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Jul 12, 2012

What Does a Nonprofit Board Need to Approve?

There has been a long discussion going on in the Nonprofit Board Forum on LinkedIn about what a board needs to approve.  It has been disappointing.  So many of the respondents bog down the board with minutiae for ALL decisions, even contracts.  Some advocate using a consent agenda, which speeds up the meeting but doesn’t remove any decision-making from the board.

What a board approves is unique to each board. One respondent advocated a “one hour agenda” which seemed to consist entirely of reports.  The notion of accepting a report is arcane in my view. I view many board votes on non-decision items as a choice by the executive director to formally record board endorsement or agreement. Having your board on record as seeing and endorsing something can be valuable when the road gets rocky. If you feel there are too many votes, discuss having an consent agenda and on your meeting agenda clearly note action versus information versus accept/endorse/approve etc.

But the real issue is what actions tap the expertise and energy of the board and engage them.  There are too many boring board meetings which also struggle to maintain a quorum.  Make a board meeting have a purpose in setting and advancing the strategic plan of the organization.  If you do, much of this hand-wringing about what a board needs to approve will become legalistic detail to be minimized.

What is done at board meetings makes or breaks board member engagement.  That is why I devoted six chapters in the second edition of  Linking Mission to Money to focusing boards on decision-making and looking ahead strategically (pp.65-115).  I end the section with these Key Questions on Mission-Focused Boards:
1. Does the board agenda clearly convey the purpose and significance of each meeting?
2. Is the activity with the greatest financial loss also the key mission activity?
3. Do lower mission activities achieve sufficient profitability to support the losses in the key mission activities?
4. Are financial reports simple enough to make it clear to nonfinancial experts how the organization is doing financially, how the year’s top priorities are advancing, and where potential concerns may emerge?

If you can’t answer these questions, then you are spending your board time on the wrong things.  Let me help you to make your board meetings better strategic thinking opportunities.