Author: Phil O'Toole
Managing Partner
NFP Boards carry significant legal and ethical responsibilities, yet some Directors are unaware of the entirety of their duties. They're passionate about the mission, committed to the cause, and often generously volunteer their time. Passion and good intentions however, do not always equate to effective oversight. When issues inevitably emerge, Boards may quickly discover they've been asking the wrong questions.
Behavioural patterns of inexperienced Boards
Particularly in smaller or fast-growing NFPs, Board members arrive with the best intentions, but limited governance experience. They are often appointed to the Board because of a connection to the organisation, professional expertise in related fields, or their commitment to the cause - but not necessarily because of their Board or governance experience. Combined with busy schedules outside of the NFP, a pattern often emerges with Board members who are either:
Board seats filled with a greater proportion of hands-off Directors are typically good at setting the direction of the organisation, but that direction can come at a price. When Board members receive sanitised reports from a management team not wanting to disappoint, they may be unaware of the hidden operational risks lying below the surface. Hands-on Boards, on the contrary, often miss the early warning signs we've explored in previous articles on recognising misconduct and creating proactive risk cultures, as they may be too close to the people and process to see/foresee the high-level risks and governance issues with clarity.
Despite the different approaches and pitfalls, the same question is asked by Board members when problems arise: "Why didn't we know about this sooner?". The reality is that they either didn't develop the required communication channels, didn't ask the right questions, or didn't maintain the independence needed to see what was really happening.
Effective oversight starts with aligned leadership
A Board Director's duties aren't a mysterious dark art, but they do require active engagement. NFP Directors owe duties of care, diligence, and good stewardship to their organisations. This means more than attending meetings and rubber-stamping management's decisions. It means understanding what information you need to request to fulfil your oversight role, creating systems for early problem identification, and maintaining the balance between trusting management and verifying that trust is warranted.
Personal relationships clouding professional judgment - while not unique to NFPs, is often an issue that is magnified due to limited size or available resources. The CEO you've worked alongside for years, the program manager who's passionate about the mission, the finance officer who's always been reliable - these relationships are valuable, but they can't replace independent oversight. Effective Boards understand this balance and manage it deliberately, and are hyper-aware that misconduct often doesn't start with bad intent.
The Chair-CEO relationship sits at the heart of this balance. A strong, transparent relationship between these two roles enables honest conversations about challenges, creates space for difficult questions, and ensures the Board receives complete information rather than curated highlights. When this relationship works well, including regular check ins outside of Board meetings, it strengthens both governance and operations. When it doesn't, problems can rapidly escalate.
Building systems that enable the Boards to act (and react)
Good governance requires good information, and Boards need to be clear about what they require to fulfil their duties. This isn't about demanding reams of reports or micromanaging operations. It's about requesting the right performance indicators and having fit for purpose reporting frameworks in place that identify issues early. In previous articles, we've touched on many topics relating to building systems that achieve these organisational objectives and characteristics, so I encourage you to read those to gain a more holistic overview (see the links to all at the bottom of the page).
Best practice is to create rhythmic reporting and implement systems that enable Directors to act and react effectively and be able to identify whether key decisions are aligned with strategy and risk. Some key initiatives include:
Effective Board oversight isn't about micromanaging operations or second-guessing every management decision. It's about asking the right questions, requesting the right information, creating the right systems, and maintaining the right balance between trust and verification. Boards that understand and exercise their duties protect all: The organisation, their own integrity and the community they serve.
How Centium can help
At Centium, we work with NFP Boards to strengthen their governance capabilities and risk oversight systems. We provide practical guidance on Director duties, help establish effective reporting frameworks, and support Boards in building the capabilities they need for effective oversight.
Whether you need support developing Board education programs, establishing risk monitoring systems, or reviewing your governance frameworks, we're here to help your NFP Board fulfil its responsibilities with confidence.
To learn more about our governance and risk management services, or to discuss your specific needs, please contact our Managing Partner, Phil O'Toole, directly at the contact details above.
If you're interested in reading more on how to strengthen your NFP's governance and risk management, follow our series of articles:
