Nonprofit organizations unlike for-profit organizations, are less directed by an operations staff and are largely managed by a committee. It becomes the role of the board to design structures and guidance for committees that will be relevant to the needs of the organization.
Committee Guidance for Nonprofit Organizations
The modern nonprofit organization selects board and committee officers through a refined recruitment process that takes into consideration the needs of the organization’s committee directives. As the board designs its blueprint for committee and subcommittee guidance, it must prioritize a structure of oversight and compliance that enables each committee to direct its individual mandate effectively while not operating in informational silos. Active nonprofit board committee structures are integral to a board’s work, committee members need to leverage technology where they can manage a transparent and collaborative decision-making process based on the individual guidelines of each committee as well as the overarching mission of the organization.
Each board committee should serve a specific strategic or supervisory purpose, identified in the written committee charter or “statement of purpose.” Board committees are often driven by a common set of best practices, but this can sometimes vary. Typically, each board committee is chaired by a board member who moderates committee meetings. The number of committee members can vary considerably between board committees, but typically a board committee has at least three members – all or most of whom are directors.
The tightrope that nonprofit boards must walk is designing a committee operations structure that prioritizes regulatory compliance and ethical guidelines without becoming a labyrinth of ineffective bureaucracy that hinders the organization’s ability to effectively carry out its mission. The primary nonprofit committee model should have two to three primary committees with six to eight subcommittees.
The primary committees create a refined agile operations structure for subcommittees to manage under. Primary committees direct the organization’s focus of governance, internal operations, and external operations.
Governance – Governance committees are responsible for the ethical mandates within the organization. They are responsible for overseeing the functions of audit, policy management, health and safety, diversity and inclusion, environmental impact, internal controls, training, and employee engagement. Governance also has the added role of evaluating the performance of the board. Governance holds both a role in managing the organization’s process and also a role that stands outside of the organization to review its leadership. You can read more about the GRC space in Non-profits.
Operations – Internal operations and external operations represent the mission-focused functions of the organization. Internal operations could represent aspects of financial planning, program management, and recruitment. External operations focus more on the forward-facing context of the organization in areas such as fundraising, marketing, service and product management.
Creating two and three-pillar committee structure enables the organization to prioritize efficiency, it enables agile decision making and reduces the likelihood of the organization becoming held hostage by the bureaucratic process while still adhering to the mandates that nonprofit organizations fall under. The composition of these primary committees and subcommittees can be a mix of both board directors, staff, or volunteers. Committee leadership must be able to work effectively and collaboratively with the board while also maintaining departmental focus.
The chair of the board or board president acts often as the de facto chief executive to oversee and monitor the workflows of other board members and committee heads, the management teams and the organization as a whole.
Board chairs often are designated the authority to appoint all committee heads or to provide preferential recommendations on committee leadership.
The chair of the board chair also works in close collaboration with the committee directors to develop operational agendas for board sessions. The board also provides significant oversight of committee heads, providing annual performance reviews, ethical reviews, and workflow analysis. How boards provide governance structure and committee oversight directly translates into how the organizations operational integrity is carried out. The board must act as facilitators as integrity to instill ethics within the organizations operational conduct.
The modern nonprofit must enable functionality across the interactions and activities of every committee. The committees are in effect equivalent to departments in nonprofit organizations, rather than an executive in a for-profit organization reporting to a board of investors and strategic observers appointed, nonprofit boards are often more active and include committee heads.
Modern nonprofit boards have several standing committees and some special committees. A new governance trend that is gaining popularity is the use of a two and three-commissioned nonprofit structure. The main committees of the nonprofit board are the nomination and governance committee, the finance and/or risk committee, and the executive committee. The nominations and governance committees are responsible for recruiting and orienting new directors. They may also be responsible for the ongoing training and development of board members. Boards of directors may also form a committee responsible for the combination of finance, risk management and audit. Duties will vary depending on the type of committee they create.
An executive committee usually consists of the leaders of the board and the chief executive officer. The executive committee helps to delegate and manage issues that may arise between board meetings. Executive committees can also act as steering committees that prioritize items on the board’s agenda. Councils may also form committees or task forces for any other needs they may have, such as: A small number of committees is often easier to manage than nonprofit boards. Each committee has a direct link to the management of the board of directors and the division of responsibility of each committee is very clear. This committee structure also makes it easier to structure the board’s agendas around the reports of the three committees. In the quest for good board composition, good governance and increased productivity, the committee structure makes all the difference. If the current committee structure is not working, it is time to restructure the work of the committee so that it has a positive impact on the board and the organization.