Give.org, an arm of the Better Business Bureau, rates charities for prospective donors. One focus of their rating is governance. According to their web site the following standards are used for this topic:
GOVERNANCE & OVERSIGHT
How a charity is run affects its overall performance. Poor governance and oversight often points to problems in other areas as well, which is why these five standards are important.
- Board Oversight - A board of directors that provides adequate oversight of the charity's operations and its staff. Indication of adequate oversight includes, but is not limited to, regularly scheduled appraisals of the CEO's performance, evidence of disbursement controls such as board approval of the budget, fund raising practices, establishment of a conflict of interest policy, and establishment of accounting procedures sufficient to safeguard charity finances.
- Board Size - A board of directors with a minimum of five voting members.
- Board Meetings - A minimum of three evenly spaced meetings per year of the full governing body with a majority in attendance, with face-to-face participation. A conference call of the full board can substitute for one of the three meetings of the governing body. For all meetings, alternative modes of participation are acceptable for those with physical disabilities.
- Board Compensation - Not more than one or 10% (whichever is greater) directly or indirectly compensated person(s) serving as voting member(s) of the board. Compensated members shall not serve as the board's chair or treasurer
- Conflict of Interest - No transaction(s) in which any board or staff members have material conflicting interests with the charity resulting from any relationship or business affiliation. Factors that will be considered when concluding whether or not a related party transaction constitutes a conflict of interest and if such a conflict is material, include, but are not limited to: any arm's length procedures established by the charity; the size of the transaction relative to like expenses of the charity; whether the interested party participated in the board vote on the transaction; if competitive bids were sought and whether the transaction is one-time, recurring or ongoing.
I honestly don't object to these standards on the surface but I do wonder how many nonprofits are even aware of this rating system and pay attention to it when organizing their governance in this case. Perhaps worth a consideration?