The Soapbox and Toolbox for New York State's Nonprofits

From the CEO

Is Your Board Bifurcated? Huh? 

by Doug Sauer, CEO

There are all kinds of regulatory and “best” practices being tossed around nowadays as to how nonprofits can be more accountable and better governed. The one practice where there appears to be total consensus is to have a well-meaning, talented and appropriately balanced board composition whose members are committed to mission and able to function as responsible fiduciaries. Clearly, this solution is easier said than done. This brings us to one of the latest “new” ideas; to have what is considered a “bifurcated board.” If your jaw dropped when you read that and your brain went “What?!”, I fully understand; but new governance trends, even re-packaged, re-named ones such as this, have a place in the marketplace of governance solutions.

The concept of a bifurcated board, as advocated by Michael Klausner and my respected colleague Jon Small in the Stanford Social Innovative Review, is that the board divides into two parts; there are those real board members who assume and exercise full governance responsibility and those not-so-real members who do ancillary things of value but without fiduciary obligations. The model is seen as a solution to the dysfunction that boards experience as a result of having too many members for responsible engagement or having directors with too specialized or narrow of an interest such as fundraising or programs. These members are well meaning but not “up to the job”, or may serve more so because of “status” than anything else.

The bifurcation label is perhaps new, but not the concept. It is more widely used than we may think and has been since the dawn of nonprofits. Most boards allow non-board members to sit as ex-officio, non-voting members or on committees, advisory or auxiliary groups. Many use, and I would argue mistakenly, their executive committees to govern as “shadow” boards; rendering the remaining full corporate board to be rubber-stampers or spectators to true governance activities. An old bifurcated model (that is sadly still present today) is where a board of “trustees” controls the assets of the corporation while a board of “directors” is attentive to operating or what I call “mission oversight” issues. In some of the century old female focused nonprofits, trustees were men and women were directors.

There are no “nirvanas” in this world of governance nor are there silver bullets that will end the failure of some boards to govern. On one hand, bifurcation is really just a smart way to allocate human capital at the board and oversight level while being attentive to compliance and risk management matters. On another hand, it can be seen as an allocation of power because ultimately, those who vote are in control. One needs to be very careful not to assume that those most competent in compliance or professional governance

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