Nonprofit Governance Best Practices: A Board’s Working Checklist
What are nonprofit governance best practices?
Nonprofit governance best practices are the habits that let a board oversee an organization without running it: at least five board members on staggered, limited terms, a governance committee, a written conflict-of-interest policy, financial oversight that includes the Form 990, an annual review and support plan for the executive director, and a yearly board self-evaluation.
Ask a board what good governance means and the answer usually comes back as paperwork: bylaws, a conflict-of-interest policy, a Form 990 filed on time. Those documents matter. The practices that decide whether a board governs well go further and keep the board and the executive director working as a pair.
This checklist covers both, with a way to check each practice at your next board meeting.
Key Takeaways
- Six of the eight practices match questions that every organization filing the full Form 990 answers in public, in Part VI of the return.
- BoardSource recommends at least five board members, and the most common term structure is two consecutive three-year terms.
- The strongest boards keep a monthly check-in between the board chair and the executive director and evaluate their own performance.
- BoardSource pairs supporting the executive director with evaluating them. In our coaches’ experience, boards most often skip the support.
What Does Good Nonprofit Governance Look Like?
Good nonprofit governance means the board sets direction, approves the budget and major policies, and hires, evaluates and supports the executive director. Management means the executive director runs the work inside those decisions. A board governs well when both sides can say where its job ends and the executive director’s begins.
Board members also carry three legal duties that BoardSource names as care, loyalty and obedience, and several states write versions of them into statute. BoardSource’s Ten Basic Responsibilities group the board’s work into oversight, resources and strategy.
Which Practices Belong on Your Board’s Checklist?
The Eight-Practice Board Checklist below covers most of what a nonprofit board needs to govern well. Six practices match questions that every organization filing the full Form 990 answers in public, in Part VI of the return: board size and independence, meeting records, conflicts of interest, review of the return and how the executive director’s pay is set.
| Practice | Why it matters | How to check |
|---|---|---|
| Enough voting members | Enough people to staff committees and stay independent of any one voice. | Count the voting members. Part VI line 1a reports the number. |
| Staggered, limited terms | New members arrive on schedule and no small group holds power for decades. | The bylaws state term length and limits, and no more than a third of terms end in the same year. |
| Independent members | Members with no pay or business ties to the organization can judge it freely. | An annual questionnaire to each member, which the IRS instructions give as one way to answer line 1b. |
| Conflict-of-interest policy | Board decisions serve the organization instead of a member’s business or family. | A written policy, disclosures signed this year and a record that members with a conflict stayed out of the decision (lines 12a–12c). |
| Financial oversight | The board answers for the money even when staff manage it. | An approved budget, financial statements at each regular meeting and the full Form 990 sent to every voting member before filing (line 11a). |
| Records and policies | Minutes and written policies show what the board decided and why. | Minutes written up by the next meeting or within 60 days, whichever is later, and written whistleblower and document retention policies (lines 8, 13 and 14). |
| Executive director review, pay and support | The board’s most important hire needs feedback, fair pay and the resources to succeed. | A dated annual review, pay set with comparable data by members without a conflict (line 15a) and a development plan the budget funds. |
| Board self-evaluation | A board that reviews only its executive director never sees its own gaps. | The date of the board’s last self-assessment. |
Federal tax law does not require most of these policies, as the IRS instructions for Form 990 say directly. The IRS still considers them good for tax compliance, and every filer answers each Part VI question in public. An organization that files a shorter return can use the same questions as an annual checklist. For the seventh row, see our guide to running the executive director’s annual review.
How Big Should the Board Be, and for How Long?
There is no outside benchmark for the right size. BoardSource’s own recommendation is no fewer than five board members. Terms are close to universal: in BoardSource’s Leading with Intent survey, 95 percent of boards report set terms, 54 percent have term limits, and the most common structure is two consecutive three-year terms.
A board is too small when it lacks the expertise and perspectives the organization needs or struggles to stay independent. It is too big when members cannot all join one conversation and the real debate moves to the executive committee.
BoardSource advises staggering terms so that no more than half of the seats, and preferably a third, turn over in one year. Limit the chair’s term too: BoardSource notes that limits keep chairs from burning out and protect the chief executive from an ineffective chair.
Term limits also give a graceful exit to members who stopped contributing, such as the “resume board members” our coaches hear about, who join for the prestige and then do little. While members serve, the work is keeping board members engaged.
A term limit is the kindest way to part with a board member who stopped showing up.
What Does a Governance Committee Do?
A governance committee looks after the board itself. It finds and vets new members against the skills the board lacks, runs orientation, plans for the seats that open each year and leads the board’s self-evaluation. Some boards call it the nominating committee, and in a very small nonprofit the full board does this work.
For recruiting, BoardSource suggests a board composition matrix: a grid of the skills and perspectives the board needs, checked against the members it has. The same committee keeps a list of candidates ready before terms end and holds exit interviews with members who rotate off.
Orientation can stay simple. In a small nonprofit, the basics are enough: how the organization runs, a written job description for board members, clear roles and an expectation that members show up. The full process is in our guide to onboarding new board members, and training for nonprofit board members covers the skills that come after orientation.
How Does the Board Support the Executive Director?
The board supports the executive director through a regular check-in between the board chair and the executive director, a shared line between governance and management, and support for the executive director’s development. BoardSource’s Ten Basic Responsibilities pair supporting the chief executive, morally and professionally, with evaluating them.
Our coaches hear about this partnership from the executive director’s side. In the strongest ones, the board chair and the executive director meet monthly outside board meetings, both can say where governance stops and management starts, and the board evaluates its own performance too.
The partnerships our coaches see struggling usually have a communication gap at the center. The executive director assumes the board understands the operating reality, the board assumes support exists that does not, and neither checks. Micromanagement is the visible symptom. Disengagement is more common and harder to spot.
Most of this runs through the board chair. Write the monthly check-in into the board chair responsibilities, so the habit survives a change of chair.
In our coaches’ experience, most boards read their duty toward the executive director narrowly: hire, set pay, evaluate. The broader reading adds the resources to succeed, and coaching is one of them, filling the gap between the annual review and week-to-week support. Boards that frame it as continuity for the organization treat it as part of their job. Boards that frame it as a fix for a struggling leader attach a stigma that keeps capable leaders away.
A board that shows up quarterly and rubber-stamps everything is failing as much as one that second-guesses every hire.
Read more on the board and executive director relationship and our answers to board questions about coaching. Center for Nonprofit Coaching volunteer coaches donate their time, which keeps fees 85%+ below market rate: individual coaching for an executive director costs $300, $400 or $600 for six sessions and executive team coaching costs $500, $700 or $1,100, by operating budget.
How Does a Board Check Itself Against This List?
Run the Eight-Practice Board Checklist once a year, ideally at the meeting where the board reviews the executive director. Mark each row yes, partly or no, pick the two weakest rows and give each one an owner and a date. A short board self-assessment survey adds the members’ own view of how the board works together.
When the weak rows concern skills or recruitment, the answer is board development: deliberate recruiting, orientation and training over several years. Funders notice the board too, and when one asks how your board governs, the finished checklist gives you specifics to point to.
Two limits apply. Questions about bylaws, state law or tax filings belong with a nonprofit attorney or your auditor. And we offer no board consulting or board training. Our coaching supports the executive director and the leadership team, who often bring board questions to their sessions.
A quick win before your next board meeting: check two rows. When did every member last sign a conflict-of-interest disclosure, and did each voting member receive the Form 990 before filing? We coach nonprofit leaders only. When you are ready, start an application.
Frequently Asked Questions
Should the executive director be a voting board member?
BoardSource recommends that the chief executive sit on the board ex officio, without a vote, where state law allows it. California is one exception: its nonprofit law does not count a person without a vote as a director. Check your bylaws and your state’s rules with a nonprofit attorney.
Are term limits required for nonprofit boards?
Not under federal tax law. Your bylaws set terms and limits. BoardSource recommends limits, and 54 percent of boards in its Leading with Intent survey have them.
What are the legal duties of nonprofit board members?
The duty of care, the duty of loyalty and the duty of obedience. Care means paying attention and deciding on good information. Loyalty means putting the organization’s interest ahead of your own, which a conflict-of-interest policy puts in writing. Obedience means keeping the organization true to its mission, its bylaws and the law. State law sets the details.
How often should a nonprofit board meet?
As often as your bylaws require, and state law may set a minimum. BoardSource advises fixing the year’s schedule in advance and sending materials two to three weeks ahead. Document every meeting: Form 990 asks whether minutes were written up by the next meeting or within 60 days, whichever is later.
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