I was recently contacted by a local organization to explore supporting them with an executive transition. The leader had given the board more than 9 months notice of retirement and the board was ready to get going on the hiring process.
As I chatted with the board leaders, it became clear there were other challenges that the board was avoiding because they wanted to focus on something that was less contentious and forward-looking.
I have a few standard questions that I ask to gauge the health of the organization, the health of the board and the relationship between the board chair and executive director.
- How large is the board? Are there term limits?
- How would you describe the relationship between the board chair and executive director? How often do they meet?
- What have the revenue/expense trends been over the last 3 years?
- How large of a reserve does the organization have?
- When was the last strategic planning process?
The answers to these questions determine how healthy an organization is and I strongly believe this: Your organization is only as healthy as your board and that STARTS with the relationship between your Board Chair and Executive Director. Joan Garry has written many great blog posts related to board health and this post on board chair-executive director relationship came to mind as I sat through this meeting. The answers to the above questions were the following:
1. How large is the board? Are there term limits?
We have a handful of board members but we are recruiting more. We don’t have term limits. WARNING: Without a robust process for board recruitment and transition, the organization is at risk of a governance crisis with the board shrinking and stalling out.
2. How would you describe the relationship between the board chair and executive director? How often do they meet?
Well, we really respect the executive director, they do a great job. The board chair doesn’t have regular meetings with the executive director. If they need the chair, they call her. WARNING: As I stated above, the most important relationship in a nonprofit is that of the chief executive and board chair. They share leadership of the organization. If there isn’t regular communication, the organization is at risk of going adrift.
3. What have the revenue/expense trends been over the last 3 years?
Well, we have a very large reserve so the board has approved a deficit budget the last few years but we have told the executive director they really need to develop a balanced budget for the next year. WARNING: There are times when it is strategic to approve a deficit budget. In this situation, there was no strategic investment being funded, it was just an unwillingness of the executive director to cut expenses, or increase revenue to compensate for programs that were not fully funded. This was coupled with an unwillingness of the board to fulfill their fiduciary obligation of being stewards of the organization assets and require a balanced budget. As we all know from our own personal financial stewardship… this strategy doesn’t end well.
4. What have the revenue/expense trends been over the last 3 years?
Related to the answer to the previous question,…we still have a pretty decent reserve but if we continue our deficit budgets as we have, we won’t have any reserves in three years. WARNING: I think the concern about this is pretty clear.
5. When was the last strategic planning process?
Hmmm, let’s see.. I can’t recall the last time we did strategy development. We have an operational plan every year that explains the calendar of activities for all the programs. WARNING: The board is on auto-pilot. One of the primary functions of a nonprofit board is to establish the organizational identity (mission, vision, purpose) and the strategic direction in response to the community needs it is supporting.
After this very enlightening conversation, I suggested the board might consider focusing on a few other things before conducting a search for a new executive director. They were not interested in focusing on anything but hiring a new executive director. I wished them well in the transition.
If you are interested in how to build a high impact board, please consider attending the upcoming training on Next Level Board Leadership on October 25, 2023.
For more information on nonprofit governance, check out one of these blog posts: