Board governance is a hot topic. The recurring spectacular organizational collapses of the last few years (read: Enron) have prompted more stringent securities regulations and closer scrutiny of individual directors in the corporate world. As private sector companies scramble to comply with mandatory new disclosure and accountability laws, nonprofits are taking a good, hard look at their own governance policies and procedures.

Tracking board practices

Sue Dalhoff, CEO and president of Strategic Leverage Partners Inc. (SLP) in Toronto, is conducting one of the most comprehensive surveys on nonprofit board governance ever undertaken in Canada. SLP’s National Study of Board Governance Practices in the Canadian Non-Profit and Voluntary Sector gathered responses from more than 800 nonprofits surveyed, information from a series of regional focus groups, and expert opinion from key informant interviews. It is an attempt to provide useful and practical information to the sector. Survey results are due out in March 2006.

“The environment has really changed in the last few years. There is a heightened sensitivity to board governance issues,” says Dalhoff. “We want to be able to give people a look at the lay of the land and identify some successful practices…to give organizations some more effective tools to work with.”

The Centre for Voluntary Research and Development (CVRD) in Ottawa is a partner in this venture. Paula Speevak-Sladowski, managing director for the CVRD, believes this study is already bearing fruit. “[It’s] demonstrating that organizations are very interested in governance and accountability. The hope is that we’ll be able to identify critical practices that will help with governance,” she says. But Speevak-Sladowski points out that different organizations have different governance needs and won’t necessarily all share the same practices.

“I don’t use the term ‘best practices’ because you could have a hospital foundation with multiple boards and a multi-million dollar budget and also have six women who decide to start an organization because one of their neighbour’s daughters died of a disorder,” she says. The questions of board composition and resources are proving to be difficult to address.

Systematic problems

Statistics Canada recently issued the results of the 2003 National Survey of Nonprofit and Voluntary Organizations. The survey noted that, “many organizations appear to be experiencing problems with respect to their ability to fulfill their missions. The majority of organizations (56% to 58%) report difficulty recruiting the types of volunteers the organization needs, difficulty obtaining board members, and difficulty planning for the future as problems.”

A 2002 column in Report on Business magazine noted the same issues: “Not-for-profit boards often attract volunteer members with limited resources to devote to issues that may require more expertise.” Many experts point to this issue as a key starting point from which to effect positive change in nonprofit board governance.

Clarifying roles

David Brown, executive director of the Conference Board of Canada, believes board members sometimes confuse their duties. “The biggest problem boards face is where to draw the line between the board’s responsibilities and management. In the not-for-profit sector, boards tend to get into micro-management,” he says. “The directors, often volunteers, join the board because they really care about the organization, but often don’t have a lot of private sector board experience. When you combine those [factors] you have a risk that they’ll get into running the operations and [forget] to do their job in governing.”

John T. Dinner, president of John T. Dinner Governance Services, concurs with Brown’s assessment. “Boards run into challenges when there isn’t a keen understanding between the differences of governance and operations,” he says. Dinner also advises nonprofits to invest time and resources to make sure board members are trained as directors and are not, “…just an extra layer of management.” But both men hasten to add that nonprofits are getting better at governance.

“We’ve seen the biggest improvement in the sector in the last four years,” notes Brown. “Particularly their audit and control responsibilities, but they’re also taking their communication and strategy responsibilities much more seriously. They invest a lot more time in board training, recruitment, and meetings.” Dinner sees the same trend. “There’s an increased appetite [for board evaluations] and people are certainly starting to do it more,” he says. Current board members are also noticing these changes in attitude.

Changing to ensure success

Christine Dade is past president on the board of the Autism Society of Ontario (ASO). Like other nonprofits, the ASO has a passionate board, but it was stuck in unproductive governance. “All of us have other jobs and it is difficult to fit in extra committee meetings, and finding time to work on projects that needed to be done,” she says. “We have taken steps to increase our complement of staff to recognize the needs of specific positions. We tried for too long to ‘do it ourselves’ and not spend the money on new staffing. Unless we do this we will not be able to move forward or see growth.”

Dalhoff also recognizes this need. “In the boards I sit on now, people really want board education to be part of board meetings. We want to know how to do our jobs better…to be more accountable. It’s becoming very competitive out there for funding. Only those who can clearly articulate their vision and their mission and ensure the donors the accountability they deserve will be successful.” Some boards are implementing drastic measures to ensure that success.

Radical shifts in practices

Gwynn Williams is a board member for the Easter Seals Society of Ontario (ESS) and a professional governance consultant. As chair of ESS back in the late 1990s, he was asked to reshape its practices. “We decided to move to a stronger governance model, where those providing the oversight of management had experience that would help management to do a better job,” he explains. The ESS also decided it needed to be more accountable to stakeholders and keep the trust of its funders.

“Here was a charity raising millions of dollars a year and didn’t have proper business practices for tracking that money, for budgeting and allocating resources,” he says. “We’re responsible for money that doesn’t belong to us; it belongs to people who have given it to us to be spent on these children with physical disabilities. When you’re responsible for someone else’s property that’s the ultimate fiduciary responsibility.” As a result, the board voluntarily adopted the private sector disclosure standards of the Ontario Securities Commission. It was a radical move, but one that paid off. ESS Ontario won the 2000 Governance Award from the Conference Board of Canada as a result of these implementations.

The future looks bright

It is evident that nonprofit board governance practices are going through a period of realignment, but according to Brown, it all bodes well for the future. “What’s driving change in the private sector is largely regulations and court cases. But what’s driving change in the not-for-profit sector is people [volunteering for] self-improvement…people wanting to excel. When you have a movement like that afoot, it tends to have staying power. I don’t see any end in sight,” he says.

And that should make board members and funders everywhere very happy about the future of nonprofit governance.

For more information on the ongoing National Study of Board Governance Practices in the Canadian Non-Profit and Voluntary Sector, visit: www.strategicleveragepartners.com/governance.html.

Andy Levy-Ajzenkopf is a freelance writer living in Toronto. He can be reached at aajzenkopf@yahoo.com.