Is It Board Oversight or Is It Micromanagement?

Every week, three or four nonprofit case stories surface in the media related to inadequate oversight by nonprofit boards of directors. Many of the cases result six or seven figure dollar losses to the nonprofits. Following is my personal list of what reasonable board oversight means to attempt to help nonprofit boards of directors to avoid such losses.

  • At least half the board should be able to analyze the     monthly or quarterly financial statements. Have voluntary information     sessions available for those who do not have the skills.
  • Make certain that an external audit is conducted at     least every two years, and the board is involved in the selection of     the external auditor from a list of two or three suggested by board     members and/or management.
  • Be alert to the system used for developing new     programs. Be wary when new programs are described such as “mind-boggling.”
  • Be certain the organization has either a comprehensive     assessment committee, finance committee, and/or audit committee. (Some     states require nonprofits to have an audit committee once the organization     has a certain annual revenue.)
  • Be alert to the development process for filing critical     reports –Examples: 990s, employee tax withholdings and both state and     federal tax reports.
  • Make certain the board has developed or is developing a     current strategic plan.
  • Make certain that the organization has a knowledgeable     CFO. No board member should have to worry about the safety of the     organization’s assets.
  • Develop a system with the CEO for measuring qualitative     outcomes and impacts.
  • Be especially alert when financial reports are     frequently late or one or more directors perceive financial personnel are     inadequately skilled.
  • If you don’t understand something, be ready to raise     questions, even if the question appears to be “dumb.”
  • Nonprofit transparency is critical in the 21st     century. “Trust But Verify.”