At its best governance is a statement: “This is how things work around here.  We have the policies and structures to do things right. It makes life easier for everyone.”

Everyone recognises the need for governance. Funders demand it, the law may require it.  And there is a lot of useful material on how to do it right.  I want to make a case for the value of governance and how to do it well. 

I am sure that many NPO leaders recognise the need, but still resent the time taken on board meetings, audit processes, delegations of authority, HR policies etc. My contention is that governance, done well, creates both certainty and effectiveness.

I spent my early working life associated with NGOs without any real governance.  They were mainly small and worked fine.  I never thought about governance. Two shocks changed my mind:

First in 1994 I found my self chairing the board of a very reputable and significant NPO.  The founders left, the new CEO turned out to be corrupt, and after a rapid downward spiral we closed the NPO and returned funds to the donors.  Imagine if there had been no board, no whistleblowing, and no rules governing the use of the company credit card?

Then in 1995 I was appointed CEO of a nonprofit financial institution supporting emerging construction businesses in South Africa.  It was jointly funded by the SA Government and a large US based philanthropy.  For the first two years I could not come to terms with the volume of board meetings, subcommittee meetings, staffing and remuneration policies, rules governing banking and much else. (And then came the PFMA!). I sometimes felt that I had no time to do the work for which I was employed.

Decision making becomes much easier when there are clear guidelines, and a board to make sure you stick to them.

Over time the benefits shone through . . .

• The board as talent and support: There were board members who brought knowledge, networks and experience that were priceless.
  
  
• The board as cover:  When clients, staff members or government officials asked for special treatment of one sort or another it was wonderful to be able to say: “That’s not in our policy, but I can check with the board I you want me to.”
  
  
• The board as guarantor of transparency: At the end of board meetings one of the non-executive directors would look at me and ask: “Is there anything else we should know about that you have not reported to us?”  You can be sure that the board reports were comprehensive, and all risks  were well described. 
  
  
• The board as guardian of the slippery slope:  Good rules and effective oversight prevented any temptation to take short cuts. Sometimes I felt it would be convenient to fill an urgent post or consultancy with someone I knew could do the job without all the hassle of a formal recruitment process. But that is the first step on a slippery slope to nepotism. If the CEO does it once, other managers will follow suit and soon it becomes the culture of the organisation.  
  
  
• The board as gatherer or information: Reporting regularly to the board also makes it easier to satisfy funder reporting requirements and to produce annual reports. The information is all there and ready for use.

The point is that decision making and quite a lot of the work of the executive becomes much easier when there are clear guidelines, and a board to make sure you stick to them. 

In the end I became an ardent convert to good  governance.  It’s like an organisational social contract that states, this is how things work.  We dont have to invent new ways to do things – because there are policies and processes and proper monitoring and reporting proceedures all in place.  We can just get on with our work.

Bad governance can be difficult, or even toxic.  That’s a topic for another blog, and that’s why it’s important to focus on getting governance right – not just for reasons of compliance, but to make sure that everyone knows "how things work around here."