Wednesday, November 07, 2012

BoardSource Nonprofit Governance Index 2012

Every 2 - 3 years BoardSource conducts an in depth survey and publishes The Nonprofit  Governance Index.  This important report helps us understand how nonprofits govern,  benchmark our organization and Board to others, and provides updates in trends and recommendations by BoardSource.   My articles about the Nonprofit Governance Index are always popular – and enduring long after they are published.  As always I mix in my commentary along with the objective results – so please don’t blame BoardSource which has diligently reported the data objectively.

Today I am publishing two articles on the 2012 Nonprofit Governance index.  This article covers:

  •  Board Policies and Practices
  •  Board Performance

  • Organizational Characteristics
  • CEO Characteristics
  • Board Composition and Structure

1341 nonprofit CEOs from across the country completed a detailed questionnaire with multiple choice and open ended questions – 66 questions in total.  Large, medium and small sized organizations are fairly represented across all nonprofit sectors. The median budget size was in the $1 - $5 Million range.

So here are the results of all this:

Board Policies and Practices
Adoption of accountability measures has continued to increase since the revision of IRS Form 990, which began requiring disclosure of governance policies in 2009. 96% now have conflict of interest policies and 88% have whistleblower and documentation retention and destruction policies.  81% of boards have a formal written evaluation of their CEO and provide 990s to Board members before filing.  This represents significant progress with accountability by Boards on these  important responsibilities.  Boards are definitely taking their responsibilities more seriously than in the past.

44% of nonprofit Boards meet 4-6 times a year and also 7-12 times a year.  It’s a dead heat.  I am often asked how often is most common and I always say that I have seen every frequency.  This data bears that out.  What is also true is that if there are fewer meetings the meetings are longer.  Boards reported spending 35% of their time on committee or staff reports and 38%  on strategy and policy issues rather than operational issues.  88% of Boards report 75% attendance at meetings or better.  Sounds great but I think they are counting more tele and video conferencing than in the past since 47% say they use these technologies.

55% of the respondents report that they have conducted a formal self-assessment in the past three years, but nearly 30% of respondents report that their Board has never conduct­ed a formal, written evaluation of its own performance.  When I am contacted in the early stages of Board Retreat planning, I frequently recommend conducting a Board Assessment and I have an excellent tool for conducting an assessment.  I am surprised that so many Boards don’t consider this an important thing to do.  ALL of the organizations that I have done an assessment with have found it helpful and it provides an excellent springboard for discussion on how Board performance can improve.  If you haven’t done a board assessment, seriously consider it.

Board Fundraising
75% CEOs report 90% to 100% personal board giving.  This is good news.  However,  while 75% of CEOs say that expec­tations regarding fundraising are explained during recruitment,  40% of nonprofit CEOs report that their board members remain reluc­tant to participate in fundraising activities.  CEOs identify fundraising as the most common area needed for board im­provement, and fundraising is consistently the lowest scoring area on the board report card.  I have seldom met a nonprofit CEO that does not have this complaint. But frankly – no egg throwing now – I think the expectation in small -  especially urban based -  nonprofits is frequently unrealistic.

Board Orientation
This chart clearly shows the value of having formal Board orientation.  Boards that do report having a structured orientation report having significantly more well informed boards.  It does make a difference.

Board Responsibilities
BoardSource asked CEOs to assess their Board’s performance in the responsibilities outlined in the BoardSource publication, Ten Basic Responsibilities of Nonprofit Boards. Over 80% of CEOs rated their Boards as having a grade of A or B in their understanding of the organization’s mission and financial oversight.  From there the grading goes down rather precipitously. Once again, as in past surveys, boards received a low grade for fundraising. In fact 45% of CEOs gave their Board a D or F in fundraising. Not very encouraging. 


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