Published in, Forbes

Stuart R. Levine, Chairman and CEO, Stuart Levine & Associates LLC 

The pandemic has caused leaders to rethink their potential and the impact they can have in their communities.  Volunteering to serve on not-for-profit boards will emerge as an important trend in the next twelve months. They will bring with them business experience, judgment, knowledge, and skills that can be applied to not-for-profit organizations to achieve outstanding results. The not-for-profit sector represents a contribution of over $1T or about 5% of the U.S. GDP and involves the activities of over one and a half million organizations where more than 25% of the population volunteers.  

The COVID-19 pandemic has made today’s environment for not-for-profit governing boards incredibly difficult.  Responding to sharp changes in consumer demand, workforce realities and challenging technology investments create opportunities for experienced professionals to step up and contribute.  Every organization faces technology-related transitions, especially the need for increasing levels of investment capital for hardware, software, and cybersecurity protection. 

Like corporate boards, not-for-profit boards have major fiduciary responsibilities. Governing boards provide critical oversight for the development of annual budgets and accountability in institutions like credit unions, universities, foundations, and health care organizations. Currency is critical and has become the new “currency” for not-for-profit” service.  These volunteer board members work to make their organizations financially secure through their leadership in good governance and transparency. They provide insights into strategic goals, the ability to engage in a successful strategic planning process and oversight into the management of risk.  

Defining board service and reasonable expectations is difficult and time-consuming work. Yet business leaders are increasingly making time for it. In addition to the intrinsic benefits it brings, service-oriented people and their companies are discovering ancillary business benefits. Board service can positively impact the brand of a company. These volunteers create personal and business connections that are both life-enriching and often useful in their work. They further their connectivity within their communities, and their work exposes them to the current thinking of other service minded professionals representing a spectrum of industries. 

For many professionals, especially younger ones, board service is a new experience which requires thoughtful consideration before committing to an organization. When invited to join a board, every potential director or trustee must ask themselves about their aspirations for joining, and their capacity to serve once they do. Questions include: 

  • Do you fully understand the expectations/commitment required for board service?
  • Does the organization’s mission/purpose align with your personal beliefs? 
  • Do you understand fiduciary duties of care, loyalty, and obedience?
  • Do you understand the rationale and workings of the board committees?
  • Are you prepared to fully participate and engage in committee and board meetings?
  • Do you have access to organizational leadership to learn all you need to properly assess your prospective service?
  • Are you satisfied with the “tone at the top” in addressing ethical conduct and compliance with law, regulation, and the organization’s foundational documents?
  • Does the board have an effective onboarding process?

Once joining a board, the director commits to fulfilling their fiduciary duties. “Duty of Loyalty” requires directors to be well informed to act in good faith, avoid conflicts of interest and make decisions that are in the best interest of the organization. Continuous learning is the starting point. Board members must now devote more time, effort, and talent to keep themselves fully informed in order to oversee the organization’s operations, policies and strategy. 

“Duty of Care” requires directors to act with the same care that a person in a like position would reasonably believe is appropriate for a member of a governing body in similar circumstances. With pandemic effects, demographic change, and technological disruption taxing the best minds, duty of care becomes essential for thoughtful leadership. 

“Duty of Obedience” requires directors to take actions consistent with the organization’s mission as memorialized in the Articles of Incorporation and Bylaws. They assure that the institution adheres the relevant laws and regulations that govern it.

Each board member must continually examine their own service to the organization and that of the board.  A sample of questions for directors to ask themselves include:

  • Do the directors fully understand the appropriate relationship between the board and management?
  • How well is the board managing its relationship with the CEO, Executive Director, and senior leadership?
  • Does the board have annual assessments driven by an independent third party to ensure a fair discussion around board accountability and culture?
  • How effective is the board in assessing the effectiveness and the accountability of the leadership on an annual basis? 
  • Is there a succession plan in place for the CEO and the board? 
  • Is each director fully up to speed on, and given full access to, the organization’s strategic and business plan?
  • Is the board fully engaged in Enterprise Risk Management (ERM)?
  • Does the board understand the technological needs and investment requirements for safe and effective operation, including a robust cybersecurity plan? 
  • Is the board committed to Diversity, Equity & Inclusion (DEI)?
  • Does each member understand the full force of reputational risk associated with board service?
  • How effectively does each member participate in board conversations? Are members comfortable engaging in challenging conversations when there are differing points of view? 
  • Is the board on top of conflict-of-interest policies and fully disclosing related party transactions? 
  • Has the organization limited the personal exposure of directors through indemnification and Directors and Officer’s liability Insurance? 

The above queries highlight areas requiring director awareness and illustrate why learning and training on best governance practices are imperative for high-quality volunteer board service. Our for-profit, private, and not-for-profit clients alike understand how vital it is for board members to be properly briefed and trained to deliver strong governance. Education around board service benefits not-for-profit organizations striving for excellence, as well as for-profit companies supporting their volunteer employees, who are ambassadors for their organization’s brand. The duties of board service require it.