Governance (‘Board’ includes Committee or Board of Management, and Board of Directors)
The Board is the governing body of the legal entity with the legal responsibility to govern the affairs and activities of the organisation on behalf – and in the interests of – the financial or formal members of the association, company or co-operative:
- a financial member will have paid the annual membership fee
- a ‘formal’ describes a member where there is no entry or membership fee.
In both cases, an application for membership will have been formally submitted.
There are three key components of nonprofit governance:
1. to endorse the strategic and policy framework for the organisation,
2. to ensure the financial viaiblity of the organisations, and
3. to ensure compliance with all legislative, statutory and contractual duties and obligations.
Note – the legal entity is what the nonprofit organisation is: and the organisation is what the legal entity does.
The governing body of a legal entity is legally accountable to Association, Company or Cooperative members for its decisions, actions and obligations on their behalf and in their interest. The Board is required to govern according to:
- the laws relating to it as a legal entity and laws relating to the purpose for which the organisation exists as a service-provider and as an employerthe philosophy, objects, rules and by-laws set out in the constitution
- terms and conditions of contractual, funding and service agreements, and
- Board-endorsed strategies, policies, procedures and practices.
Board Structure and Process (CEO indicates the senior paid staff position)
Each Board, together with the CEO, is responsible for the way it works and organises its own affairs and activities. It does this through the Board structure and process.
Structure is the way a Board manages its own affairs and activities, eg:
- meeting procedures
- meeting agenda and minutes
- sub-committees or portfolios
- annual general meeting and annual report
- requesting, receiving and giving information
- arranging audit
- policies and procedures
Process is the manner in which things are done, the way that Board members:
- treat one another
- come to agreement
- raise issues for discussion
- handle dissention
- cater for conflict of interest
- manage grievances
- assess risk
- relate to key stakeholders