The Car Analogy
A few years ago I heard a car analogy that has stuck with me. It goes something like this—
In the car analogy we have a nice little car, which is our nonprofit organization. Under the hood we find the programs, employees, and everything else that runs the organization.
This car is chugging along and the driver of the car is the Executive Director. It is the Executive Director (or CEO) who runs the day-to-day tasks of the organization.
In front of the Executive Director is the odometer, gas gauge, etc., which are the financial statements of the organization. The ED knows exactly what is going on and is wide awake as he is driving along and checking his gauges. It is also the Executive Director who is responsible to figure out what is going on if there are problems under the hood. He or she will get out and check things out before contacting the other people in the car.
In the passenger seat we have the Chairman of the Board of Directors. This individual is aware of what is going on, but can sometimes doze off because the Executive Director has his or her hands on the wheel. Additionally, other key board members are sitting all snug in the back, and they give direction when needed, but can take naps along the way.
All members in the car work on keeping enough gas in the car. Everyone contributes to the organization and donates to the cause regularly.
Defining the Board of Directors
The Board of Directors is a group of volunteers who oversee the nonprofit organization. Unlike for-profit boards, they do not receive monetary compensation for being on the board.
The Chairman of the Board
The Chairman of the Board has specific duties including finding the right people to add to the board. The Chairman is also responsible for keeping all board members on the same page.
Responsibilities of the Board of Directors
1. Raise Funds
The Board of Directors are at the forefront of fund-raising. Ideally they are passionate about the organization’s cause and are more than excited to get out and raise money for the nonprofit.
2. Donate to the Organization
Each board member is responsible to personally donate to the organization. We can’t expect people outside of the organization to donate if the organization members are not donating first.
3. Determine Mission
It is the board’s job to determine the mission and long-term direction of the organization. The Executive Director runs the day-to-day, but the Board of Directors create the long-term vision.
4. Select Executive Director
When the time comes to select the Executive Director for the organization, it is the duty of the Board of Directors to find and decide on a great leader for the organization.
5. Approve Budgets
It is the Executive Director’s responsibility to make the budget and bring it before the Board for approval.
The Next Level—A High Impact Board
We do not want to have a board that is not invested in the organization. Likewise, we do not want to have a board that doesn’t make an impact on the organization. Therefore, here are some extra guidelines for your Board of Directors.
- An excellent board of directors will be heavily involved in fund-raising, promoting the organization, and cultivating donors.
- They also bring a variety of abilities and experience to the nonprofit organization and give counsel.
- They should not become involved in the day-to-day tasks of the organization. This is the duty of the Executive Director.
- Effective board members are connectors in the community. They know people and have a diverse social network.
- They are successful in their chosen expertise. Additionally, each board member should bring something unique to the board. There should be someone with a financial background, someone with a fundraising background, etc. This allows the board to be effective in supporting all areas of the nonprofit organization.
When forming a Board of Directors (or inviting someone to join the Board of Directors), it is important to clearly articulate their roles and responsibilities. For instance, be clear that they are responsible to fund raise and that they are expected to donate X amount of money each year. You will be able to create a high-impact board when they know their roles and responsibilities.