National Board Governance Survey for Not-for-Profit Organizations

Posted by on March 22, 2010

Survey highlights new demands on nonprofit boards

What are not-for-profit organizations doing – or not doing – in the face of declining revenues, growing governance and disclosure expectations, and closer scrutiny from regulators and donors?

Each year since 2003, the National Board Governance Survey for Not-for-Profit Organizations has examined the governance of not-for-profit organizations in order to learn how they are handling these increased demands.

The survey is conducted by Grant Thornton, the internal accounting firm.

According to the 2009 survey, the vast majority of organizations have responded to these challenges by cutting costs, seeking new revenue streams, reducing endowment spending, enhancing their governance practices and reassessing their strategic plans.

For example:
— Nearly nine in 10 (87%) respondents reduced expenses, while more than half (54%) reduced personnel.
— Boards made a number of governance changes in 2009, adopting or updating their policies relating to investment (39% of boards), record retention (32%) and whistleblowing (26%).
— A volatile market and staggering losses for a number of organizations led nearly six in 10 (58%) to rebalance their investment portfolios.
— Nearly three-quarters (73%) of respondent organizations now have formal policies in place to review executive compensation.

Thirty percent of the 465 nonprofit leaders who responded to the survey said that one of “the main ways the board’s agenda changed in 2009” was that members spent more time evaluating the work of chief financial officers.

Twenty-four percent said they paid more attention to evaluating board performance and 14 percent “became more focused on evaluating the executive director/CEO or the director of development.”

Also, more nonprofit audit committees are meeting frequently with their groups’ outside auditors, the report said.

The moves are prompted in part by greater scrutiny of charity finances and a need for increased accountability, according to Grant Thornton analysts.  The Internal Revenue Service has revised its primary reporting form for charities — the Form 990 — adding new questions about governance and oversight.

More than half — 55 percent — of the groups in the poll said they had established formal policies for their board members to review the Form 990, up from 22 percent in 2008.

Grant Thornton conducted the survey in October and November of 2009.

To download the report, click here.

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