Does Your Nonprofit Board Have Term Limits?

One of the many activities that I have been asked to perform over the years is board training. Whether it is a governing board or advisory board, every nonprofit board needs structure and guidelines to follow. Recently, I was asked for board advice by a new CEO of a nonprofit. It seems that this organization has a board, but term limits for all members have never been enforced, officers serve at their pleasure and the board is extremely weak.

This is also due to the fact several board members have not truly “served” for years. One key board development issue that needs to be examining at the outset is term limits.

According to BoardSource, term limits should be defined in the bylaws of the organization. Board rotation is a healthy and natural way of providing change and necessary transformation for a board. Bringing in new board members on a regular basis keeps away stagnation and gives the board an opportunity to renew itself. Each board should establish its own system for defining term limits.

According to a BoardSource survey, nearly three quarters of the respondents reported using three-year terms, with a maximum of two terms. Some disadvantages of having term limits include loss of expertise and organizational memory. Some advantages of having term limits include fresh ideas and perspectives, and easy exit for passive and ineffective board members.

BoardEffect noted that the financial crisis of 2008 changed many long-standing practices for nonprofit boards. More than ever before, boards are rethinking past practices and weighing the pros and cons of board member term limits. A 2010 survey by BoardSource Nonprofit Governance noted that 70% of nonprofit boards have term limits. Board recruitment as a best practice should be visible and a continuous process. The board needs to know that board seats are intended to be temporary. It is expected that board members financially support the organization they serve, plus be active in their board role.

Another BoardEffect article emphasized that best practices indicate that term limits are the best structure for most nonprofits. As society changes, especially with respect to technology, boards must continually assess their skill sets to ensure the board remains competent.

Term limits offer the benefit of adjusting board membership to adapt quickly to changing needs. The IRS favors term limits, because they believe that static board membership leads to unhealthy attitudes, which can cause boards to govern out of self-interest rather than community interest. When writing their bylaws, nonprofit boards should decide on the most preferred term limits and how many consecutive terms the directors may hold.

Jay Love, co-Founder and CEO of Bloomerang, feels board governance is often taken for granted in the early stages of creating a nonprofit organization. Most boards see governance review as something that will happen in the future or when the need arises. To prevent major problems in governance, Love suggests five reasons every nonprofit board should have term limits.

1. Batteries must be recharged as true board engagement is a part-time job.
2. Involving more board members aids fundraising and numbers enhance quality.
3. New members bring additional talents and perspectives, plus a clean external perspective.
4. It allows removal of bad board members.
5. Term limits allow younger members to your board.

Stanford Social Innovation Review promotes the concept that rethinking board sizes, term limits and fundraising requirements may help unlock greater strategic insight and value from your board. Management experts have long challenged the notion of double-digit participant sizes for decision-making and problem-solving meetings, as the median nonprofit board size is 15 members. In reality, eight members may be the upper bound to ensure high quality discussions.

With respect to term limits, have the board chair and executive director do an intensive performance term review with a board member at the end of their term. That will determine if the board member is valuable to the organization or not going forward. With respect to board member giving to the organization, emphasize the importance of the board’s role in fundraising. Consider setting a “give-or-get” requirement and devote material board time to fundraising. Understand each board member’s talents and compare against the organizations greatest need. Provide opportunity areas and ways the board can be strengthened.

You should strive to have the best board possible. Understand how a comprehensive board can propel your organization in a positive fashion. Focus on recruitment, orientation, engagement and retention of your best board members. Recruit board volunteers based upon their expertise and your need for their expertise. Does your board have term limits? If not, I suggest you establish sound by-laws, term limits and enforce them through performance reviews. Have term limits for officers of your board. Challenge yourself to obtain the best board in the community. It will not be easy but the benefits will be great.

Remember that it is all about volunteer time, talent and treasure.