Nonprofit governance models help guide the policies, systems, and processes used by boards to make effective and informed decisions.
Over the last few years, many nonprofit organizations struggled through unexpected setbacks, pandemic-related disruptions, and other economic uncertainties that presented new and complex challenges.
To tackle those challenges head-on, more nonprofit organizations across the globe are seeking solutions to better corporate governance. To help foster good governance, OnBoard, for example, provides an all-inclusive Nonprofit Board Management Software with powerful features and capabilities to enhance nonprofit corporate governance.
Even so, depending on the needs and purpose of your organization, there are several nonprofit governance models used by nonprofits today. In this post, we look at five common nonprofit board governance models. But first, let’s briefly review what we actually mean by nonprofit board governance.
What Is Nonprofit Board Governance?
In its simplest terms, the nonprofit governance structure combines the policies, guidelines, systems, and processes used to make effective and informed decisions, and holds the decision-makers accountable. It also involves aligning the operational framework with the organizational goals and mission to help the organization realize its vision.
There is no compromise on good governance for nonprofit entities. Despite taking on humanitarian or environmental causes, nonprofits face similar challenges and risks to profit-oriented businesses. Hence, good governance is essential, not only to govern effectively but to make the organization appealing to volunteer workers as well as sponsors/financiers.
Below, we look at some governance models examples:
5 Nonprofit Governance Models
Nonprofit board governance models or structures refer to how the organization’s systems, guidelines, processes, and framework seamlessly interact to help achieve the organization’s missions. The model also defines the working framework of the organization, including the responsibilities of the board members and whether they’re accountable individually or as an entire organization.
Nonprofit boards must prioritize the organization’s missions when overseeing and conducting the organization’s affairs. Most board members typically offer to serve the organization based on their willingness and desire to achieve a particular mission or help a humanitarian cause.
Below are the 5 most common nonprofit board governance models:
1. Advisory Model
An advisory board model is one of the traditional methods of governance used by nonprofits. Typically, the top brass or CEO will turn to the advisory board to seek help and advice in running the organization. Members of an advisory board are industry gurus who have the experience and expertise to provide professional services, but at no cost to the organization.
A nonprofit may form an advisory board in addition to the organization’s usual board. The advisory board members bring their professional skills and talents to the organization. And since they’ve established their authority in the nonprofit industry, they help the organization expand its reach, boost credibility, and elevate its fundraising and public relations efforts.
2. Cooperative Governance Model
One of the most democratic governance models, a cooperative model, exists where the nonprofit has no CEO or president to oversee the organization’s activities. Usually, this kind of governance model is put in place just because the law requires the nonprofit to have a board of directors.
There’s usually no hierarchy, as all members are at the same leadership level, and decision-making is based on consensus. This model calls for each member to be equally responsible, accountable, and committed to the organization’s mission.
3. Patron Governance Model
The patron model is somewhat similar to the advisory governance model. The key difference lies in the primary purpose of the board members. Unlike an advisory board model, which is largely concerned with offering advice and expert services, patron board members are primarily tasked with providing financial support. They give their own contributions and use their influence to help the organization pull more funds from the outside.
Patron board members usually have a great deal of personal wealth and influence in the nonprofit field. Yet still, they have less influence over the CEO than the advisory board members.
4. Policy Board Model
Policy board, one of the most common governance models, is a popular governance method used by nonprofits. John Carver developed the model in his book, “Boards That Make a Difference.”
With this model, the board extends a high level of trust and confidence in the CEO on running the organization. In fact, it delegates and grants most of its authority to the CEO, thereby allowing the CEO to have complete control of the organization.
While the board may act as second in power, the CEO and the board work together and usually hold regular meetings to get updates on the organization’s progress.
5. Management Team Model
The management team model is a well-known governance structure, even with for-profit entities or corporate enterprises. However, instead of recruiting people to be in charge of human resources, fundraising, planning, public relations, and any other area of interest, the board divides itself into department-like committees to oversee those areas.
Mixed Nonprofit Governance Models
Although it’s not the most preferred nonprofit governance structure, some organizations usually decide on a mixed model. With this method, the board picks the main nonprofit governance model from the first four models above. It then adds a relevant committee or sub-board, which operates similar to the committees in the management team model.
Generally, a mixed nonprofit governance structure consists of any of the first four models with a partial mix of the team management model. For example, a health organization can have an advisory board to advise and help the CEO run the organization while still forming a sub-board/committee to work on fundraising.
What Changed for Boards in 2021?
The Bottom Line
Good governance is essential for navigating the turbulent and volatile business environment for both profit and nonprofit companies. While nonprofit boards need to take an active role in putting the organization’s mission and goals at the forefront, they also need to take on fiduciary matters and fortify the organization against risks and legal tussles.
Board management solutions like OnBoard can help nonprofits cultivate and foster good governance through myriad options, such as a Governance, Risk, and Compliance portal. Such software systems offer the capabilities to not only help the organization govern more effectively but attract competent board members, able staff, and volunteers who can propel the organization’s growth.
Want to learn more about how OnBoard can help you streamline operations for your nonprofit? Contact our team of experts and see how we can help. We’re happy to assist!
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