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Governance and strategy

In order to fulfil its mission, an organisation needs the leadership and guidance provided by an efficient and well-resourced governing body. Although most governing bodies delegate many of their functions, they are ultimately legally responsible for the activities of the organisation, and in particular for ensuring that the organisation is fulfilling its legal and contractual responsibilities and that appropriate financial systems are followed.

Governing bodies will be subject to different legal requirements in different countries, for example there will be different degrees of personal financial responsibility and liability. There are also different names, such as Board of Trustees, and different cultural expectations about such things as degree of involvement and styles of leadership within the governing body itself, as well as within the organisation as a whole.

In general it is the responsibility of the governing body to ensure that there is:

• an effective planning and decision-making process
• a clear and appropriate mission statement
• a strategic plan with clear goals, objectives and targets. See Strategic planning
• a management system with a budget and workplan to implement the strategic plan
• clear lines of reporting and accountability
• quality assurance and evaluation systems
• adequate risk management.

The governing bodies of NSPs will also be responsible for ensuring that:

• the NSP’s support programmes accurately reflect the values and ethos of the organisation in practice
• the NSP responds strategically to the changing needs of NGOs and CBOs and the context in which the organisations work
• the NSP uses its resources to build sustainable programmes.

These strategic functions of governance are usually carried out by a non-executive body, which usually delegates operational functions to one or more executive bodies. The exact separation of roles between a governing body and chief executive will vary from NSP to NSP. Governing bodies will usually delegate responsibility to the executive director to:

• take operational decisions in the implementation of the workplan
• manage staff
• report on progress in achieving objectives
• report on compliance with legal and financial responsibilities
• manage specific risks
• advise the governing body about strategic and organisational development.

They may also delegate some responsibilities to:

• other managers (for example the finance director) to take operational decisions, and report on progress and risk-management involving particular areas of specialised technical expertise
• third parties, such as auditors or lawyers, to give sound advice on legal, financial and other professional matters
• specific committees (such as human resources, audit, which may be ongoing or temporary, and can consist of members of the governing body, staff, and sometimes other co-opted individuals with particular skills or expertise.

Generally, the governing body will:

• provide strategic input in the development and activities of the organisation, agree policy changes for the organisation and establish organisational strategies and priorities in line with its mission
• provide supervision for the chief executive officer to ensure the organisation is being well managed and operating legally and within agreed policies, procedures and budgets
• evaluate its own performance and ensure that it acts in accordance with its own terms of reference and the strategic governing documents

There are several good reasons for a clear separation between the roles and responsibilities of the governing body and the day-to-day management usually delegated to the chief executive and other staff:

• it provides independent oversight of the organisation’s executive
• it provides transparency and accountability to donors and other stakeholders
• it provides an opportunity for community representation in the strategic process
• it can bring a wide range of expertise into the strategic process.

It is important to have clear definitions of ‘governance’ and rules of proper conduct for members of the board. Terms of reference for a governing body will usually include:

• how members are elected or appointed, and how long members can serve on a board before (and under what circumstances) they can be re-elected or re-appointed
• clear job descriptions, both for ordinary members of the board and any defined offices (such as Chair, or Treasurer)
• frequency of meetings and expectations of time and other commitment
• whether board members are paid or given other honorariums, such as training allowances, travel and subsistence expenses
• what professional, secretarial and administrative support there is for the work of the governing body
• the code of conduct for members (i.e. their rights and responsibilities) and actions to be taken if these are not fulfilled
• protocols for representing the organisation (for example, relations with media, conflicts of interest, attendance at conferences, etc.)
• terms of reference for specific committees (for example, audit, human resources, etc.)
• the scope of delegated authority, and lines of access and communication between the governing body, staff, volunteers and clients of the organisation.

Issues to consider

Key questions to consider in the composition and selection of the governing body for NSPs are:

• does it include the ideal range of skills and experience?
• does it include people with community-based experience as well as those with more formal or long-term NGO/CBO-sector management experience?
• does it include people with HIV and/or representatives of the communities most vulnerable to HIV?
• is there an appropriate balance of gender, ethnicity, sexuality?
• is the size of the board conducive to decision making?
• how many office bearers (such as chair, vice-chair, secretary and treasurer) are needed?
• should the executive director be a member of the board or not?
• how to avoid or minimise (professional, programmatic or financial) conflicts of interest?
• what curriculum of training and induction is needed to make the board effective?

Since members of governing bodies often establish the policies and governance structure of an organisation, models of board procedures are frequently adopted from the previous experience of board members. Although this can work well, it may mean that there is insufficient thought and consideration given to designing a governance structure appropriate to the organisation being established.

There may be conflicts of interest for the governing bodies of NSPs that are grant-givers if they are composed of representatives from partner organisations who might be recipients of grants from the NSP itself. Ways of protecting against these conflicts of interest include:

• policies for members to declare conflicts of interest and possibly preclude them from discussion of relevant issues at meetings of the governing body
• transparent delegation of all grant-making decisions to staff or committees with tightly controlled ethical procedures
• transparent systems for reviewing the fairness and probity of the grant-making systems.

Boards should provide advice and guidance in the best interests of their own organisation. Thus, they are important for the sustainability of an organisation and NSPs should encourage all partners to establish their own independent board. The NSP should accept, however, that this degree of independence will cause tensions if the interests of its partner conflict with the wishes of the NSP.

Boards can be involved to different degrees in each area of management. However, a recurring theme is that less experienced board members will sometimes want to micromanage (i.e. specify decisions outside of their mandate or put inappropriate ‘pressure’ on staff). Clear mandates and delegation of tasks will help avoid this.

In countries where some benefit can be gained by acting as a board member, the potentially adverse consequences and conflicts of interest need to be carefully considered. For example, travel and re-imbursements for meetings, or use of office resources are open to abuse. Clear term lengths can help avoid financial dependence and compromised objectivity.

Related themes

Technical support in Governance and strategy

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