Get on board and make a difference at NPOs

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Israel Noko | CEO | NPI Governance Consultingmail me |


There are about 230,000 registered non-profit organisations (NPOs) in South Africa, and getting involved as a board member could make a considerable difference to their sustainability. Join up and make a difference – but avoid some common pitfalls.

Most organisations, whatever sector they function in, seek board members who will add value to their operation through experience, and specific expertise. This could take the form of a sought-after qualification, or a skills set that is currently lacking on the board. Increasingly, they also seek the ability to be independent. For many who play strategic roles, close proximity to a founder, shareholder or management can be a step too close. There is a need for independent objectivity, as board members apply their minds independently for the benefit of the organisation. It’s worth reiterating too that a board member’s input is for the benefit of the organisation as a legal entity, and not for the shareholders.

Exercising your fiduciary (trustee) duties comes with serious consequences, not only at an organisational but at a personal level. As a potential board member, you need to be beyond reproach; if you have a somewhat chequered past the chances are you will lack credibility. You must have the highest level of integrity.

I have encountered a case where a charismatic founder deemed it acceptable to use funds for personal use, and strong and independent trustees averted this. Over the last few years, matters have improved, with the King IV guide on good corporate governance for NPOs underpinning the need for transparency and integrity among directors and board members

For-profit and NPO’s fiduciary responsibilities are the same, but there is the difference that some NPOs turn to board members for funding. In the USA and Europe, for example, there are expectations that if you are on an NPO board you will also provide some funding. In South Africa, this could pose some conflict if you are both a donor and board member, and this needs to be managed.

It is also important for fiduciaries (trustees) to not get involved in day-to-day operations of an organisation. While they may be curious to follow how matters are unfolding, input must be kept at a strategic level. There needs to be trust between fiduciaries and management in order to have a functional arrangement. If that trust breaks down, one party has to go.

Also recognise that a trustee must ensure that they are not over-committed. In the early days of democracy, many individuals took up 20-30 memberships and moved from one board to another. Now, with greater recognition of the need for corporate governance, nobody should hold more than four positions on boards, so that you are able to apply your mind properly to preparation, and ensure you participate meaningfully in maintaining good governance practice within the organisation. Organisations must ensure that  board members can fulfil their roles effectively.

Finally, board members should ensure they don’t overstay their welcome. Sometimes they are in their posts for 10-15 years and, when optics change in society ‒ economically and politically ‒ the most dignified thing they can do is to know when it’s time to leave.

Remuneration for board members varies. For-profit organisations might offer a sitting fee for attending meetings, plus other fees, with factors such as the number of branches and staff influencing payment.

For NPOs, the general ‘informal’ rule is that fiduciaries are not remunerated with a fee but are compensated for out of pocket expenses. There are exceptions, such as universities, where fiduciaries are remunerated in accordance with their level of expertise. It’s quid for pro for the expertise and commitment that people bring.

I also highly recommend getting in touch with the Institute of Directors South Africa, which is itself a long-standing NPO. It advocates for good corporate governance and provides training in fiduciary responsibilities, the Companies Act, King reports and related matters. Acquiring Certified or Chartered Director (SA) qualifications will give would-be Board members greater credibility.

Inyathelo, an NPO which contributes to the development of sustainable organisations and institutions, has many useful resources and services to help NPOs ensure good governance and effective board membership. The organisation offers publications, workshops, training, one on one clinic advisory sessions, and more, often free of charge.

For NPOs searching for trustees, the pool of potential NPO board members from diverse races, backgrounds and gender is much larger than 25-30 years ago. It is short-sighted for organisations to seek out only people who sound, look and act like them. The more diversity within a board, the more the trustees can open their eyes and minds to opportunities.

An NPO is likely to look for board members within an NPO environment, but I would like to challenge them to search within the private sector too. The more networks an NPO has in the private sector, the more fundraising it can initiate when those networks become established.

Also, in the early days of democracy, many sought to appoint people with the right political connections. That is still important, but it must not be the only criterion: the politics of the day change swiftly and may no longer serve the organisation.

In the case of NPOs seeking out board members, take heart that there are many well-qualified people who would like to assist. They can be found if you look in the right places. NPOs should align themselves with local organisations and join Chambers of Commerce. Senior corporate managers are always entering retirement, and given that people are living longer, there is a pool of talent out there for whom assisting an NPO could be an attractive proposition.

Part of giving back to society is also giving back to NPOs. If you have experience and expertise, participating in an NPO as a board member could be the right thing to do.


 

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