Corporate social investment practitioners, not only in South Africa but globally, understand that having professional, knowledgeable, competent, and dedicated governing body members of non-profit organisations (NPOs) is essential today. 

The donor, funder and social impact investor community is becoming more stringent on this issue, and has made it a high priority, especially when conducting due diligence before funding NPOs. This makes it imperative that all governing body members have the correct competencies and are equipped to be more effective and efficient in the discharging of their duties on behalf of the stakeholders and, ultimately, the beneficiaries that they are privileged to serve.

The following statement is frequently heard: “We have a dysfunctional or disengaged governing body (board)...”

Although this may be an accurate statement, it may not necessarily be a fair one. Many governing body members accept a position onto a governing body with the best intent and passion for the social issue being addressed. However, most of the time when we hear the above statement, it is generally through no fault of the governing body member, but rather as a result of many factors.

We regularly make the mistake of thinking that because a person has accepted a position onto ‘our board’ that they are equipped to fulfil that function. It is, therefore, incumbent upon the organisation to implement a robust board succession plan and recruitment process and ensure that there is a quality board orientation process in place. Not only does the organisation need to conduct detailed due diligence on each potential board member, but each potential board member also needs to conduct their personal due diligence on the organisation for which they are being asked to consider joining the board.

According to the Department of Social Development’s NGO register, as at the writing of this article there are 277 0671 NPOs registered on the NPO register, and it is estimated that there could be as many as 50,000 non-registered.

Of the total number of these NPOs, 93% of these are classified as generally less formalised, community- based voluntary associations, that is they are not formally structured as non-profit companies (6%) or non-profit trusts (1%). This is according to the last Department of Social Development 2 - State of South African registered non-profit organisations.

All these structures are required to have some form
of governing body in place, to be a registered NPO, be that a management board for a voluntary association, a board of trustees for a non-profit trust, or board of directors for a non-profit company. The average board size differs between five to twelve directors. Therefore if we are to be conservative and use an average of six governing body members per board, that would translate into a staggering 1.7 million individuals in South Africa who have a governing body role, of which over 80% of these may have had little or no corporate governance experience or training within the non-profit sector.

Whose responsibility is it?

Whose responsibility is it then to ensure that each board member is equipped to fully discharge their duties? Well, it is both; however, the organisation holds the initial and primary responsibility to ensure that new members have access to all the relevant information and documentation, so that they can conduct their own due diligence in ‘getting up to speed’ before accepting the role.

The process of appointing new governing body members should be the culmination of a process, which started long before the positions became available. This should be a planned and well-managed succession process, starting from the understanding of the skills mix required for the next season to contribute to the organisation’s strategic plan in the next three to five years. Many organisations rush this process to fill the vacant seats and generally find that this can lead to a dysfunctional and non-engaged governing body.

Therefore, take the time to thoroughly think through the process and plan accordingly, both personally and organisationally.

The process

Governing bodies are generally expected to provide orientation for their members. Volunteer governing body members contribute tremendous value to their organisation. Their commitment of time and expertise deserves a thoughtful, formal orientation programme to integrate new members into the governing body.

As part of that formal orientation programme, the governing body can assign experienced governing body members to mentor new members.

Governing body orientation refers to a process for helping new governing body members contribute fully, and as early in their tenure as possible, to the work of the governing body. The following guide outlines the objectives that might be considered, who should lead the process, and how an orientation programme might be structured. Governing body orientation is not just about the transfer of information. As a result of their orientation, new governing body members should:

• Understand their roles, responsibilities, and
• Be aware of the current goals, opportunities and challenges facing the organisation;
• Be aware of who the organisation’s main stakeholders are including members, funders, clients, partners, the public, volunteers as well as staff;
• Have some sense of how their own background, knowledge, experience and skills will contribute to the current work of the governing body and the goals of the organisation, in line with the strategic plan;
• Appreciate the background, knowledge, experience, and skills of each of the other governing body members; time commitment to governance work around the governing body and committee table, and away from it;
•  Know how governing body meetings are run, decisions are made and what formal governing policies and practices exist; and
• Appreciate how this governing body functions similarly or differently to other governing bodies they have served on, or are currently serving on.

Governing body orientation ought to begin when a person is being considered as a potential governing body member. At the very least, the recruitment and application process should assist a new governing body member in understanding:

• Why their expertise and skills, and which ones in particular, would be valuable assets to the governing body and to the organisation;
• Some of the current challenges and opportunities facing the organisation;
• The time commitment required of them; and
• That the organisation is competently run, including sound financial management.

To this end, board composition is seen as a critical success factor for board effectiveness. In addition
to board composition, there are several other critical factors that are considered important for board effectiveness and governance. Here are eight key priorities:

1. Board diversity;
2. Board independence;
3. Competencies and skills;
4. Board leadership;
5. Effective communication and collaboration;
6. Board evaluation and refreshment;
7. Strategic oversight and risk management; and
8. Ethical and responsible conduct.

These factors contribute to board effectiveness and are considered critical good governance practices. However, it’s important to note that specific priorities may vary depending on the social issue being addressed, organisation size, and jurisdiction.

References

1. Department of Social Development’s NPO register – http://www.npo.gov.za/

2. Department of Social Development – State of South African registered Non-Profit organisations 2015/2016. Page 10.

 This article was first published in Inyathelo's 2023 Annual Report.