Northampton Governance Advisors: FAQ

Q: What is governance?
A: Governance, at its most basic, is how an organization makes decisions, communicates those decisions, and ensures the decisions are implemented and maintained in force.

Q: What is a board’s role in governance?
A: The board is the final authority on all governance decisions. It either makes policy or directs Management to make policy. The Board must also provide oversight to ensure that the policy has been faithfully implemented.

Q: What is Management?
A: Management includes all the individuals who oversee the implementation of policy decisions and otherwise direct staff. Management is led by a chief executive, sometimes called President, CEO, Administrator, or a similar title. The chief executive’s role and responsibilities are defined by the organization’s bylaws, a board-approved job description, and other corporate documents.

Q: What are the most important responsibilities of the Board?
A: The Board is responsible for everything the organization does — the “buck” literally stops at the Board. Directors of nonprofits are “fiduciaries,” meaning they have an obligation to make cautious, thoughtful decisions that are free of bias from self-interest. Core duties include hiring and overseeing the chief executive, approving budgets and operating plans, engaging in strategic planning, and guarding against existential risks.

Q: Are nonprofit directors compensated?
A: Although legal, generally, nonprofit directors are not compensated. See more on this topic in this blog: XXXXXXX.

Q: It seems like being a director is a really important job. What qualifies someone to be on a nonprofit board?
A: There are very few formal criteria. In many states, there is only a minimum age requirement. Most often, boards oversee their own director recruitment process. A key to building an excellent board is a selection process that identifies well-qualified candidates who can strengthen the board. Even well-qualified candidates should expect to go through a comprehensive orientation to ensure they are ready to serve from their first meeting.

Q: Do nonprofit directors have personal liability for their actions or the actions of their agency?
A: While anyone can be sued, nonprofit directors enjoy many protections against potential lawsuits, including state laws that limit director liability and corporate bylaws that require director indemnification. All nonprofits should purchase director and officer liability insurance. Directors are at the greatest risk when they engage in self-dealing and ignore conflicts of interest.

Q: What do governance advisors do?
A: Governance advisors work with nonprofit boards and CEOs to improve their effectiveness. Governance advisors analyze board performance, compare it with well-recognized best practices, and help boards improve both their governance structures and leadership skills.

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