With all the financial mess we are dealing with on a national level today it seems like a good time to talk about accountability. Accountability is essential for effective governance and it’s about more than the money.
Accountability is an important, strong sounding word but it is also one of those words that leaves a lot unsaid. What should a nonprofit board be accountable about anyway? Effective governance requires that a nonprofit Board review and approve the mission and strategic direction, budget, financials, compensation policies and fiscal and governance policies.
Try to recruit new board members with this line? You’re more likely to put them to sleep or see recruitees run away. But all of these functions are important governance responsibilities. Let’s break it out and discuss it so that we understand it as the energizing charge it should be rather than the dry responsibility that it sounds like.
Developing the strategic direction for an organization is an exciting venture. Determining the vision of the organization for the future and the values you will have as guiding principles is exciting and uplifting. Making that happen with fiscal responsibility is the accountable and just as important ingredient in the journey.
Board training should include the role of accountability and the Board should understand that its accountability is to the community – that is who is counting on you. Just as parents are responsible for their children, the responsibility is more than to pay the bills – it is to lead, set a good example, expose our children to new experiences and possibilities, to help them make their dreams come true.
This is the exciting part of a Board’s accountability. But just as we must balance our budget at home and invest in the future at the same time (paying college tuition, funding an IRA) doing so is important for the Board of a nonprofit. You will undoubtedly have to take some risks, but they should be reasonable risks grounded in both confidence and facts – not just one or the other. I am an officer on two nonprofit boards and I always face financial decisions as I would if it were my own money. That means I vote against some proposals based on my own financial risk/value to the community assessment. Other risks I am willing to take because of my assessment of value to the community.
What’s important in understanding your Board’s role in accountability is that you see the whole picture. Too many people just look at the financial responsibility or the desire to fulfill the mission only. Accountability comes in to play when you balance both roles.
So today, if you were thinking about where is the accountability in the bailout plan, take some time to also think about your own accountability as a board member.
Marion Conway Consulting