Legally, boards are required to ensure that the organization accomplishes its goals and has a well-thought-out plan of action and doesn’t fall into legal or financial issues. The manner in which boards perform their duties differs greatly and is dependent on the particular circumstances.
Boards often make the error of becoming too involved with operational issues that should be left to management, or are not clear about their legal liability for decisions and actions taken on behalf of a company. This confusion is often due to the fact that they are not keeping up with the changing requirements of boards or unexpected problems like financial crises and resignations of staff. Usually, this can be remedied by taking time for discussion about the challenges faced by directors, and by providing them with an orientation and simple written material.
Another mistake that is common is that the board is able to delegate its authority and chooses not to look into the things it has delegated (except in the case of the smallest NPOs). In this situation, the board loses the assessment function and cannot determine whether the operations contribute to a satisfactory performance for the organization.
The board must also establish a governance plan, which includes how it will interact with the general manager or CEO. This includes determining the frequency of board meetings and how members will be selected and removed, and how decisions will take place. The board must also develop information systems that collect information on the past and future performance to help them make decisions.
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