Legally, boards are required to ensure that the organization is able to fulfill its mission, has a solid strategy and doesn’t get into legal or financial issues. However, the method by which boards are involved in these responsibilities can vary dramatically and is very dependent on the circumstances of the company.
A common error is that boards are too involved in operational aspects that should be left to management, or they aren’t aware of their own legal responsibilities for the decisions they make and the actions they undertake on behalf of the organisation. This confusion usually results from not keeping up with constantly changing requirements for boards, or from unexpected issues like unexpected staff resignations or financial crises. This can usually be solved by taking the time to discuss the problems facing directors and providing them with simple, written materials and a briefing.
Another common blunder is when the board makes the decision to delegate too much power and does not scrutinize the tasks it has delegated. (Except in the smallest NPOs). In this instance, the board loses its evaluation function and can no longer determine if these operational activities contribute to a satisfactory performance of the entire organization.
The board also needs to develop an effective governance system, including how it interacts with the general manager or CEO. This includes setting the frequency of board meetings and the manner in which members are selected and removed, as well as the manner in which decisions are made. The board also needs to develop information systems that offer information on the past and future performance to aid in their decision-making.