Strategies for Building Effective Nonprofit Boards

The challenge of attracting and retaining the right mix of board members is paramount for any nonprofit organization. The leadership teams of these groups rely on their board members for strategic and financial support to fulfill their mission.

City National Bank recently brought together a group of nonprofit leaders, at an event moderated by Jason Niell, a national trust administration manager for City National Bank, for a frank discussion about the perils and possibilities of board management.

Niell works closely with City National's nonprofit clients, helping to guide organizations through their unique challenges.


Revamping a Legacy Board

Sometimes board issues don't arise until many years after they are founded. Even the most established organizations can experience stagnation or dysfunction if their boards aren't governed by the right bylaws.

For example, boards without term limits, members who lack expertise and insights, and boards that are given only minimal training can struggle to be effective.

“The crux of the lesson from that organization is that board members need accountability," said David M. Rottkamp, CPA, partner and nonprofit practice leader for Grassi Advisors and Accountants in New York City. “Board members, especially those on the finance committee, must be ethical."

One way to create accountability, Rottkamp says, is to create term limits for board members.

Rottkamp also recommends that nonprofit organizations have a formal review of their bylaws and board member responsibilities every few years. If regulatory changes take place, the bylaws must be rewritten to reflect the new laws, he said.


Board Recruitment Strategies

The makeup of a board and the skill sets of board members are among the most important elements to running a successful nonprofit, Rottkamp said.

“Finding and attracting the right candidates for your board is crucial," Rottkamp said. “It's especially important to recruit board members who understand business and finance."

One organization Rottkamp works with took a year to divest itself of 12 board members who had been on the board for decades, moving them into advisory roles or event committees so they could continue to support the nonprofit's mission.

“We looked at the gaps on the board in terms of professional backgrounds, geographical locations and skills to create diversity on the board," Rottkamp said. “Turnover on a board can be a good thing because you want to develop an engaged, high-energy group."

The switch to virtual meetings during the pandemic increased potential participation and recruitment of board members outside an organization's geographical region. Some organizations deliberately recruit non-local board members for diversity and to reach new donor and volunteer pools.

Rottkamp recommends that a nonprofit's CEO and leadership team, as well as board members, search for new recruits.

“It should be a board member's responsibility to identify people who buy into the mission of the organization and bring them to the staff and nominating committee to vet them," Rottkamp said.

In addition to the personal and professional networks of staff and board members, new board members can be found through recruiting organizations such as BoardStrong, which matches volunteers with nonprofit groups.

“You can also recruit people for organizational committees to test them out and see if they are board material, then run through the governance process to bring them on as board members," Rottkamp said. “But you can't have non-board members on corporate committees such as finance, audit and governance committees."

As part of the recruitment process, Rottkamp recommends that the nominating committee and staff members meet with prospects to talk about the level of engagement expected.


Removing Board Members

Nonprofit leaders face a delicate situation when they need to cull their board members to eliminate those who are not actively engaged or to bring on new board members.

“You need to start this process with a one-on-one board engagement discussion at the beginning of the year that sets expectations," Rottkamp said. “Then, at the end of the year, you can repeat that discussion with each board member. When you ask them about competing priorities and offer to transition them to committee positions, 70% of the time people are relieved because they didn't want to admit they can't keep up with the responsibility."

Setting clear policies and procedures, including the number of board meetings each member must attend, is one way to manage expectations with members. They make it easier to ask someone to step down if they are not participating.

Ultimately, the goal is to set expectations that keep people engaged with an organization, even if they step away. It can help if you offer them an emeritus or advisory board position.


Developing a Strong Board

Alignment of the CEO and board chair is vital to the success of any nonprofit, Rottkamp said.

“You need a board chair who is strong but fair, follows policy, adheres to their commitments and leads by example," he said. “The culture of the board follows the board chair."

A strategic succession plan can include putting potential leaders into key committee roles, then into a committee chair role, followed by a board leadership position and then potentially board chair, Rottkamp said. For example, someone could join the governance committee, then lead that committee, become secretary of the board and then eventually board chair.

“This goes back to recruitment," he said. “You want to look for potential skill sets to cultivate for your leadership roles."

Rottkamp suggests a board of 15 to 17 members works well because it offers more opportunity for connectivity, collaboration and volunteerism.

An important component of nonprofit board work, of course, is fundraising for the organization.

“I think the 'give or get' policy is an important concept, but you need flexibility because not everyone can achieve the level you hope for," Rottkamp said. A give and get policy generally requires board members give a certain contribution and then get — or help secure — additional contributions.

Deploying a give or get policy means navigating the personal situation of each of your board members.

“I think a good compromise is to ask people for a 'personally significant' contribution, which is something you can discuss during your one-on-one conversations."

For example, if a hedge fund manager gives $5,000 annually, Rottkamp said it may be appropriate to ask for $50,000 annually. On the other hand, some boards include family members of people their organization serves who may have limited means to donate.

“It's vital to build engagement that is specific and personal with each board member," he said. “More importantly, you need each board member to contribute something, even if it's just $5, preferably early in the year, because corporate donors want to know that you have 100% board participation in fundraising."

The key to board engagement, Rottkamp said, is to balance one-on-one sessions with productive board meetings that focus on vision and strategy rather than operations.

“You'll have a much more engaged board if you structure your meetings with a consent agenda, a finance report and then turn to a discussion of strategic plans that allow for opinions rather than 75 or 90 minutes of staff and committee reports," Rottkamp said. “With a larger board, you can even use breakout rooms for deeper conversations."


Your Nonprofit Needs the Right Team

Building a better board can take years of strategizing, recruiting and training, along with continuous board management by staff and board leaders. However, you don't have to face these hurdles alone.

Contact the Institutional and Nonprofit Commercial Banking team today to discover how our expertise, tools and solutions can help your organization achieve its financial objectives.

This article is for general information and education only. It is provided as a courtesy to the clients and friends of City National Bank (City National). City National does not warrant that it is accurate or complete. Opinions expressed and estimates or projections given are those of the authors or persons quoted as of the date of the article with no obligation to update or notify of inaccuracy or change. This article may not be reproduced, distributed or further published by any person without the written consent of City National. Please cite source when quoting.