Contemplations from my first year on an NFP board

My interest in governance and compliance continues. I delve into this subject in waves and I learn something new each time. I use my knowledge every day at work, both internally and as part of giving advice to my clients.

Last year I felt my professional business experience and understanding of governance were at a level that it was time to use my skills to give something back to the community. I put myself forward and became a board member on a community transport organisation. The organisation does a great job providing services to those who are transport challenged.

So, what have I learnt over the past year?

You wear a different hat

Although some of the skills and business experiences are transferable and a particular area of professional practice is very useful, being a manager is quite different to being a board member. Instead of being in charge of a team, I became part of a group process. In all honesty I have never liked decision by committee, but as a board member that’s exactly what the process requires and I have learnt to have more patience as a result.

It may not happen often, however other board members may take a contrasting view to your own on a particular issue.  As a result you have to carefully consider each participant’s views against your own and if necessary have a respectful debate over the issue. The best outcome is the best outcome for the organisation. If a motion is passed and you don’t completely agree with it, then so be it. Thankfully I sit with an intelligent, caring and considerate group of people, and we make good decisions. If you can’t get along with others, maybe do something else.

Support the CEO and know your boundaries

I have seen various organisations where the CEO puts up with a dysfunctional board that make their life difficult. However the CEO has been hired, usually by the board, because they have the skills, experience and mindset to take an organisation in the right direction. As a board member you are meant to support the CEO and make it as easy for them to create and implement strategy and execute the business plan.

As a board member, even for an NFP, you are not really meant to get involved in the day-to-day operational aspects of a business, but you are meant to receive reporting on how all aspects of the business are progressing. While asking questions, expressing concerns and offering advice is fine, it is not your place to tread on the toes of the CEO.

I’m not an Accountant but…

You don’t have to be an Accountant to be on a board. However, having a good understanding of a P&L, a balance sheet, budgets, forecasts, and annual reports gives you confidence in the state of the organisation and your decision making. As a board member in any organisation you want to make sure the organisation is and remains solvent.

Community organisations and charities operate on a shoestring budget. As a board member, you learn to assist the organisation do its best with minimal exposure to unacceptable financial risk.  Yes, yes spend money to make money, but a limited budget teaches you not to throw good money after bad. It’s all about being conservative to ensure the organisation has a bright future.

Read your board papers, several times

A number of public companies have come undone over the years through board members failing to read their board papers. As unbelievable as that sounds, what makes it worse is that those individuals are paid professional board members. You must read everything provided to you. A switched on CEO will provide the board with everything needed to make decisions. That being said, if you have a question about anything ask for greater specificity.

Constitution and relevant legislation

An organisations constitution (or similarly named instrument) is the primary document by which it operates. Reading and understanding the scope of that document is an imperative. It is a living document and last year we redrafted ours for clarity and modernity reasons. Additionally, having a strong understanding of the legislation under which the organisation operates is important. A periodic review of the relevant legislation is a really good idea.

Final thoughts

I would like to think I have been a participative and useful inclusion on the makeup of the board. I have enjoyed the experience and look forward to another year of participating. We are making well informed decisions, we are in a good financial position, we have a good business plan and strategy, the board operate well as a group, and we have a great CEO.

From a governance perspective, many of the same requirements apply whether you sit on the board of a public company or a community organisation. Take it seriously, do it for the right reasons, do your homework, know your organisation and its purpose, and read every relevant document twice. If you are new to the process, leave the ego at the door, talk less and learn more. The organisation benefits from your participation and you learn some really useful skills for your professional development. The Matrix will be revealed.

Article by Charles Watson

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