November 1, 2018
Published: Journal of Accountancy
Strong not-for-profit governance hinges on successful recruitment, training, and retention.
The severity of the risks associated with not-for-profit board shortcomings came fully into focus for Cheryl Olson, CPA, CGMA, while she was having coffee earlier this year with Elizabeth Grant.
Grant is attorney-in-charge of the Charitable Activities Section in the Civil Enforcement Division of the Oregon Department of Justice. The section oversees the 18,000 charities that are registered in Oregon, and in her work there Grant has observed the hazards that ineffective board governance can pose for not-for-profits.
“We believe almost all nonprofit failures stem from a lack of board oversight,” Grant told Olson, who recalled the conversation for the JofA. “This is due to board members being inactive or not being trained on their financial stewardship responsibilities. Really, no one is minding the store.”
Developing effective not-for-profit board governance is hard work. The painstaking effort needed to maintain a high-quality board may seem to drain some of the resources needed to pursue the not-for-profit’smission. But the reality is that without a strong board, the long-term success of the organization’s activities may be endangered. With this in mind, a not-for-profit’s mission depends on results in three key governance areas:
– Recruiting board members who are engaged and highly skilled.
– Training those board members on how to provide effective oversight.
– Retaining board members and keeping them engaged throughout their tenure.
“You’re not just looking for bodies,” said Olson, who is based in Oregon and is director of not-for-profit consulting for Clark Nuber. “You’re looking for people that are going to bring something of value to the board. And then there need to be clear expectations on what’s required.”