Skip to main content

Watch our latest video: "3Q2023 Market Review and Outlook for 2023"

Board Composition Blog DHM USE

3 Types of Board Members: Why All Are Essential for Organizational Success

Photo of author, David McKinley, CFP®.
David McKinley, CFP®
President and Chief Investment Officer

The world is full of possibilities to make a difference for others. As you have taken an interest in a blog post like this, it’s likely you have accepted the challenge. We hope these thoughts about board composition will lead to higher returns on your investment of resources and maximize your impact.

Many people find enjoyment in service on boards of directors for their favorite non-profit organizations. Like me, it could be a foundation for your alma mater or park system, a local scouting organization, or so many other possibilities. Like you, I find personal fulfillment helping ensure organizations like these are vibrant, impactful, and positioned to be sustainable — hopefully in perpetuity. But occasionally, I’ve also found service on some boards frustrating as there seem to be varying levels of organizational dysfunction.

The cause of this dysfunction wasn’t always obvious to me in the earlier years of my board service but, over time, it became much clearer. The most effective boards seem to have a thoughtful and strategic approach to selecting directors with the intentions of achieving and maintaining an appropriate balance of skills, experiences, and interests that serve the organization’s interests very well. This issue is particularly important among selection of officers for the board.

One approach to differentiating and finding an appropriate diversification of your directors is to identify those with technical skills, those that are mission focused, and those that are accomplished visionaries.

Technical, Mission, and Vision focuses

With decades of investment management experience, I’m often asked to serve on boards to oversee the finance function which I’m happy to do. Considering my background and resources available to me, it’s a relatively easy role to fill and, like others that are regularly invited to boards for their technical skills (accountants, attorneys, construction backgrounds, etc.) I’m happy to offer my skills to help the organization. However, technical directors should not be more than a third of a typical board.

Mission focused directors seem to be the most common on many boards. While these members care deeply about the constituency the organization serves (i.e. students at the college, the boys or girls in scouting, or patients at the local hospital) and can be creative in thinking through ways of improving services to them, they don’t always bring the depth of thinking necessary in their governance role to ensure these commitments can be made without sacrificing the organization’s financial security.

The third category, the visionaries, is often the hardest to fill. These are often accomplished business entrepreneurs that have been able to identify needs in their marketplace and were able to lead their organizations to meet these needs through thoughtfully designed strategies and finding the right people to execute the strategies. These are amazing, rare, and highly valued leadership skills which can make a significant difference to an organization. Be sure to find visionaries for as close to a third of your directors as you can.

Putting this into action

Something I’ve done on boards I serve, particularly when I have a nominating role, is to evaluate each member for their area of skill (technical, mission, or vision) and likely term of board service. Finding a balance now and, as board members roll on and off, increasing the probability of this balance can make a huge difference in the health of the organization. I’m also similarly thoughtful about nominating board leadership, looking for visionary leaders to chair the board.

The non-profit advisory team at McKinley Carter Wealth Services can be a helpful resource in strategies for board development and strategic planning among other services. Don’t hesitate to call us for a conversation about your specific situation. If we can offer you a few ideas to get started, we’re glad to do it at no charge. Of course, if your situation is more complex or challenging, we can be engaged for reasonable fees to help lead you through projects as well. Click here for more information about our services to non-profits like yours.

Related Insights
I Stock 1204150840 cop JAE Blog banner

SECURE Act 2.0’s Enhancements for the Charitably Minded

Chatter abounds in the world of finance law since the Setting Every Community Up for Retirement Enhancement (SECURE) Act 2.0 became law on December 29, 2022. Built upon the work that was started in the original SECURE Act of 2019, the sequel creates further enhancements that impact how individuals and families may prepare for the lives they envision in retirement, as well as how they navigate that dream once it is achieved.

Among the enhancements introduced in the bill are additional benefits for those retirees who are engaged in giving back to their communities through charitable gifts. Here are some new considerations that may help you increase the impact of your charitable donations.

Read More
I Stock 1283279349 JJB IPS blog USE

Nonprofits: How to Get Ready to Invest with an IPS

Every nonprofit organization knows that having more available resources equates to having a greater community impact. Thriving organizations usually empower a finance committee to act as their fiduciary and invest their excess funds. What's the best tool to help them achieve their goals? Learn how a strong Investment Policy Statement (IPS) will prepare your nonprofit for investment success.

Read More
I Stock 1368219212 KAM Endowment blog

Endowments 101: Three Most Common Endowments and How Nonprofits Use Them

The term “endowment” is often used loosely and in reference to an organization's investable assets. However, there are distinct differences among endowments depending on their purpose and use. Learn more.

Read More