All 990s report on Board Members and Managers. When you join a board, the risk is to avoid one that is stuck or failing. The 990 information is a springboard to other sources and patterns emerge of the best boards – and the worst!  1019_4272320

What is the worst number of directors for a healthy nonprofit?

Less than 11. The nonprofits in the study that had less than 11 board members reported on the 990 had reports of corruption in news articles or were really a family business in the garb of a nonprofit. If you want to disguise another business purpose in a nonprofit form, a small board is essential to keep secrets.

Otherwise, a small board is ineffective. Small boards are erratic on accountability. One poorly qualified member of a small board has an outsized voice. The line between a governing board and a working board starts to blur. A large board  should have enough wisdom to sort out erratic opinion and be globally focused.

What are worst board members for charitable guidelines?

Members who Give Time Instead of Money!

  • Charitable gifts are important because contract money usually has a specific purpose that doesn’t fully reflect the nonprofit mission. Gifts also impress foundations and government of community support for the agency. 50% of the Board of Directors should be willing to host a fund raiser each year. 100% of directors needs to make an annual gift that is one of their top three charitable priorities for the year. No exceptions. Directors who don’t contribute should be offered a volunteer position.
  • 20% of the Board of Directors should appear on 990 Schedule B as giving $5,000 or more to the organization. It’s a signal that someone on the Board really cares about this!

The indicators mentioned above for the Board charitable effort is a sign of the importance of your mission and the passion of the Board.

What is the worst Board Balance for Regulatory?

100% regulatory members

Every board has a universal need for 2 board accountants. The Board needs a CPA for the Audit Committee and at least one Management Accountant to analyze financial reports. Most of this business should take place in the Finance Committee. The 990 Part VII lists each Board Member. Always use the 990 as a beginning point for searching social media and online. Too many accountants on the Board will blur the line between management and board and meetings will be spent poking and probing the regulatory reports.

What is the worst Board relationship to the community?

No Centrality

The 990 Part VII lists each Board Member and Senior Manager. In New York City, the nonprofit world, similar to all other industries,  attracts the best connected members and managers. If you search each name on Google and LinkedIn, successful New York City nonprofits often draw Executive Directors and board members from Ivy League graduates. There are exceptions, but you will work twice as hard to get the job for which you have the same credentials as the Harvard alum.

Perform a search of 20 nonprofits in your community in the size that you plan to be in your Strategic Plan. Make a chart of companies, colleges, and community activities to see what patterns emerge. Make sure that half of your new Board Members are connected to the central nonprofit community.

What is the worst Board for Directing the Agency?

The Board is charged with setting the basic direction of the agency and creating measures to measure the effectiveness of the Executive Director and staff. The 990 Part III asks about agency accomplishments. Schedule O gives opportunity for more reporting.

Most boards fail this last and most important question. The largest nonprofit in the study has three paragraphs on the 990 as to what it provides to children. There is no indicator that they accomplished anything. Part III gets little attention because too many agency missions are controlled by the demands of the funder. Boards of Directors simply give up and vote to fund the agency and hope for the best.

Conclusion

The 990 has information that is more than a report on financials. It’s possible to see the makeup of a board. One can discover the presence of major board member gifts. Most importantly, it has space for whether the board thinks about mission and results. It’s a great tool to use at the next time that someone asks you to join their board – avoid the worst!

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