Lisa Kingman OAM gives three practical pieces of advice to get the most from your not-for-profit board. 

The vast majority of charities are run by voluntary or unpaid boards, with only 12 per cent of not-for-profit organisations paying their board members, according to the Pro Bono Australia 2022 Salary Survey. 

Unfortunately, having an unpaid board can impact its efficiency and effectiveness, and create a domino effect of challenges long-term. That said, serving as a voluntary non-executive director comes with risks and is usually time-consuming.  

Charities are currently facing a range of financial challenges. Sixty-five percent of charities in Australia are turning over less than $250,000 per year, many are still working to recover from the impacts of the pandemic, and many more are trying to meet increased demand for social services due to rising inflation and financial pressures on households. 

Consequently, it is understandable that the majority would turn to volunteer-based boards where possible to keep costs low. Paying board members is one way of building environments where performance accountability is incorporated into their role and the structure of the organisation, but this is not a viable option for most NFP’s. There needs to be a tailored approach to ensuring every board member, whether they are paid or not, is driving constructive outcomes for the organisation. 

Here are three ways NFPs can increase the effectiveness of their boards. 

1. At the outset define ‘good’ beyond compliance 

A good board is invaluable. Unless you set the standard you want, you will get what you deserve.  While it may sound simple, many charities struggle with what a good board looks like and how to have constructive conversations with board members to get the most out of them.

To limit the chances of needing to have these challenging and awkward conversations down the track, document and communicate a Board Charter clarifying what a ‘good’ board is for your organisation as well as general expectations from each board member. This should form part of the induction process so every member agrees at the outset.

In the corporate sector, it is common for each employee to have clear KPIs, consequences for not reaching those KPIs, and incentives to reach or exceed expectations. Furthermore, most businesses will have processes for regularly checking in on an employee and track their performance against their goals and KPIs, support or provide training when that employee may be struggling to succeed against those metrics, or performance manage an employee that is not meeting basic performance standards. These structures and processes often exist in NFPs for employees, but rarely for board members and non-executive directors. When done well, KPI-setting can have a significant impact. 

I’ve seen board charters that not only specify legal and compliance requirements, but go further and set metrics for directors including; securing new investments either financial or in-kind, presenting the organisation at an external event, being able to articulate what the organisation is actually doing (projects) in relation to its mission. These sorts of metrics ensure everyone is on the same page from the start, leaving no room for frustrations or misunderstandings down the road. 

Likewise, a good charter articulates the behaviours and character it expects from board members.  This can be useful if members need to be called out further down the track for not demonstrating those qualities.  My favourites include “don’t make excuses – instead take personal responsibility”, “don’t be afraid to challenge but be constructive”, “be more interested in voices other than your own” and “know and act when you’re not being effective”.

Revisit your board charter annually to ensure its front of mind and to give board members the opportunity to adjust and improve the content. 

2. Commit to a regular health check at least biannually

Whether they are positioned as performance reviews, strategic alignment workshops, or feedback sessions, a high performing board evaluates its performance honestly and bravely.  Doing a health check of a charity board, including the chair, is critical. Without performance reviews, board members cannot know whether they are succeeding. Without strategic alignment, a board could be working against itself without realising it, and without a culture of ongoing and constructive feedback, no one knows how to correct errors or improve things for the future. 

As part of a team that has conducted dozens of health checks for charities and NFPs, I can confidently say that if done with anonymity and respect, a performance review can be an exceptional conversation starter for action, improvement and change. It is important for everyone involved to recognise that regular check-ins and alignment is primarily about helping the organisation be as efficient and effective as possible in achieving their social purpose. Reflections such as “How often do we seek feedback from those we serve”, “What would you do with a 20 per cent increase in unrestrained income?” and “what has been your greatest strategic failure in the past three years”, all offer valuable and constructive insights. 

In the charity sector, the idea of doing a performance review of a voluntary board member could raise eyebrows, even though most NFP leaders would recognise this is critical to a board’s overall accountability and effectiveness. If you build this requirement into your charter you will be off to a good start.

3. Schedule a thank you day and project visit

It may sound coy but getting back to basics can have long term benefits and deliver constructive outcomes. Scheduling an annual project visit and thank you day for board members along with staff and volunteers can go a very long way. Strengthening relationships, understanding motivations, listening to each other and getting to know what makes someone engaged or disengaged is a valuable asset for any organisation. 

There is nothing like seeing and feeling the impact of your contribution in the community you serve.  Yes, these sorts of days take time and resources to organise but they also provide a positive setting to have tough conversations. Don’t leave this until the last minute and don’t make it an optional extra – it should be a must for every board member. Build it into your annual calendar six to 12 months in advance. Some organisations also invite their sponsors or key donors. 

With the new year just around the corner, now is the ideal team for any for-purpose organisation to take a step back and reassess its operations. There are no quick fixes to driving greater outcomes and effectiveness from a board, though starting the process of inviting discussion and regular check-ins on these topics does not have to be complex. Like any problem worth solving, it will take a team effort and a long-term lens, and there is no better time to start than now.