The Transformation of Nonprofits and What It Means for Your Board
Change is the only thing that stays the same. For nonprofit and charitable organisations and their leaders, the pandemic accelerated the changes already occurring in their sectors. Savvy boards and their CEOs will lead their organisation successfully into the future by coming to terms now with the shifting landscape, and by undertaking board transformation.
Board members who understand and prepare for the changes in the world of charities and not-for-profits will be in the best position to take advantage of opportunities that will help their organisations grow in impact and influence. They also will mitigate the risks that come with change.
Building the leadership capacity of board members has been a focus of the charity and nonprofit sector in the past few years, as the pandemic and other societal factors exposed the need for new types of expertise not just in the organisation’s leadership but also among board members.
Board work and organisational oversight are growing in complexity. Board members are asked to bring their skills, talents and innovative mindsets to their board work, and to be willing to learn, plan and grow along with the organisation.
As nonprofit boards shrink in size, board members must quickly gain new skills and take on more work. Fewer people are sitting on boards, which makes existing board members even more crucial to the success of their organisations.
Legal and regulatory demands and requirements also impact board composition and structure. Board members must receive ongoing, specialised training to perform their duties and serve their organisation.
Risks and Opportunities
Meanwhile, risks to organisations also are growing. The financial health of organisations is impacted by inflation and the threat of a recession. With so much uncertainty about the economy, businesses, foundations and individual donors are holding back on spending.
The digital transformation organisations are undergoing also poses risks and opportunities. Cybersecurity risks, requirements for climate change and environmental mitigation, and diversity and equity policies and practices are all part of an increasingly complex oversight job. Staying ahead of these issues will certainly require training and skill development for board members.
Transparency and trust have changed the way boards must communicate to their stakeholders. People expect up-to-date and immediate information from the board and organisation. Tools that help the board track and store data are becoming more important to board business.
The goal is to ensure that boards possess a robust and dynamic skillset to adapt to the complexities of the modern nonprofit landscape.
Boards Are Getting Smaller
The number of volunteers who sit on governance boards has been shrinking. The U.S.-based study Leading with Intent: A National Index of Nonprofit Board Practices found the average board size has dropped by more than 20 percent in the last two decades. Smaller boards mean more opportunities, but also more pressure on volunteer board members.
In the past, it was common for boards to have 30 or 40 members, with organisations asking their major donors and funders to send representatives to serve as part of the governance team. In many of these cases, a board seat was more ceremonial than the action-oriented expectations for boards today.
The UK Charity Governance Code advises that the board be big enough that the charity’s work can be carried out and changes to the board’s composition can be managed without too much disruption. They suggest that a board of at least five but no more than twelve trustees is typically considered good practice.
“As nonprofit boards become smaller, the impact of each board member grows.” – Leading with Intent
Smaller boards have several advantages over the massive boards of the past. Smaller boards mean that members can develop stronger bonds and create relationships that the work of the board easier and more satisfying. Board members can be more directly involved with their work. When volunteer members know their work and their votes make a difference, they feel more engaged and committed to the board and the organisation. Board members find it easier to communicate with each other and their CEO.
According to Mission Met, there’s currently “more of an emphasis on boards built based on the competencies or talents of the members. Leaner, more skilled boards are better able to make a significant difference.” Also, as Mission Met points out, “It’s often quicker and easier to make decisions and get projects or tasks rolling. Smaller boards may be more agile.”
More agile, yes. But smaller volunteer boards also face pressure. They have even more work to do and less time to do it. Members often take on several roles and increased responsibilities. They might lack expertise or familiarity with the requirements of these new roles.
Streamlining Communications and Operations
Streamlining board operations is essential to maximising the efficiency and productivity in the world of smaller, leaner boards and increased regulatory and fiduciary pressures. Digital solutions can simplify administrative tasks, create a centralised platform for collaboration and streamline communication. By automating routine processes, your board members can focus on strategic discussions and mission-critical decisions.
It’s important to foster an environment of open dialogue, transparency, and inclusivity among board members. Effective board communication between board members and donors, volunteers and others will be key to transformation. Encourage constructive discussions that enable diverse perspectives to be heard. Communication should not be limited to internal board interactions; extend it to stakeholders, donors and the broader community.
These communication channels can showcase the board and organisation’s commitment to equity, diversity and inclusion (EDI) and environmental, social and governance (ESG) efforts, reinforcing your organisation’s values and impact.
Keeping on Top of Risk Management
Nonprofit organisations are vulnerable in these times of change, and mitigating risk is critical to safeguarding your organisation’s mission and reputation.
Prioritise cybersecurity measures to protect sensitive information from potential threats. Nonprofit organisations are not immune to the risks of hacking and cyberattacks. Cybercriminals are becoming even more adept at breaking through website security. They can steal information such as credit card numbers collected on websites including through donations and events registrations.
Financial risks from economic conditions, competitors and market forces also pose challenges for boards. Members should consider conducting regular risk assessments to identify potential problems in areas such as financial sustainability and reputational risk.
Contingency plans to address potential crises effectively can ensure that your organisation remains resilient in the face of challenges.
Board Engagement Is Vital
Engaged board members are more likely to be effective advocates for your organisation’s cause. With fewer people volunteering for open board seats and boards getting smaller, it’s essential to make sure the board is a place where members can make an impact.
Nurture a culture of engagement by providing ongoing training opportunities, networking events, and regular updates on your organisation’s achievements and challenges. Encourage active participation in committees and task forces that align with board members’ passions and expertise. Recognise and celebrate the contributions of individual board members to create a sense of camaraderie and commitment to your organisation’s shared goals.
Staying Ahead of Change
Training for new and current board members is even more crucial in light of these continuing shifts and changes. New and current board members alike need ongoing training to stay current with the requirements of their position. Board members put their organisations at risk by not familiarising themselves with new regulations and requirements, as well as shifts in fiduciary responsibilities.
Nonprofit boards can face these challenges by using technology tools for training and keeping everyone up to date. These tools make it easier for a smaller board to take on additional responsibilities through ease of communication and access to documents, training and other materials.
Collecting reports, planning documents and other results can ease the growing demand for transparency and ESG regulations. Creating and storing succession plans for the chair and other board leadership positions bolsters stability and trust in the governance system. Cyberthreat analysis, strategies and protocols can be stored for quick access when needed.
BoardEffect is designed with the unique needs of volunteer boards in mind. Our nonprofit board management software streamlines board processes and enhances and delivers secure communication, helping you to become an efficient and effective board.
