A fundamental part of the board’s role in serving the best interests of the organisation is to ensure the organisation develops and implements strategies and supporting policies to enable it to fulfil its purpose consistent with the objectives set out in the organisation’s constitution. While the board delegates the day-to-day management of the organisation to executives, directors remain accountable for the NFP’s performance i.e. the board has its strategic and monitoring role, while also continuing to offer support to management, staff and any volunteers.

Generally speaking, organisations should identify the resources (human, financial, physical and intellectual/intangible) they need to deliver on their purpose and plan as to how those resources will be made available to, and best managed, by the organisation.

Accordingly, one of the matters a board will need to address as part of its overall leadership role is the capacity and level of capability of the organisation to deliver on its purpose. Capacity in this context refers to volume (e.g. is the organisation of sufficient scale?), while capability refers to skills to get the job done (e.g. does the organisation know how?). “Capabilities” and “competencies” are words regularly used by human resources’ professionals and other management in larger organisations. For smaller, more informal groups, simply putting it in a “skills” context might be helpful.

The board might think about issues including:

  • What are the strongest skills represented within the organisation/team/amongst volunteers?
  • Are there any skills gaps?
  • What are the organisation/team/volunteers known for doing well?
  • Do the current employees/team members/volunteers have the ability to do the jobs/tasks required?
  • How are those skills monitored and assessed?
  • If there are gaps or needs, how do we go about supporting improvements/acquiring them?
Considerations in this regard include:

  • The capabilities of the CEO and the management team
  • The knowledge, skills and experience that reside with the board
  • The financial resources available to the organisation
  • The degree to which the culture and behaviours necessary to execute current strategies and deliver on purpose are present
  • In some cases, a choice may need to be made whether to try increase an organisation’s capability to deliver on its stated purpose and strategies, or to alter its purpose and/or strategies.

Actions a board might consider, depending on the circumstances, include:

  • Mentoring of the CEO and junior board members
  • Professional development of board members
  • Focusing on how success is rewarded or celebrated

CEO appointment

The appointment of a chief executive officer (CEO) or equivalent is a critical factor to the success of an organisation. A core part of a board’s activities involves appointing and managing the performance of an appropriate CEO, and possibly overseeing the appointment of other senior executives. As the leader of the team executing the strategy, the value of the CEO to the organisation cannot be underestimated. Ideally, the board and CEO are in a mutually dependent partnership.

Accordingly, governance experts suggest a board should look for collaborative traits when selecting a new CEO. Consistent with this, experts often advise boards to avoid CEO candidates who give the impression that they see the board as an entity to be “managed” rather than a body to which they are accountable. Collaboration with the board could even be built into a CEO’s job description as a KPI and feedback provided regularly.

CEO succession planning is another important aspect of the board’s role. The needs of an organisation will change over time and a CEO who is an excellent appointment today and in the short term may not be the best person later. For example, an organisation undergoing a period of major change or regulatory reform can benefit from a CEO with skills and experience in this area, but the organisation may require a CEO with a different skill set when the period of major change is over and the circumstances are more settled.

Human resources policy

A matter of focus by many boards is how their organisation is able to attract and retain individuals with necessary skills and experience, and often with limited financial benefits to offer such individuals. In the NFP sector it may be the potential management, staff and/or volunteers are passionately committed to the cause or central activity of the organisation and want to be involved and help. Goodwill and conviction may not always be enough to get and keep the type of skills required, so many boards devote time, in conjunction with management, to developing policies and plans as to how the organisation will access resources to build and sustain its organisational capacity and capability.

Use of volunteers

There are a large number of NFPs that are sustained by the involvement of volunteers, including at the board level. This often involves a level of commitment by the individuals concerning the underlying purpose of the organisations. The combined contribution of volunteers can represent a valuable and sometimes critical resource for NFPs.

Subject to what the NFP does and how it engages volunteers, with the immense benefits of having access to them comes some matters that need to be addressed.

Some of the things that might require consideration include:

  • Providing relevant training
  • Workplace health and safety issues
  • Checks, clearances and references

Questions for consideration

  • Does the board have the right set of skills, knowledge and experience to deliver on its purpose and execute its strategies and how often does it conduct a review?
  • Does it have the right CEO and management team?
  • Is there an appropriate succession planning process in place for the CEO and senior managers?
  • Does management regularly report to the board on resource planning and management for the organisation?
  • Does the board have a clear and current policy on volunteers?
  • Have comprehensive volunteer practices and procedures been prepared by management and endorsed by the board?
  • Does the organisation have the necessary financial resources to support vital skill development and retain the people with the right skills? 

Download the full Good Governance Principals and Guidelines for Not-for-Profit Organisations as a PDF.