Why non-profit boards fail
- We hear a lot about badly run charities in the media. This is often due to specific challenges that charities face such as small size, high levels of voluntary staff and low turnover.
- Being a director/trustee of a charity board is about providing
- Board failure is due to at least one of the following:
- Trustees see their role as boosting the confidence of management. In reality, their primary role is holding the staff and management to account, providing direction, providing control and ensuring resources are well used.
- The board forgets to keep an eye on what’s happening in the organisation and fails to spot early warning signals of trouble.
- Board members don’t have the skills, know-how, or diversity to be able to provide the governance that’s needed, especially as the charity grows and complexities increase
- A board member being complicit in benefitting personally from the charity or the board failing to take action when they see fraudulent activity happening in the organisation.
- When something goes wrong in another organisation, it’s your board’s opportunity to do an assessment of their own governance practices.
- Some themes emerging in charity inspector reports include:
- Ineffective board.
- Issues with the accuracy of board minutes.
- No evidence of robust scrutiny.
- Absence of necessary skills.
- A weak financial reporting process.
- Regular questions the board should ask itself include: are the right mix of people on the board? Do they have the necessary skills? How well organised are our board meetings? Is the chairperson providing effective leadership? How comfortable do members feel asking questions of the board?
- For effective governance, the board needs:
- A clear succession plan – know who is stepping down.
- A solid recruitment process – where to go to recruit a diverse mix of members
- An induction process for new members.
- A clear understanding of the trustees’ roles and responsibilities.
- Robust structures, policies and systems in place that are constantly reviewed and updated.
- To be compliant with the Governance Code and other regulatory requirements
- Be accountable and transparent.
- To be constantly training and developing board members, individually and collectively.
- To carry out an annual review of the board’s effectiveness and to get an external reviewer every two or three years.
Join Diarmaid Ó Corrbuí, CEO of Carmichael, a leading specialist training and support body for nonprofits, who will be discussing board failures at non-profits. He knows that having the right people, skills and information are essential for effective governance and he’ll be sharing his insights with you.
This will be an informative and engaging discussion with plenty of practical insights to bring back to your boardroom. We look forward to hearing your questions and seeing you there.
Diarmaid is CEO of Carmichael, a leading specialist training and support body for non-profits in Ireland. Diarmaid is a former Executive Board Director and Company Secretary for three private sector companies. He is a certified Technical Corporate Governance Assessor in the National Standards Authority of Ireland’s Swift 3000 Code of Practice for Corporate Governance Assessment.
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