Nonprofit boards need a wide range of expertise to achieve their missions — a board of advisors provides the necessary guidance to realize success.
Access to a full range of advice can help a nonprofit grow and surpass its competitors while increasing the value and reputation of the organization.
Nonprofits must set up a formal board of directors responsible for planning and oversight of the organization, yet boards are only sometimes equipped to lead independently. While forming an advisory board is optional, it is a valuable resource.
With that in mind, we’re defining the difference between a board of advisors vs. board of directors. We’ll also go over the roles, responsibilities and benefits advisory board members should consider before they accept a position on an advisory board.
What Is an Advisory Board?
A board of advisors (also referred to as an advisory board) is a group of experts willing to share their expertise, skills and knowledge with the board of directors of any organization.
Advisory board members are often respected members of the community who offer expertise in various factions of business such as:
- Human resources
By design, the purpose of a board of advisors is to offer advice and guidance to the board of directors to help them make decisions that are in keeping with the nonprofit’s mission and vision and that are in the organization’s best interest.
Before setting up a board of advisors, boards should discuss the issue and come to a consensus on why they want to establish an advisory board and what they hope to accomplish with it. Boards need to keep the advisory board’s purpose in mind when creating it so they can structure the advisory board to get the most from it.
Board members may give advisory board members limited access to their board management system to collaborate with one another and the board.
Advisory Board vs. Board of Directors: What Is the Difference?
While the names are similar, the roles of a board of advisors vs. a board of directors are distinctly different. An advisory board is an informal committee where the board selects the members.
Ginger Silverman, a woman who has served on multiple boards for private, public and nonprofit organizations, as well as advisory boards, states, “The level of tender and hands-on tactical advice is higher for me on the advisory board capacity.” Noting her experience as a board director, Ginger says that her regular board role is more strategic and focused on a higher level.
The primary role of a nonprofit board is to strategize for organizational success and future sustainability. The core responsibilities of a nonprofit board of directors include:
- Ensuring effective organizational planning
- Providing financial oversight
- Ensuring the nonprofit has sufficient resources
- Abiding by the fiduciary duties of duty of care, the duty of loyalty, and the duty of obedience
- Ensuring legal compliance and good governance
- Hiring, firing and overseeing the CEO or executive director
- Making changes in executive leadership
- Recruiting, orienting, and training board members
- Improving the nonprofit’s reputation
- Raising money for the nonprofit and making a personal donation
By contrast, a board of advisors bears responsibility for the following duties:
- Providing guidance, education, and advice in their area of expertise
- Expanding the nonprofit’s network
- Promoting the nonprofit in the community and within their network
- Offering an annual financial donation
Forming an advisory board is one of many ways boards can work toward fulfilling their duties responsibly.
Roles and Responsibilities of Advisory Board Members
In considering the roles and responsibilities of a board of advisors, board members must consider what advisory board members do as well as what they are not allowed to do.
For example, advisory board members typically perform the following functions:
- Be available to serve as consultants
- Educate board members in their areas of expertise
- Attend advisory board meetings
- Introduce people within their networks to the organization
- Speak highly about the nonprofit in public arenas
- Give a donation
On the other hand, advisory board members are not allowed to:
- Govern the nonprofit
- Make financial or other decisions
- Create policies
Benefits of Advisory Boards
Advisory boards can be beneficial for startup nonprofits that have fewer resources.
Unlike board directors with fiduciary duties, advisory board members don’t have any liability, allowing them to freely give guidance and advice to the board. The board can take or discard their advice as they see fit.
Advice from an advisory board tends to be more specific to new changes that are occurring and affecting operations. There tends to be a freer flow of information and discussion during an advisory board meeting than a board of directors meeting with a strict agenda.
Having an advisory board listed on an organization’s website and letterhead can also boost an organization’s reputation and credibility with clients or donors.
People who have the caliber to serve on an advisory board will also help expand an organization’s networking contacts.
What Is an Advisory Board Member?
Advisory board members are generally volunteers who are invited by the board of directors to assist them in fulfilling their duties and responsibilities by sharing their knowledge and resources with the board.
A board of advisors typically meets anywhere from a few times per year to monthly, depending on the nonprofit’s needs. With the help of an advisory board, a board of directors positions itself well to achieve the goals it sets for the organization.
Advisory board members are hand-selected and targeted for the expertise they can bring to an organization to help fill in knowledge gaps. In addition, they can help the board break into new markets or industries. Advisory board members are strictly consultative and don’t have any official voting rights on the board.
Selecting Members for Your Board of Advisors
Boards can expand or decrease the size of their advisory boards as they see fit. Advisory board members can be recruited only to serve as needed and can be easily replaced.
When selecting people to serve on a board of advisors, the board should trust the individual’s skill, level of industry knowledge and awareness of the company’s needs. It’s also essential for advisory board members to be interested in the organization and motivated to help it succeed.
Boards should pass over candidates who are apt to give in to groupthink or only offer the advice they believe will be received well by the board. Advisory board members need to be individual thinkers who also have enough time to do research before advisory board meetings and be able to deliver objective, accurate information.
Are Advisory Board Members Paid?
In nearly all cases, nonprofit advisory board members serve without direct compensation. By contrast, advisory board members of corporations may get paid between a third or half of what regular board members get paid.
Corporate board directors may receive compensation in the form of equity interest in the company. Nonprofit boards will reimburse advisory board members for travel, lodging or other expenses incurred during their terms.
Serving On an Advisory Board
While serving on a board of advisors requires a time commitment, it is an honor to be asked to fill such a role. Beyond the prestige of being named to an advisory board, those who are willing to accept this responsibility gain the following valuable benefits:
- Enhances their resume
- Establishes them as a thought leader
- Increases their visibility and credibility with employers and others
- Provides practical experience
- May lead to a position on the board of directors or a promotion
- Expands your personal and professional network
Summing It Up
Establishing an advisory board is one way boards can work toward fulfilling their duties responsibly.
The formation of a board of advisors shouldn’t be considered a “one-and-done” activity. As organizations go through various stages and phases of development, they will have different needs.
At least annually, boards should review the advisory board’s purpose and evaluate whether they still have the right individuals serving on their advisory boards so they can make adjustments accordingly.