Galvin and Associates

Problem: Board afraid to act in a financial crisis

4.02.2025

Blog

If a nonprofit loses a major funding source, or if it has unanticipated major expenses, a board will want to know that the organizational leader has a plan for handling the situation. If there is no plan, the board should ask for one. If the organizational leader doesn’t know what to do, then the board needs to step in and act decisively to avert organizational harm. Some board members will be reluctant to act because it violates the principles of policy-based governance. Making financial decisions involves opening the black box and making changes. But if the organizational leader does not know what to do, the board will need to become a managing board for a while until the financial crisis is averted. Managing boards may also avoid acting because they are unsure what to do. In either case, the board and the organizational leader should work together as a team to chart a course through the tough times.

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