Directors should be selected and maintained with a view towards creating the most effective and efficient board possible.
Too frequently, directors of non-profit organizations are selected based upon personal relationships or other contacts, upon the director's perceived ability to raise or donate money or upon the director's visibility in the community. Where possible the size and composition of the board should be consciously evaluated and determined based upon the organization's unique requirements. Matters which should be considered with respect to the composition of a board of directors include:
Director Attributes
The qualities of an effective director include strength of character, an inquiring and independent mind, practical wisdom and mature judgment. An ideal director should also have vision, keen insight, imagination, resourcefulness in dealing with unusual situations and a co-operative attitude. A director should have sufficient time and interest to devote the necessary energies to the required job. Careful scrutiny should be given to the wisdom of selecting a director who is serving on more than three or four boards. Persons possessing expertise or experience in different substantive areas affecting the organization may provide greater breadth to the board.
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Strength of character
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Intelligence with cooperative attitude
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Sufficient time and interest
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Should not serve on too many boards
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Field of Expertise of board members should vary
Independent Directors
To be truly effective, a board must be independent from management and not merely rubber-stamp the recommendations of the executive officers. Directors should constructively challenge the officers and scrutinize carefully the materials furnished to them. If they are not provided sufficient information, they should demand it. If they do not understand some portion of the information, they should find out what it means.
When selecting these directors, the organization should closely examine the candidate's background and other business affiliations to avoid potential conflicts of interest. For example, the candidate should not have an ownership interest in or management position with a company having substantial dealings with the organization.
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Background Checks
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Conflicts of Interest?
Size of Board
Traditionally, boards for non-profit corporations have been quite large, frequently exceeding 30 members. It is questionable whether such a large board is the most effective and efficient in fulfilling directorial responsibilities. Detailed and challenging dialogue by all directors is unlikely and quite time consuming with such large boards. Accordingly, smaller boards should be considered, provided diversified and independent representation on the board is not unduly sacrificed.
Self-Evaluation
The board should periodically analyze its performance and the performance of individual members. The evaluation of board performance should be performed by members of the board, by management and, where possible, by outside consultants. The evaluation of individual members may be performed by the nominating committee, by all directors anonymously, or (where staggered terms are used) by directors not up for re-election. Evaluations should cover such topics as attendance at board and committee meetings, participation in board discussions, contribution of constructive criticisms and suggestions, preparedness for meetings and availability to management.
The evaluations should be reviewed by the nominating committee. If deficiencies are identified, the matter should be discussed personally with the derelict director, giving the person the option of improving performance or resigning. Ultimately, the nominating committee should withhold the names of those persons who are not qualified for re-election based upon performance.
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