Future Students, Alumni & Visitors

20 Questions For New Directors Asked to Join a Not-for-Profit Board in 2013

A female bank vice president was asked to join a not-for-profit (NFP) board and asked me what questions she should ask, before she joined. I shared what follows with her, and I reproduced it below and amended it.

Here are the questions I would ask before joining a NFP board. Some or many of them can apply to other types of boards. It is important to scrutinize the organization for professionalism and fit, particularly for NFPs where resources can be stretched, as your reputation and even financial assets may be at risk. Many directors I interview, when I ask for their greatest regret, they say not firing the CEO earlier, and joining the wrong board.

These questions try to address the downside of joining the wrong board. Here they are:

1. Do you have an inner passion for what the organization does and stands for (its vision, mission and values), and whom it serves? Can you make a solid contribution to the strategy of the organization and its performance?

2. For Director & Officer insurance, ask to see the policy and have it independently reviewed, including scope and depth of coverage, exclusions and indemnities. Assume the worst-case scenario, such as fraud, accidents, harm to a beneficiary of the NFP (e.g., student, children, patients, etc.), property destruction, harassment, or a completely unanticipated risk, including injury or death.

 Make sure you are appropriately covered, including advancement of legal expenses.

3. Ask about donor stewardship assurance, conflicts of interest, internal policies governing self-dealing, asset treatment, ethical compliance, expense reports for staff, gift policy, and reputational risk.

 Specifically, ask to see these policies and reporting as part of your “ask” binder of materials.

4. Ask to see all important reporting (financial, budgets, by-laws, strategic, risk, operations, resource allocation for programs and administration, beneficiaries / stakeholders, governance) as part of your consideration.

 Be prepared to sign a confidentiality agreement if you are asked.

5. Talk to current and past directors if possible (including CEO/Executive Director).

 Talk especially to former directors, if you can. Look at the tenure of management, staff and directors too. Prolonged tenure can indicate entrenchment and undue influence. Take a tour of key facilities as talks progress, to see the culture.

6. Who chairs the board and the audit committee? What is his or her leadership style, commitment to effective governance?

7. What are the board dynamics and board-staff relations like? Are there factions or control, by a particular donor, management or other stakeholder for example?

 Ask to see a board meeting in action if or when it comes close to the “ask” stage.

8. What are your roles, responsibilities and expectations, both generally (as a director), but specifically you? Are donations or fundraising expected? If so, what are expectations, so you know what you are signing on to.

 Be as explicit as possible here, tactfully and diplomatically. But don’t not ask.

9. What competencies, skills and contacts do you possess that would contribute to your effectiveness as a director, that this NFP board is looking to you for?  What contribution to you think you could make?

10. Do you understand fully, or have a capacity to understand fully within short order, the revenue model and the financial accounting and measurement issues involved in this NFP? Staff will make choices on accounting policies for making estimates, and you need to understand how and why, and to detect potential manipulation. (Assume fraud may occur.)

11. Is your directorship tied to your professional employment at your home firm?

 Do you have consent from your home firm on your end, if it is needed? You should obtain this if need be, as a case can be made for your professional development and relational enhancement. Tell your firm the name of the prospective NFP, as your identify and firm name (and its reputation) may be involved. Consent however should not unreasonably be withheld. Make the case for professional development, networking, learning, brand and reputation.

12. How many board and committee meetings are there? Length? Location? Frequency? What is the tenure? What are the conditions for reappointment or resignation, if any?

 The average board position, even in a NFP, is 200+ hours a year, particularly if you are not from the sector, so don’t take a board position lightly. (Also, you are likely not being paid, although you will receive non-financial benefit from doing so, including satisfaction, networking, fun, and making a difference.)

13. Are there any pending or past litigation? Tax arrears? Wages? Infractions? Staff difficulties? Red flags? Problems or issues?

 (I would even do a search of the NFP and its executives, and even fellow directors, as a precaution. Many of these searches can be done online, but if you have red flags, there are several professionals who can help you with this due diligence. I can recommend some.)

14. What are the quality and ethics of the Executive Director and the management team (including CFO, and internal audit if it exists)?
 This question is very important.
 Is there a code of conduct and it is effective and enforced? If it a large NFP, you may want to speak to the external auditor and even the internal audit function.

15. How is the Executive Director assessed?  By whom?  How is compensation for him/her and staff established?  Does the full board consent? Is compensation transparent, including to external stakeholders? (There have been past weaknesses on the issue of compensation, setting of it, approval and disclosure. Assume self-interest on the part of executives, and know what the role and power is of the board.)

16. Are there conflicts of interest between volunteers or operational roles and director/governance roles?

17. Does the organization have a whistle-blowing procedure? Is it effective? What are the ethical reporting procedures to, and oversight by, the board?

18. Does the board assess its own performance? 

Including the chair?

19. What are the professional development and learning opportunities on this board? What is the orientation program?

20. Lastly, why do you want to serve as a director of this NFP board? Does this board and sector align with your long-term career and director profile and trajectory? This may be your first board, and your first board likely is a NFP or governmental board, so plan for the future. If you are not entirely confident in the above and have any red flags, say “no thanks.” More directorships will come along and remember, your subsequent directorships are based on your first one, so be careful in joining the “right” board for you. Then your directorial career can flourish.

Even if you get answers to many or most of the above questions, you will be in good shape as an incoming director. Good firms and people should have no hesitation whatsoever in answering fully these questions. (I have seen all of them answered in my own experience.) They know that their own reputation and that of the NFP are involved and they want the best directors they can find. You also establish your diligence but do so in a nice and professional way.

Hope this all helps!

Save and Share
  • Print
  • PDF
  • email
  • LinkedIn
  • Twitter
  • Facebook
  • Reddit
  • del.icio.us
  • StumbleUpon
  • Add to favorites
  • RSS

One Response to “20 Questions For New Directors Asked to Join a Not-for-Profit Board in 2013”

  1. […] Dans son billet du 1er janvier 2013, Richard Leblanc procède à un inventaire assez complet des questions que tout nouvel administrateur d’OBNL devrait se poser avant d’accepter le poste qu’on lui propose. Ce sont des questions qu’il faut se poser personnellement, tout en cherchant à obtenir les informations pertinentes et les documents nécessaires. Il faut également obtenir des informations sur la culture organisationnelle et se faire une tête sur le climat qui règne au conseil d’administration. Notons que la plupart de ces questions sont aussi valables pour d’autres types d’organisations.20 Questions For New Directors Asked to Join a Not-for-Profit Board in 2013 […]