policy governance principles

Following are ten policy governance principles that are commonly referenced. There are, of course, many principles at work in policy governance for nonprofit boards. These are a good start and highlight important features of the model.

    1. The board acts on behalf of owners. It is fundamental that boards act on behalf of an organization’s owners. That may be obvious in membership nonprofits such as credit unions. But for many nonprofits the owners are less clearly defined and boards need to take time to figure out who they are so they can represent their interests.  See the separate discussion on Who owns a nonprofit and why ownership is important.
    2. Ends determination is the primary duty of governance. If the organization doesn’t know where it is trying to get to — the results or value it provides to the outside world — then the rest doesn’t matter much.  It is the board’s primary job to clearly define the ends or results that the owners expect the organization to achieve.
    3. The board speaks with one voice or not at all.  This means that once the board makes a decision all board members will support it.  This doesn’t mean that boards should operate by consensus. It is often good to have vigorous debate on board issues. Dissenting votes should not be seen as negative but a sign you are getting diverse views on an issue. But it is dysfunctional board behavior if board members work to undermine a decision after it has been made, especially when that happens with the staff of the organization.
    4. Board decisions are primarily policy decisions. Under the policy governance model the board provides its direction to the organization and exerts its control through written policies. Policies, as opposed to specific decisions on individual issues, provide long term and consistent guidance to the organization.
    5. Policies are decided at the broadest level first. Boards should set policies at the highest level sufficient to achieve the desired results and control. Often there is no need to get into minute detail on policies. Also, it is often easiest to get board agreement on broader policies.
    6. Define and delegate rather than react and ratify.  Boards add little value if they merely ratify what the CEO has already decided or done. Likewise, being proactive is nearly always better than reacting after something has happened. By defining ends and acceptable means and delegating to the CEO, boards create a much more empowering environment for the CEO.
    7. Control by limiting rather than prescribing.  Instead of being very directive and prescriptive — telling a CEO everything that they must do — a policy governance board controls the CEO by telling them what they can’t do.  Everything else is allowed. This approach helps the board prevent the organization from doing something imprudent, too risky, or illegal while empowering the CEO to make the management decisions they should be making.
    8. The board is explicit about its products and processes. No one should have to guess about what the board produces and how it conducts its business. Under the policy governance model all of that is written down.
    9. Delegation to the CEO is clear and coherent.  The board has one employee — the CEO or Executive Director.  There should be no ambiguity about what the board has delegated to the CEO, what they are expected to accomplish, what they must avoid, and how their performance will be judged.
    10. Performance is monitored rigorously against policies.  The boards policies — ends and executive limitations — say it all.  Performance is determined by whether the organization achieves the ends while operating within the limitations.  Performance of the organization and performance of the CEO are one in the same.

To learn a bit more, view my short video introducing policy governance.

For short videos on policy governance principles, click here.