How-To Tips: Implementing Practice 2c

Consider the appropriate governing body size and committee structure to oversee the organization, encourage discussion and enhance efficiency.

Organization by-laws generally contain requirements regarding the size, structure and composition of the governing body. These requirements must comply with federal and state law. Currently federal law does not require a minimum or maximum number of governing body members, though recommendations by nonprofit leaders through the Panel on the Nonprofit Sector suggest a minimum number of three members. Although there are currently no laws limiting the number of members of nonprofit governing bodies, the median size is 17 and some experts recommend 13-15 members to operate effectively.

Keep in mind that the most governing bodies' duties include overseeing the legal and financial undertakings of the organization, hiring and supervising the chief executive, and ensuring the organization meets its resource and program goals and objectives. Consider the number of members required to ensure sufficient expertise and experience to carry out these duties.

Too few governing body members may lead to insufficient knowledge among board members to fulfill their obligations, insufficient numbers to act in leadership roles, or conflicts of interest that impede decision-making in the interest of the organization. Large governing bodies may not have sufficient opportunities for engagement and opportunities to gain knowledge of the issues facing the organization, leading them to feel less individual responsibility and obligation for the organization's decisions. An informed, engaged governing body leads to better decision-making.

A final issue to consider is independence of board members. The federal Sarbanes-Oxley Act of 2002 contains standards for the independence of board members of publicly traded corporations. These do not directly apply to nonprofits, but many nonprofits are voluntarily seeking compliance with Sarbanes-Oxley.

In addition, several states have laws related to the independence of nonprofit governing bodies. The Panel on the Nonprofit Sector recommends that at least one third of nonprofit governing body members be independent - not receiving any monetary gain through employment or contractual relationships with the organization and not related to anyone receiving such compensation.

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