Conducting Board Evaluations in a 501(c)(3)

Behind every successful and prosperous 501(c)(3) is a healthy, vibrant and energized board. Board evaluations are a viable tool to help boards maintain their vitality. By taking what they learn from annual board evaluations and making a few changes, even well-run boards can improve their performance.

Nearly all for-profit corporations make a regular practice of conducting annual board self-evaluations. Despite recognizing the benefits of board evaluations, only about half of nonprofits make a regular practice of conducting them. Board self-evaluations are important for nonprofit organizations for all the same reasons they’re effective for profitable corporations. Because nonprofit organizations exist for a specific cause and because they serve the public good, all board directors of nonprofit organizations should be asking themselves what they can do to improve their individual performance.

Starting the Conversation With Your Board About Self-Evaluations

Often what it takes for nonprofit boards to move in the direction of conducting board self-evaluations is simply a matter of one board director stepping up to the plate and starting a discussion about it. Initial discussions about board self-evaluations usually begin with a board discussion about the general role of the board. Moving the activity forward will require getting a buy-in from the whole board. It may take some time to get a full buy-in if the board isn’t familiar with how they can benefit by doing self-evaluations. Having an initial discussion about the general role of the board will help the board to set up consistent expectations for the process once they implement it.

Once the board has agreed to pursue conducting board evaluations, it’s time to place it as a new business item on the agenda. Initial discussions on the role of the board are a good precursor for the next discussion, which is asking each board director to reflect on their own roles as board directors.

Nonprofit board directors usually have a range of board experience, from no experience to many years’ experience. It’s also important to recognize that while some board directors have past experience on a nonprofit board, they may have had a different board experience than what the current opportunity offers.

Benefits of Board Evaluations Prove Their Worth

Nonprofit boards quickly realize the benefits of conducting board self-evaluations when they have the chance to analyze the results. Board self-evaluations bring issues that need clarification to the surface and highlight the board’s gaps in governance skills.

Through the process, nonprofit boards will usually be able to identify topics for future board education and development. The evaluations will likely uncover some ideas about how far the board is from the expectations they set for themselves. Boards should also be aware that self-evaluations are a learning process whereby they learn to measure their own effectiveness. The process becomes smoother and easier each time.

How to Get Board Evaluations Started

Invite the rest of the board to participate in doing board self-evaluations and pick a date to get started.

Since every nonprofit board has different needs, the questions will be different for every organization. It helps to review at least a few of the blank questionnaires that other nonprofit organizations have used successfully. Pull out the most important questions from the templates and customize the form with additional questions that are specific to the board.

Many boards like to start with two general questions to help focus the board on the process.

1. Why does the nonprofit organization exist?
2. How can the board help to advance the organization’s mission?

Topic Areas for Boards to Evaluate

Everyone likes a well-deserved pat on the back now and then, but to get the most out of board evaluations, it’s important for board directors to go into them with the mind-set that they need to put some careful thought into hard topics like advocacy, strategic planning, conflict of interest, diversity, executive director evaluations and fundraising.

Advocacy

Not all board directors are aware that nonprofit organizations can participate in advocacy. In fact, most nonprofit organizations can participate in advocacy and lobbying as long as those activities aren’t a substantial part of the organization’s activities. It’s important for board directors to understand this and know their state laws about nonprofits and lobbying because participating in advocacy with or without the support of other advocates can help advance the nonprofit’s mission.

Strategic Planning

One of the common mistakes that nonprofit organizations make is that they get stuck in the rut of reviewing reports and doing fundraisers while paying little or no attention to strategic planning. Board self-evaluations often call the board’s attention to the fact that they need to be spending the bulk of their board time in strategic planning.

Conflict of Interest

The IRS requires board directors to have a conflict of interest policy. Those that don’t have a formal conflict of interest policy should write one as soon as possible. Boards that have an existing conflict of interest policy don’t always require that board directors disclose a conflict or potential conflict. All boards should require disclosure of a conflict in their conflict of interest policies.

Questions on the conflict of interest policies should be designed to create an environment of candor where boards can discuss the types of situations that might create a conflict of interest as well as how they intend to manage conflicts of interest when they happen. Boards should also require that all board directors sign the conflict of interest policy and keep a copy in the board director’s file.

Diversity

Diverse boards create better decisions, so boards need to evaluate their board as it relates to diverse populations. Learning more about how heightening awareness of diversity among boards helps to better connect them to their communities.

Evaluating the Executive Director

Board evaluations will also point out whether boards are evaluating their executive directors and planning for succession. In most cases, executive directors who receive annual evaluations enjoy higher job satisfaction.

Fundraising

Board self-evaluations will also highlight whether board directors are actively involved in fundraising and also making personal contributions to the organization. Donors and grant-makers usually look for assurance that board directors are making personal contributions to the organization as proof of their commitment to the cause.

Board evaluations don’t take huge amounts of time. The results of the evaluations usually yield information that will truly help the organization to move forward efficiently, successfully and according to the mission. The value of information gained in conducting board evaluations far outweighs the cost of any time constraints.