Board Term Limits: Everything You Need to Know

Board term limits are essential for ensuring corporate and nonprofit boards stay dynamic, accountable, and forward-thinking. By setting term limits, boards regularly bring in fresh perspectives, maintain strong governance practices, and prevent stagnation at the leadership level.

Read on to learn about the pros and cons of setting term limits for board member positions and discover how board portal software enhances collaboration, simplifies manual tasks, and provides data-driven tools to evaluate board member performance.

What are Board Term Limits?

Board term limits are simply the length of board service. Typically, term limits for board members are outlined within the organization’s bylaws. 

• BoardSource recommends two consecutive three-year terms for nonprofits. 
• The National Association of Corporate Directors (NACD) recommends 10 to 15-year terms for for-profit corporate boards.

Both organizations also recommend instituting a staggered board to allow for a certain number of new board members each year. This limits the number of terms expiring at the same time, so boards can maintain continuity and new members have access to mentors with institutional experience. 

All board members go through an extensive vetting process before taking a seat on the board. Regardless, there are still instances where members fail to meet expectations or simply become disengaged from proceedings. Here are some signs that one of your board members has become disconnected from your organization:

• They don’t consistently attend board meetings
• They don’t actively participate in the board meetings they attend
• They’re rude to fellow stakeholders or generally disruptive
• They fail to meet personal obligations, such as donations or volunteer requirements 
• Their public behavior negatively impacts the organization

Term limits provide one of the only options to deal with difficult board members. Similarly, unhappy board members are more likely to submit their board resignation letter. 

Pros and Cons of Board Term Limits

Pros

Implementing board term limits brings several benefits to your organization such as:

• Term limits provide an opportunity for the board to source new talent with a background and/or expertise that aligns with their unique mission.
• Regular turnover allows for a more diverse board in terms of age, gender, ethnicity, and experience.
• Term limits help to prevent any one member or small group of members from dominating the board and its decision-making.
• Limiting terms prevents long-serving board members from becoming fatigued or complacent in their roles.
• They streamline board succession planning, making it easier to replace certain board skills at specific times.
• Limiting terms provides a respectful procedure for passive, ineffective, or problematic board members to exit the organization.
• Term limits bring in new perspectives to refresh the board’s decision-making process.

Cons

While term limits are mostly beneficial, they can also invite some drawbacks. Consider these downsides to board term limits: 

• Terms can result in the loss of valuable institutional knowledge, which can be particularly detrimental in new or complex organizations.
• Frequent turnover can disrupt the continuity of board activities, making it harder to maintain long-term focus or follow through on projects.
• It can be difficult to recruit and maintain new board members whose skills, experience, and commitment match the organization.
• Implementing and managing term limits can add to the administrative workload.

How to Establish Board Term Limits

While the specific steps ultimately depend on the unique makeup of your organization and board, you typically want to follow these steps: 

1. Evaluate whether term limits are beneficial for your organization.
2. Draft a clear and detailed proposal outlining term limits, including the number of consecutive terms allowed and the length of each term.
3. Present to the board for broader discussion and proposal.
4. If approved, amend the organization’s bylaws to include a new term policy.
5. Gradually introduce the term limits over a set period to allow for a smooth and seamless transition, ensuring the organization is well-prepared for the changes.

Some boards give members the option to eventually become an emeritus board member or serve as a non-director, allowing them to maintain involvement in the organization after serving the maximum amount of terms. In nonprofits, directors often transition to the advisory board after completing their term limits. 

Achieve Succession Planning Mastery with OnBoard

Term limits encourage the infusion of new ideas and perspectives into the board. The regular rotation of board members ensures accountability and encourages members to remain actively engaged in their roles

OnBoard’s board portal software is designed to help you define and execute your succession plan with ease. 

Key OnBoard features include:

• Board assessment tools and engagement analytics to measure board member effectiveness
• Secure messaging to boost board collaboration
• Voting tools to streamline decision-making
• Customizable agenda builder to simplify meeting management
• Integrations with popular apps and software, including Zoom, Microsoft 365, and Teams

Ready to learn more about how OnBoard software optimizes board governance? Download our free board meeting minutes template today.