Evolving with Purpose: How Your Nonprofit Board Should Grow Over Time

One certainty in the life of a nonprofit organization is change. Ideally, these changes will lead to positive outcomes—expanding programs, increasing staff, serving more clients, and amplifying your impact within the community.

Your board of directors plays a crucial role in guiding your nonprofit through these changes. But how should a nonprofit board evolve over time? This evolution depends on factors such as the organization’s mission and its current life stage, influencing the board’s priorities, responsibilities, and composition.

Early Years

In the beginning, a nonprofit board often consists of founders or early volunteers who are deeply committed to the organization’s cause. These small boards typically focus on the day-to-day operations and may be more entrepreneurial and willing to take risks. Even in these early stages, it’s essential to formalize decision-making processes. Critical decisions should be documented through formal votes and recorded in meeting minutes, rather than relying on informal consensus.

As the organization matures, paid staff members may be brought in to handle daily operations. At this point, it’s vital to establish a more formal governance structure and diversify the board's membership. Seek candidates with at least two of the "three W's":

1. Work: Look for individuals who are reliable and enthusiastic about contributing beyond board meetings. These members might volunteer, organize events, and engage with clients.
2. Wealth: Board members with financial resources or connections to potential donors can be invaluable, whether through personal contributions or fundraising efforts.
3. Wisdom: Members with specific expertise—such as nonprofit experience, deep knowledge of the community you serve, or professional skills in areas like accounting, law, marketing, public relations, or IT—can provide essential guidance.

Growing Pains

As a nonprofit enters the growth stage, the board’s focus often shifts from operational involvement to governance. While board members may still engage in some operational activities, the emphasis should move toward strategic planning, policy-making, and ensuring sustainability.

Expanding the board to include a broader range of skills and backgrounds can be beneficial during this stage. Passionate volunteers or clients might also transition into board roles, bringing valuable perspectives.

Establishing board committees can help manage the increased workload and focus on specific areas. However, it’s crucial not to overcomplicate the structure. A simple three-committee system can be effective, with committees dedicated to internal affairs (such as finance, HR, and facilities), external affairs (fundraising, PR, and marketing), and governance.

Maturity and Stability

As a nonprofit reaches maturity, it may attract board members with wealth, prestige, and strong connections. These individuals often bring more than just financial support; they offer industry expertise and a deep commitment to the mission, enhancing the organization’s stability.

At this stage, the separation between paid staff and board members typically becomes more defined, with the executive director acting as a key liaison. The board takes on a more significant leadership role, focusing on setting strategic direction and policy. This may involve navigating complex issues related to funding, tax compliance, and legal matters.

Embracing New Ideas and Perspectives

Over time, boards may naturally become more conservative and risk-averse. While this can be a safeguard against hasty decisions, it’s essential to avoid stagnation. Consider implementing term limits for board members to ensure a regular influx of fresh ideas and perspectives.

How HoganTaylor Can Help

The HoganTaylor Nonprofit team of business advisors and CPAs is comprised of former CFOs, controllers, and industry experts with extensive experience providing the guidance organizations need to lean forward again in their leadership. If you have any questions about this content, or if you would like more information about HoganTaylor’s Nonprofit practice, please contact Jack Murray, CPA, Nonprofit Practice Lead.

INFORMATIONAL PURPOSE ONLY. This content is for informational purposes only. This content does not constitute professional advice and should not be relied upon by you or any third party, including to operate or promote your business, secure financing or capital in any form, obtain any regulatory or governmental approvals, or otherwise be used in connection with procuring services or other benefits from any entity. Before making any decision or taking any action, you should consult with professional advisors.