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How Does Board Structure Affect Performance?

October 19, 2016  | by Commonfund Institute

Governance and Policy | Industry Knowledge

The structure of a board has an important influence on its effectiveness, and being cognizant of these matters is essential to improving a board’s performance. In this article, we’ll discuss four major factors that relate to the structure and composition of effective boards.

Size

Until recently, nonprofit boards tended to be relatively large, with as many as 20 or more members including honorary members who rarely attended meetings. Today, those practices have changed. According to BoardSource, the average size of a nonprofit board in the U.S. is now 16 members.

The Board Chair

The role of the chair is the most important on the board, and the most demanding and time-consuming. The diligence, commitment and character of the chair determine the board’s agenda and the way committees are populated, and help to ensure that board and staff view the mission in the same way. Among other duties, the chair:

  • Presides at board meetings
  • Facilitates the work of the committees, often serving as an ex officio committee member
  • Serves as the chief liaison with the president or executive director of the organization
  • Works with the board’s executive committee and the president or executive director to prepare the agenda for board meetings

Board Recruitment & Diversity

A board that is too homogenous lacks the benefits that can be gained from bringing to its deliberations a range of perspectives that can lead to vigorous debate, well-rounded discussion and comprehensive examinations of key issues. For this reason, a board should ideally be composed of people with varying and relevant backgrounds, perspectives, expertise and experiences. To achieve this, it is important that the board take a strategic approach to recruiting new trustees, and that there be a strong nominating committee or board development committee to vet potential members.

Training & Ongoing Education

It is often assumed that new trustees coming from a business or professional background will automatically grasp the nuances of nonprofit governance. In fact, however, the nonprofit world differs in significant ways from the business world; because of this, new members not infrequently need help in adjusting to the nonprofit environment in order to become successful trustees. Board orientation is the first crucial step. In the weeks leading up to their first meeting as trustees, new board members should attend, as a class, a briefing led by the board chair or the head of the board development committee along with the chief executive officer.

How does your board measure up?

Disclaimer

Information, opinions, or commentary concerning the financial markets, economic conditions, or other topical subject matter are prepared, written, or created prior to printing and do not reflect current, up-to-date, market or economic conditions. Commonfund disclaims any responsibility to update such information, opinions, or commentary. To the extent views presented forecast market activity, they may be based on many factors in addition to those explicitly stated in this material. Forecasts of experts inevitably differ. Views attributed to third parties are presented to demonstrate the existence of points of view, not as a basis for recommendations or as investment advice. Managers who may or may not subscribe to the views expressed in this material make investment decisions for funds maintained by Commonfund or its affiliates. The views presented in this material may not be relied upon as an indication of trading intent on behalf of any Commonfund fund, or of any Commonfund manager. Market and investment views of third parties presented in this material do not necessarily reflect the views of Commonfund and Commonfund disclaims any responsibility to present its views on the subjects covered in statements by third parties. Statements concerning Commonfund’s views of possible future outcomes in any investment asset class or market, or of possible future economic developments, are not intended, and should not be construed, as forecasts or predictions of the future investment performance of any Commonfund fund. Such statements are also not intended as recommendations by any Commonfund entity or employee to the recipient of the presentation. It is Commonfund’s policy that investment recommendations to its clients must be based on the investment objectives and risk tolerances of each individual client. All market outlook and similar statements are based upon information reasonably available as of the date of this presentation (unless an earlier date is stated with regard to particular information), and reasonably believed to be accurate by Commonfund. Commonfund disclaims any responsibility to provide the recipient of this presentation with updated or corrected information. Past performance is not indicative of future results. For more information please refer to Important Disclosures.

Disclaimer

Information, opinions, or commentary concerning the financial markets, economic conditions, or other topical subject matter are prepared, written, or created prior to printing and do not reflect current, up-to-date, market or economic conditions. Commonfund disclaims any responsibility to update such information, opinions, or commentary. To the extent views presented forecast market activity, they may be based on many factors in addition to those explicitly stated in this material. Forecasts of experts inevitably differ. Views attributed to third parties are presented to demonstrate the existence of points of view, not as a basis for recommendations or as investment advice. Managers who may or may not subscribe to the views expressed in this material make investment decisions for funds maintained by Commonfund or its affiliates. The views presented in this material may not be relied upon as an indication of trading intent on behalf of any Commonfund fund, or of any Commonfund manager. Market and investment views of third parties presented in this material do not necessarily reflect the views of Commonfund and Commonfund disclaims any responsibility to present its views on the subjects covered in statements by third parties. Statements concerning Commonfund’s views of possible future outcomes in any investment asset class or market, or of possible future economic developments, are not intended, and should not be construed, as forecasts or predictions of the future investment performance of any Commonfund fund. Such statements are also not intended as recommendations by any Commonfund entity or employee to the recipient of the presentation. It is Commonfund’s policy that investment recommendations to its clients must be based on the investment objectives and risk tolerances of each individual client. All market outlook and similar statements are based upon information reasonably available as of the date of this presentation (unless an earlier date is stated with regard to particular information), and reasonably believed to be accurate by Commonfund. Commonfund disclaims any responsibility to provide the recipient of this presentation with updated or corrected information. Past performance is not indicative of future results. For more information please refer to Important Disclosures.