, trust, mutual respect, honest communications and collaborative relationships are essential ingredients of effective board/CEO partnerships, regardless of the structures and policies in which they are lodged.