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Are you ready to grow your nonprofit board but struggle to define “how many members are too many” or “how few is too few?
First, it is crucial to recognize that no “one magic number” constitutes the perfect-sized board.
Nonprofit leaders should review sector trends, learn best practices, and complete an organizational assessment to confirm the number of board seats needed.
Nationally, “nonprofit organizations with budgets of over $10 million have an average of 18 board members, whereas nonprofit organizations with budgets of less than $1 million have about 14 board directors.” (https://www.boardeffect.com/blog/board-size-nonprofit-governance)
Five Questions to Consider When Defining the Size of Your Organization’s Board
1) Legal Compliance
How many members is a board legally required to retain tax-exempt status?
The Internal Revenue Service (IRS) requires that all nonprofits registered at the federal level maintain a minimum of three members on the board of directors.
At the state level, requirements range from 1 to 5 board members. It is important to remember that all organizations registered at the state and national level must ensure compliance with both. For example, suppose your state only requires one board member. In that case, the minimum number of acceptable members is still three to maintain tax-exempt status with the IRS.
To confirm each state’s minimum number of board members and other vital governance compliance facts, visit: https://www.harborcompliance.com/information/nonprofit-governance-by-state
2) Roles and Responsibilities
What do you need board members to do for the organization?
Leadership models can look quite different depending on the organization’s scope of work. Regardless of whether an organization identifies its board as a “working board” or as a “governing board,” members should be active. Nonprofit board members assume legal and ethical responsibilities when they accept a seat on the governing board of directors.
Organizations that are entirely or predominantly volunteer-run often need board members to assist with daily operations and direct services. Boards that identify as “working boards” assume a dual responsibility of governance and management which can require more intense time commitments outside of regular board meetings.
When an organization has staff managing daily operations, the board typically assumes the oversite role and is referred to as a “governing board.” While many of their duties focus on “planning and oversite,” the job description should also clearly define how the board expects members to engage as “planners, action-takers, and partners in accountability.”
Nonprofit leaders must assess the organization’s needs and create written job descriptions and expectations for the board of directors.
Once an organization prioritizes board functions, it is easier to determine how many leaders are needed to fulfill the roles and responsibilities of the board.
3) Diversity of Leadership
What professional skills and personal experiences on the board will help fulfill your mission?
Most organizations claim to want a diverse board but often fail to define what constitutes diversity.
When growing a diverse board, it is helpful to consider the following:
1. Do we want/need board members who reflect the demographics of the community we serve? (If so, who should be at the governance table?)
2. Do we want/need board members who bring different professional skill sets to the table? (If so, which skills sets will most advance our mission?)
3. Do we want/need board members who have a positive track record in nonprofit leadership, or are we willing to invest in new leaders?
4. What traits do we seek in our board members?
A healthy board dynamic should involve leaders who can share their unique perspectives, respectfully dialogue with those with differing opinions, and commit to achieving consensus for the wellbeing of the organization. Lack of diversity on a board can result in a limited understanding of the community served, fewer creative ideas, lack of new resources, and failure to consider all angles of significant decisions.
Do you have a diversithy of leadership on your board?
4) Action and Implementation
How many board members do you need to achieve our goals?
While job descriptions and written expectations are helpful, an organization’s strategic plan is essential in the board’s tool kit. A well-crafted written plan should capture measurable goals, strategies, and action plans.
Before determining the number of board members needed, it is vital to evaluate the following:
1. What activities are the board responsible for spearheading and supporting?”
2. Are there enough board members to fill all standing and special committees without burning out existing board members?
On average, nonprofits maintain four standing committees. According to the Boardsource Index of Nonprofit Board Practices 2021 Report, the most common committees include:
-Audit and finance (82%)
-Development and fundraising (76%)
-Governance and nominating (71%)
-Executive committee (61%)
-Planning and strategy (28%)
If the “to-do” list is long, but the board roster is short, it might be time to expand the board to meet the needs of your growing organization.
How many board members do you need to ensure that the organization is sustainable?
Consider evaluating the officer positions on your board directors. Ideally, a board should have a chair (Aka: President), vice-chair (vice-president), secretary, and treasurer. Those officer positions constitute the board’s “executive committee.”
Sustainability assessments might focus on questions such as:
1. Does the board have a deep enough bench to mentor qualified successors for each officer position?
Nonprofit trends reveal that 73% of U.S-based nonprofits have three-year terms. 46% of those organizations impose a 2-year term limit. (Boardsource Index of Nonprofit Board Practices 2021 Report)
1. Should a current board member become unexpectedly unavailable, do you have enough leaders to carry the load and carry on without staying in “crisis mode”?
2. Do board turnover rates place your organization at risk of becoming “non-compliant” with the minimum number of board members required?
3. Are there enough board members willing and able to step into interim roles should key leaders, such as the founder or executive director, become unavailable?
Most experts agree that a bigger board is not always better.
In fact, “a landmark study in the ’70s found that a “Goldilocks” sized team, one that is not too small and not too big, is 4.6 people…which in the real world rounds up to 5. More recently, researchers at Bain found that after the 7th person in a decision-making group, each extra member reduces decision effectiveness by 10%.
While many nonprofit boards need more than seven members to fulfill core governance functions and achieve strategic plan goals, the “Goldilocks” concept is helpful when organizing board members into efficient and effective committees or action teams.
Balance is everything.
When deciding how many board members a nonprofit should have, leaders must look beyond the number of “people in seats” and consider:
1. Unwavering commitment to the organization’s mission
2. Availability to fulfill the legal, ethical, and engagement requirements associated with serving on a nonprofit board
3. Depth of skills and experiences to help the organization overcome challenges and achieve goals
Are you ready to build an efficient and effective board?
Funding for Good understands that leadership development requires consistent and intentional action. Check out our Strategic Planning page to learn more.