Does your board make policy or one-time decisions?

Over the next few weeks, we’ll be excerpting chapters from the Gayle’s recently released book Make Your Board Dramatically More Effective, Starting Today*. A board member’s guide to asking the right questions. Today we’re sharing chapter 24.

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Bylaws aren’t the only rules governing your organization. Board-voted policies also guide your staff and your own actions as a board.

Effective boards make policy rather than decisions. If that sounds confusing, let me make a distinction.

Decisions answer a particular question confronting us here and now. They often lack application to any future questions that might arise.

Policies, on the other hand, provide a framework for making decisions that can be applied to future questions. Not only are they key to sound board decisions, but policies allow boards to more effectively delegate authority to others.

Here’s an example:

Your well-known organization regularly receives offers from businesses interested in marketing opportunities. For example, a local supermarket would like to put your logo on its product and offer you a percentage of the proceeds.

Every time an offer like this arises that the CEO feels unsure about, it goes to the board for a decision. Largely because the reasons for accepting or rejecting are based on the likes and dislikes of the directors in the room, tonight’s decision may contradict one made last month.

This rehashing of similar issues, whether welcomed by the board or forced upon them by the CEO, is inefficient and borders on micromanagement.

Policy-making offers a better approach. The board can streamline decision-making, ensure consistency, and even delegate more decisions to staff by creating a policy for this type of venture.

In this case, a cause marketing policy would outline the conditions that must be met before any deal is acceptable, (e.g. minimum dollar guarantees, agreed payment schedules, written contracts, use of your name and logo, prohibited businesses or types of deals, and compliance with Better Business Bureau guidelines). Once in place, the next offer can be accepted or rejected by the staff by applying this policy.

Of course, policies only have value when they’re followed. If the only record of your policies is in the meeting minutes, within a year no one will remember the details – or even if you made a policy at all.

You can improve board memory by incorporating each policy into a Policy Manual. Arrange the policies by topic, mark them with an adoption date, and tuck them into your board and staff handbooks.

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See “Cause Marketing: 10 Cautionary Principles for Nonprofits”

Wondering how to get a copy of the book? Just click here. Discounts are available for bulk purchases.

* Formerly How are we doing? The 1 hour guide to evaluating the performance of your nonprofit board.