Accountability of the Board and Knowing the Organization’s Increasing Risk

 In our last blog we talked about collective accountability and the difficulty boards have recognizing it. In a past opinion, the Chancellery (corporations) Court of Delaware has found that boards have a “higher accountability” as the organization approaches a high risk zone, e.g., the “zone of insolvency,” (i.e., is getting dangerously close to insolvency). I would slightly modify the court’s choice of words only to point out that it is not it’s accountability, per se, that changes, since it has always had the accountability, (which doesn’t change), but it’s duty and responsibility of heightened attentiveness and rigor of caution to what monitoring is revealing and the board's duty for action. 

Unfortunately, nonprofit and ministry boards, especially, are notorious for ignoring danger signals, or if they recognize them, hoping they will go away or fix themselves and that the executive director will change the present course of fiscal disaster. This is especially true if the executive director is founder or long term. The board’s loyalty and desire to be “nice” rather than tough, mitigates their joint sense of accountability toward maintaining a healthy organization. Board members individually know the organization is headed toward trouble and privately feel the “board should do something” but have dissociated themselves from the urgency for action the accountability should produce. 

(Originally posted on our website 1/7/13)

RMB