Board Governance Development Series

By John Shelford, Shelford Associates, Member of FreshXperts

The Board represents the Owners!

The Governing Board's responsibility is to the owners of the organization.  There are a myriad of avenues for the selection of the Board members but all flow from the ownership.  Ownership is often very clear as in shareholders or partners.  However ownership of non-profit organizations may not be as evident or defined; and the board must wrestle with the definition of "who are the owners" represented.

Ownership understanding is important.  It provides clarity for the board's "work."  The Board's work is always on behalf of the owners.  It is not on the behalf of the organization's executives, employees or other stakeholders.   Before any throw stones, the owners as represented by the Board, may establish policy defining the organization's desired values for employees and stakeholders. 

A Governing Board has a "fiduciary relation" to the owners. Webster adds clarity:

"the relation existing when one person justifiably reposes confidence, faith, and reliance in another whose aid, advice, or protection is sought in some matter : the relation existing when good conscience requires one to act at all times for the sole benefit and interests of another with loyalty to those interests..."  Webster's Third New International Dictionary, Unabridged

Stewardship adds insight.  Let's see what Webster says:

"one called to exercise responsible care over possessions entrusted to him <a steward of the time, talent, and treasure entrusted to his care>"  Webster's Third New International Dictionary, Unabridged

A Board, and thereby each member, is to act on behalf of the owners.  The board's actions are to reflect the owners' common desired outcomes, values or other treasure.

Such a responsibility requires a common purpose, a common mission and vision; the compelling foundation for the organization's existence.  The only reason for an organization is when two or more owners with a commonality determine an organization is more likely to achieve the desired outcome than may be achieved individually. 

A Board:

-         Acts on behalf of owners

-         Acts in a fiduciary, stewardship relationship

-         Acts for the owner's common purpose

-         Acts NOT as an individual

Next Topic - Desired Outcomes