We strive to promote great governance among all not-for-profit organizations. I personally believe greatness (or excellence) is something every organization can attain, yet, to some degree, greatness is relative to the size and resources of each organization. Let me explain, take for example orientation for new board members. The principle leading to greatness is to ensure all board members receive orientation about the organization and the board as well as training regarding the roles and responsibilities of the board, and their duties as members. In a larger organization, orientation may be part of an annual board retreat where board members set aside a block of time (half, one, or two days) and gather at a conference or meeting center. The setting, while a nice bonus, is not the central focus for the orientation, but rather the task of orienting members.

However, there are standards for board performance and one helpful approach is benchmarking the performance of your board to principles and practices of other organizations. The American Heritage Dictionary defines benchmarking as “measuring (a rival’s product) according to specified standards in order to compare it with and improve one’s own product.” In this case, it’s the Board that we are benchmarking in hopes of improving performance of the Board and consequently the organization it serves.

I believe it is impossible to have a great nonprofit organization while having a mediocre (or less) board and likewise I believe improvements, even incremental improvements in the board’s performance of its leadership roles, will produce positive results for the organization. This message is also being touted by an organization with greater access to all not-for-profit than any consulting firm and that’s the Internal Revenue Service. Over the last two years, the IRS has developed an increased focus on the governance practices of not-for-profit organizations. Just last week, a spokesperson for the IRS reiterated this commitment while speaking at the “Top Issues in Nonprofit Governance” Seminar in Washington, DC, and declared that the IRS is, “in this discussion to stay.”

The IRS developed a set of governance issues that they have required not-for-profit (aka nonprofit) organizations to address in their Form 990 filings. We’ve addressed these in previous newsletters (click here for that article). By default, the governance issues included in the Form 990 become a set of benchmarks.

Another data source you may wish to reference as you consider benchmarks for board governance is the newly released, 2009 National Board Governance Survey for Not-for-Profits Organizations published by Grant Thornton. Here are a few highlights from the survey that you might want to consider as benchmarks:

“More than half (56%) [of nonprofits responding to the survey] have revisited their strategic plans in light of the recession” (p. 2). 

If not, that might be something to consider.

“Three quarters (75%) of organizations held orientation sessions for new board members” (p. 4).

That’s a benchmark that pays great dividends in equipping new boards members and getting them engaged from day one of their board service. Click here to read an article we wrote that can help.

A little more than half (53%) of the respondents “reported that their organizations offer the board focused training on key organizational issues and briefings on key industry trends throughout the year” (p. 5). Ongoing training is vital for boards and board members. Click here to read an article on ideas for board development for your organization.

Another key benchmark for boards is having term limits for members. “78% of respondents said their board members or trustees have term limits” (p. 8).

Term limits are a great tool to help boards from stagnating.

These are just a few benchmarks that you might want to consider as you continue to raise the bar for board performance in your organization.

One final note that may be a reminder for some of our readers - if you have not yet filed Form 990 for tax year 2009 (and you use the calendar year as your fiscal year) -- you better get started as it is due by May 15. ALL nonprofit organizations -- even those with less than $25,000 in annual gross receipts -- must file a 990 (churches are exempt). Failure to file 990s could result in the loss of tax-exempt status for nonprofit groups. I mentioned this in a training session today and noticed some shocked looks on people’s faces and I realized that not all nonprofit organizations are aware of this change. Click here to read the article in Philanthropy Today published by the Chronicle of Philanthropy.

As we have stated before, excellence is a journey and not a destination. There’s always room for growth and improvement for your organization and the Board. Benchmarking is just one tool to use to help determine how your Board compares to other boards and through that process identify areas or trends on which to focus as you grow your organization.

Kevin Monroe is the Founder and Managing Partner of X Factor Consulting, a consulting firm that makes the world a better place by equipping leaders and strengthening organizations. Through active partnerships with businesses, foundations, government agencies, nonprofits, and others that share this commitment, X Factor is strengthening individuals, families, neighborhoods, and communities around the world. 

Kevin has a wealth of experience and a passion for nonprofit and philanthropic organizations, as evident in the results he has achieved working with organizations around the country. He is available to consult or speak on this topic and many more. Contact us today or click here to learn more.

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