The trend by the government to go more lean is impacting Canada’s non-profit sector, which includes more than 160,000 organizations. Their revenue account for an estimated 10% of GDP, and will grow over the next 10 years as government programs contract.

Some believe that non-profits are following sub par or outdated governance practices. It may be time to reform non-profit governance in Canada.

Here are a suggestion of 10 questions that non-profit directors should ask at their next board meeting:

1. Why is our board so big?
The optimal size of a board is 9. This allows for governance to be positive, effective and allow for better financial performance.

2. Is this an oversight board or a fund-raising committee?
The board’s purpose is oversight, not fund-raising. Too many boards forget this. The result is a proper focus on oversight is lost. It is important to separate the donor’s and the board – one is for fund-raising initiative and the other is for oversight.

3. Has every director reviewed the executive director’s contract?
There is a contract that exists between the organization and its executive director or chief executive. Unfortunately many directors fail to review this document. In some cases, when a director has asked for a copy they are told it is confidential. This is unwise and improper. As for the director who does not review, he/she could end up being guilty of a breach of fiduciary duty.

4. Has the board reviewed the organization’s detailed expense policies?
Transparency – everyone needs to be on the same page and understand/know what is covered, who is covered for what and so on. Here are some of the tough questions you need to ask: Who gets reimbursed for what? Who signs off? Is the organization buying gifts for members? Under whose authorization? Failing to be transparent can lead to systemic abuse of the system.

5. Is our chair transparently and openly elected by the full board?
Too many non-profit boards allow their current chairs to select or influence the nomination of their successors. Also, too many chairs unilaterally select committee heads and members. This needs to be the decision of the full board – to elect chair, committee heads and committee members.

6. Are our committees presenting all of their work to the full board?
Many boards allow the organization’s oversight, strategy and goals to be decided by sub-committees, leaving many directors out of the loop. Governance dictates that directors cannot delegate their material responsibilities to any committee. For example, the finance committee is not able to create the budget and simply have the board approve it. There must be a full presentation from the finance committee to all directors.

7. Have we set clear expectations about attendance and preparation and are we calling out poor performers?
Pubic companies publish attendance records for every director; non-profits should do the same. Maybe public pressure will ensure that these directors take their responsibilities seriously. Likewise, too many directors come to meetings without performing any serious review of the agenda or meeting materials. Poor attendance and lack of preparation should be called out by the chair or other directors. There also should be a consequence for this behaviour or lack of.

8. Have we created a board culture that’s hospitable to tough questions and maverick viewpoints?
Are you stacking your team to be “friendlies” and not ask the tough questions and challenge the management? A culture that values harmony over substantive, controversial/questioning discussion is a certain sign of bad board. There needs to be those that challenge, if only to provide a different thought pattern.

9. Are we spending enough time together as a board without the presence of management?
In many non-profits, the executive director attends every board meeting. From experience, directors are less likely to ask tough questions when the executive director is present. It is appropriate for the board to ask the executive director to attend some of the meeting however not all. There needs to be that “space” for the board to do their work without worrying about the executive director.

10. When was the last time the board candidly evaluated its performance in a confidential session?
Many non-profit boards fail to evaluate themselves. On a survey, 52% of Canadian boards failed to conduct self-evaluations. This is not good. After every board meeting conclude the meeting with a confidential session where the board candidly evaluates its own performance. A formal evaluation also should be done annually with the assistance of a third party. Some directors will not like this however your duty is to the position and your role – not gaining friends.

Real oversight requires leadership. This may mean making some uncomfortable yet accountable and responsible for their actions.

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