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Why Nonprofit Boards Fail

Why Nonprofit Boards Fail | Historic Preservation | Wisconsin Historical Society

People become board members of a nonprofit organization because they care about the organization and its mission. They volunteer their time, talent, and expertise because they want the organization to succeed. Despite this high degree of dedication, some boards just don't seem to work.

Two Key Reasons for Board Failure

Anne Katz, Executive Director of the nonprofit group Arts Wisconsin, has been working in the nonprofit field for decades. She has seen groups struggle and dissolve for a number of reasons. Katz says that organizations generally fail for two key reasons:

  • They lose sight of their mission (or perhaps their mission isn't very well defined).
  • They don't adapt to change.

Katz says:

People call here all the time asking about money. Yes, you need money, but if you don't lead with your mission and what you want to accomplish, then you won't raise money. People get into a money mindset. They're looking for money to do the same thing they've always done, but don't stop to consider the big picture.

She has also seen disastrous effects result from organizations that did not change course fast enough when things were clearly going wrong.

Governance Pitfalls: A Common Problem

Governance pitfalls are common in nonprofit organizations. See these articles for advice.

Read about the qualities that limit board members' governance effectiveness

See practical tips to strengthen nonprofit governance

Typical Nonprofit Governance Pitfalls

The following list summarizes typical nonprofit governance pitfalls from mentioned in the sources above:

  • Board members rely on staff exclusively for information about the organization. As boards recruit new board members, they often look outside the field for expertise that can help complement their own. But knowledge of the field and the history of the organization are invaluable to good decision-making. A well-intended board member can run afoul of his or her duty of care by not casting a wide net for information.
  • Board members know little or nothing about nonprofit management. In many cases, nonprofit boards are made up of business professionals with corporate backgrounds. The work of nonprofits is wholly different and requires knowledge of volunteer management, indirect costs, fundraising, and working with shoestring budgets. A nonprofit's success can't be measured with the same metrics that corporations use.
  • Board members don't have enough time to do what they want or need to do. Most people who are attracted to boards already have a lot on their plates. Most want to exercise care when making decisions as a board member, but they simply don't have enough time to read and digest materials or attend enough meetings to clearly understand issues. 
  • The board impedes the director's effectiveness. Most nonprofit executive directors and managers work very hard for desirable outcomes. When a board holds an executive to excessively high standards, the executive's job is even harder. More engagement means more questions; more questions take time. When time is limited, responding to constant oversight can detract from getting work done. The result of increased oversight is an interpersonal dynamic that encourages board disengagement. Sometimes, a board's excitement about new possibilities (good!) can result in oversight of minor, day-to-day work (bad, a time waste, and not governance). An ideal board balances its role as "the boss" with support for its chief executive staff member.
  • The board isn't really held accountable. When an organization is failing, individual board members do not lose their jobs. The reasons for an organization's failure often precede their tenure and can be vague. Unless an individual board member embezzles money or commits some memorably bad mistake, it is unlikely an individual board member's reputation will suffer if a board fails.

Learn More

Find more how-to articles about historic preservation advocacy.

This blog series by two experienced nonprofit fundraisers describes six common failures of nonprofit organizations.

Learn more about nonprofit operations. These tips are offered by the Center for Community and Economic Development, which is part of the University of Wisconsin Division of Cooperative Extension. This resource includes a library of articles and an organizational assessment tool.