The Directors’ Institute defines the following nonprofit challenges as some of the biggest threats to nonprofit effectiveness: limited resources, minimal training, and overlapping roles between board and management. These gaps, while not always visible, can ruin a charity’s transparency and accountability.
Public expectations for upholding best practices in nonprofit governance are also rising. Today, 70% of respondents say transparency is essential for a nonprofit’s survival. Given this, the board of directors should actively uphold the ethical standards that define the organization’s credibility. A board portal for nonprofits can help with these responsibilities, making board governance more transparent, efficient, and straightforward.
This article explores key governance models, solutions for common challenges, and nonprofit board governance best practices to help leaders set for long-term growth.
Models of nonprofit governance
Nonprofit organizations (NPOs) use different kinds of nonprofit governance, depending on their structure, the services they provide, and their revenue-generating methods. Your board of directors (BOD) may choose to adopt one of the following models:
- Advisory board model. A volunteer board that helps the CEO with advice on marketing, fundraising, accounting, and other activities.
- Patron governance model. The nonprofit board members manage the fundraising events, run promotional campaigns to gain outside contributions, and invest their funds in the NPO.
- Management team model. The BOD is split into several fundraising, marketing, management, human resources, and finance management committees.
- Policy model. The CEO has the most power, but board committees are continually evaluating their performance.
- Cooperative governance model. The board governs the organization without a CEO, with each member having equal voting power and accountability.
- Community engagement model. The community takes part in the decision-making. This model is common for organizations that serve specific populations.
- Hybrid models. The board can combine models. For example, the patron board can seek fundraising from local communities by allowing them to participate in the governing process.
Whichever you choose, make sure it’s a suitable nonprofit board governance model. This is your first step to avoiding common oversights and successfully implementing best practices for nonprofit board governance.
Key responsibilities of a nonprofit board
While specific duties may vary depending on the size and scope of the organization, every board is responsible for guiding strategy, safeguarding finances, and upholding the highest standards of integrity. Below are the core responsibilities that define effective nonprofit board governance:
- Providing strategic leadership
Nonprofit boards work alongside the executive director to define direction, approve major plans, and track performance over time. Beyond that, they must notice shifts in funding, community priorities, and policy, adapting their strategies accordingly.
Some boards make time for strategy outside their usual meeting agenda by carving out time beyond regular meetings to focus solely on long-term planning.
- Ensuring financial oversight
Directors are trusted to look after the organization’s resources as if they were their own, ensuring both stability today and sustainability for the future. Yet, not every board member needs to be a financial expert, but one should understand the basics. Regular training, clear reporting, and continuous education help ensure everyone at the table can contribute to financial discussions.
- Upholding ethical and regulatory standards
501(c)(3) organizations operate under a public trust, and with that comes high expectations around accountability. Yes, the legal side is non-negotiable since ensuring the organization meets its obligations—IRS filings, state registrations, charitable solicitation laws, and more–is their primary responsibility.
But equally important is to make ethical leadership a part of the corporate culture. Some organizations often create a dedicated governance or ethics committee to keep this work on track. These committees scrutinize policies, revisit them regularly, and help the board lead by example.
- Managing board development
This is not only the board’s duty, but also one of the best practices for nonprofit governance. A strong board prioritizes its development, including onboarding new board members with care, supporting their growth, and planning for leadership transitions.
Nonprofit board governance best practices
Strong nonprofit governance comes down to three essentials: clarity, transparency, and the right people around the table. When board members understand their roles, feel empowered to lead, and have access to the right support, the organization benefits at every level.
Here are some of the most effective and practical ways to strengthen your board’s governance.
Define clear board member roles and responsibilities
Create detailed job descriptions for board members. Members or committees can be responsible for meeting attendance, volunteering, events, or community outreach. Developing thorough position descriptions helps set expectations around attendance, community involvement, personal contributions, and fundraising efforts. A well-defined framework not only improves performance but also encourages members to remain active and engaged.
As part of this structure, it’s essential to establish a board succession plan. Planning ensures continuity in leadership and smooth transitions when board members step down.
Stay on top of finances
Even if your board isn’t full of financial experts, everyone should have a basic understanding of the budget and how money flows through the organization. Clear reporting, regular financial updates, and good recordkeeping are a must.
That said, you don’t have to do it all alone. Legal and financial professionals can help you stay compliant with tax filings (like the IRS 990 form), identify potential risks, and close any knowledge gaps. It’s a smart investment that protects both your reputation and your future.
Improve nonprofit board meetings
Respect everyone’s schedules by optimizing meeting time. Use a consent agenda to move quickly through routine items, and place the most important issues at the top.
Take notes of key decisions and outcomes for accountability and historical reference. And if your board is meeting remotely, look into digital tools that can help organize documents, record deliberations, and keep everyone on the same page.
- Additional read: Explore how to run a nonprofit board meeting in our article.
Implement regular board performance and governance reviews
Understanding how successfully your board operates through regular performance assessments creates a healthy habit of reflection and permanent growth.
Use simple tools like self-assessment surveys, peer feedback, or even CEO evaluations of the board’s effectiveness. Every so often, it’s a good idea to bring in an outside consultant. An unbiased set of eyes can help uncover blind spots, highlight strengths, and offer practical recommendations.
Give board members the tools they need
If you want your board to champion your organization, give them the resources to do it well. Things like a short elevator pitch, a compelling one-pager, or even a business card that links to your website can go a long way.
These materials help board members talk about the mission confidently, whether they’re connecting with potential donors, volunteers, or community partners. The easier you make it for them to promote your work, the more they’ll step up.
Ensure legal compliance with expert nonprofit advisors
Nonprofit compliance can get complicated, especially with evolving tax laws and reporting requirements. That said, you don’t have to do it all alone. Legal and financial professionals can help you stay compliant with tax filings (like the IRS 990 form), identify potential risks, and close any knowledge gaps. It’s a smart investment that protects both your reputation and nonprofit future.
Having that extra layer of support helps you avoid costly mistakes and gives your board confidence.
Develop a nonprofit board succession and leadership plan
Leadership transitions are inevitable—what matters is how prepared you are for them. A strong succession plan helps keep the organization stable when a board chair, committee lead, or other key member steps down.
Start by identifying leadership gaps and grooming future leaders from within your current board. Make sure new members understand the path forward, and offer mentorship or onboarding to help them step into their roles with confidence.
What are the common mistakes in nonprofit governance?
Let’s see what mistakes you may encounter during the governance process.
- Lack of awareness. Board members may be unaware of their responsibilities and the implications of running a nonprofit. That’s usually the result of outdated documentation and a lack of experience.
- Diversity problems. NPOs often recruit friends and business partners, ignoring their areas of expertise and skills. This can create severe gaps in knowledge and one-sided opinions.
- Low engagement. Members should know why the organization is effective and what separates it from other nonprofits. If they don’t know how to pitch your NPO, they won’t raise public awareness or attract fundraisers.
- Conflicts of interest. Unclear regulations and a lack of expertise can result in unresolved conflicts of interest and potential legal consequences.
- Inefficient meetings. Meetings can drag on without suitable results, without an agenda, practical guidelines, and a centralized document exchange platform.
- Security problems. Without a strict confidentiality policy and robust data security, nonprofits may suffer from data leakages and subsequent reputational or financial damage.
Now that you’re familiar with the mistakes, the next logical question would be, how do you avoid these pitfalls and improve your governance?
Simplify governance with board portal software
Boards must share large amounts of information to ensure productive governance. However, advanced virtual board portals for nonprofits can help you:
- Share agendas, regulations, and policies with members
- Generate nonprofit board meeting minutes automatically
- Audit logs for each action to ensure compliance
- Review and approve documents remotely with electronic signatures
- Find crucial data fast with the full-text search feature
- Secure your data with military-grade encryption, role-based permissions, two-factor authentication, and dynamic watermarks
- Improve communications using real-time chats, voting, annotation, and scheduling management features
Virtual board portals can cut needless bureaucracy to let you focus on critical tasks during online and offline meetings. If your organization is considering adopting a digital board solution, it’s worth exploring the leading providers in the space.
The right board management solution for your nonprofit will depend greatly on your organization’s size, structure, and unique needs. To support you in finding the best fit, we’ve created a detailed overview of leading board portal solutions tailored specifically for nonprofits.
Conclusion
Good governance helps your nonprofit do its job well, not just for now, but for the long haul. It’s worth taking a step back every so often to ask a few key questions: What’s working? What’s falling short?
The practices in this guide are recommendations to help your board stay focused, earn trust, and make decisions with confidence. And that kind of clarity benefits everyone, from your team to the people you serve.
Additional resources
Improving nonprofit board governance is an ongoing process—it takes time, intention, and the right information. Whether you’re refining board policies, planning for leadership transitions, or looking for practical tools to support better decision-making, there’s no shortage of valuable guidance out there.
Below are a few trusted resources that offer deeper insights and hands-on advice to help your board lead with clarity and confidence:
- National Council of Nonprofits ‘’Good Governance Policies for Nonprofits’’ provides a practical overview of essential governance policies every nonprofit should have in place.
- ‘’Recommended Board Practices’’ is a comprehensive overview of recommendations and best practices for nonprofit budget governance, covering topics such as board composition, responsibilities, and performance assessment.
- ‘’How to Take Effective Nonprofit Board Meeting Minutes’’ lays out tips and best practices for crafting clear and effective meeting records.
- ‘’How to Run a Nonprofit Board Meeting Effectively’’ explains the components of nonprofit meetings, the roles of participants, and best practices.
- ‘’Board Management Software: 5 Signs Your Company Needs It Now’’ explains how virtual tools help your board run more efficient meetings in person or remotely.
FAQ
1. What is the role of the board of directors in nonprofit governance?
The board of directors is responsible for overseeing the organization’s mission, finances, and long-term strategy. They provide guidance, ensure legal and ethical integrity, and hold leadership accountable while supporting fundraising and community outreach efforts.
2. How can a nonprofit organization establish a strong governance structure?
Start by clearly defining board roles and responsibilities, adopting core governance policies, and ensuring financial oversight. A strong structure also includes regular board evaluations, transparent decision-making, and a succession plan.
3. What steps can nonprofit leaders take to ensure continuous improvement in governance practices?
Leaders can promote ongoing learning, conduct regular board assessments, gather feedback, and bring in outside experts when needed. Staying updated on best practices and encouraging open communication also helps the board grow stronger over time.
4. What are the best practices in nonprofit governance?
Some key best practices include building an engaged board, maintaining financial transparency, running efficient meetings, having a succession plan, conducting regular evaluations, and ensuring compliance with legal and ethical standards.