Nonprofit Boards

The problem with some nonprofits is that they lose sight of their mission.  The obligation of a nonprofit board is to pursue the mission, not necessarily to preserve the nonprofit entity itself at all costs.

This and other nonprofit issues were explored by an expert panel held March 10 under the auspices of the National Association of Corporate Directors-New England.

A prime example of loss of sight of a mission was a recent college closure, where the board of directors went to extraordinary means, through unusual financial transactions, to save the institution, and when they failed they had not provided for faculty, students, transfers and the like.  Nonprofits with these kinds of existential issues are urged to speak with Courtney Aladro, Assistant Attorney General in Massachusetts who heads the nonprofit/public charities division of the AG’s office.

Another focus was on risk; the board must be proactive in establishing a “risk matrix” and following through to make sure that traditional risk issues, and also financial risk and exceptional risk (a pandemic?) are addressed in light of fulfilling the mission.

Lastly, the panel emphasized the necessity of having a diverse board, including representation from clients serviced by the mission.  Boards were warned of drifting into a “clubbiness” where they rubber stamp management, and do not challenge management.  While it is important for directors to “play well with others,” that does not mean neglecting the fiduciary obligation to speak one’s mind as a director.

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