When everything is running smoothly and everyone knows their role and responsibility, the need to have good governance policies and practices is not a high priority. But the minute something bad happens or leadership changes, the value of having a set of policies to fall back on and guide board action becomes critical.
An article I read recently said that good governance is like a recipe. It requires the right ingredients and the right mix of board members and accountability. It also requires careful mixing and stirring of candid discussions, transparent practices, and governance policies. Best governance policies typically clarify conflicts of interest, CEO and Board job descriptions (and boundaries), CEO compensation, financial guidelines and transparency, and other standards of conduct and legal requirements.
Additional governance policies and practices that a Board should also consider are as follows:
- Corporate minutes of all Board and Committee meetings
- Full Board review of the IRS form 990 before it is filed
- Written Whistleblower Protection Policy
- Written gift acceptance policy
When a Board regularly (at least every two to three years) completes a Board Self-Assessment and reviews its practices to governance benchmarks, they can set goals for their own growth goals and then prioritize with other Board education and development. (MHS has a Board Assessment tool that is provided at no cost to MHS Members.) Maintaining knowledge and awareness of best practices in nonprofit governance is important and helps Boards make good decisions. Regular review of your Board policies and attending to the Board Assessment results are also ways to not only maintain but improve the Board’s ethical and legal responsibilities.