Charity board size, when less is more

When carrying out governance reviews I am often asked about the right size for a non-profit board. There is no hard and fast rule, but I must nail my colours to the mast and confess that I do not advocate large boards. There are a number of reasons why organisations opt for them but I do not believe this is justified. Furthermore, there are important issues that negate most of the perceived advantages. In short, I see more difficulties with large boards than with small ones. 

Larger boards, whilst they may seem attractive, are often cumbersome and may inhibit effective discussion and decision making. My experience is that the optimum size of a board is about 10 to 12. This is small   enough to be nimble and allow effective decision making by involving all the board. A board of this size can usually bring together the right skills and not place too much of a burden on individual board members. It is also not so large that there is a need to create an inner cabal that marginalises the main board. I also believe that a larger board becomes more of an information receiving body than a decision- making body.

Does size matter?

Lipton and Lorsch (1992) and Jensen (1993) were the first to hypothesise that board size affects governance in a way that is independent of other board attribute issues. Following extensive research, they stated that large boards can be less effective than small boards. They explained that with larger boards the board often becomes titular and symbolic and does not properly fulfil its monitoring, control and decision-making duties. The understanding is that the problems outweigh the advantages from having more people to draw on. Jensen (1993) notes that ‘when boards get beyond seven or eight people they are less likely to function effectively and are easier for the CEO to control'¹. In a survey, the Charity Commission obtained information from over 1,400 charities. Charities were asked to confirm the size of their present trustee board and to state what they thought the ideal number of trustees for their charity was. The results of this showed that about 92% of the respondents had boards with 15 or fewer trustees. This appears to be a changing trend as earlier data seems to indicate that charities had larger.

boards and believed that more was better, allowing greater representation and increased skills. This has clearly changed to a belief that less is better and that other skills and competencies can be provided through management, ad hoc working groups and professional advisers when needed.

Andrew Hind, CEO of the Charity Commission, drew attention to the size issue in a book he wrote in 1995 that highlights the changes in thinking and quotes examples of many charities that have slimmed down the size of the board of trustees. Nine years later, the Commission explains in its guidance note CC60, The Hallmarks of an Effective Charity (2004) that an effective charity ‘has a trustee body that is the right size for the charity – large enough to include the right balance of skills and experience needed to run the charity effectively, but small enough to facilitate discussion and effective decision making’.

The National Council of Voluntary Organisations (NCVO) has produced a trustee briefing on board size and states: ‘The Charity Commission points to between three and nine trustees to be an adequate board size and feel boards should not be too large to make decision making difficult nor too small to have an unfair burden of work. They also point out, however, that some charities may need a larger board to allow users and stakeholders’ interests to be represented: for example village halls or community centres’.

It is telling that NCVO has put forward proposals to reduce reduction in the size of its board from 40 members to 12 and to create an Assembly³ as a forum to advise the board on policy issues.

Inner cabals

Much of my governance work results from cases where something is not working and in many cases I have found that board size is an issue. In meetings of large boards I often detect a lack of cohesion and teamworking. A small number of individuals dominate and sometimes factions emerge. It is almost inevitable that a sub-group or inner cabal emerges to take on a disproportionate share of the power and governance role.

Some organisations believe that they can get the best of both worlds by having a large board and then using a smaller ‘executive committee’ to ‘do the real work’. The option of a large board with a smaller ‘executive committee’ was once seen as a suitable model but it is increasingly being rejected as creating an inner cabal that may disenfranchise the board

In 1996, the Independent Commission on the Future of the Voluntary Sector, set up by NCVO and chaired by Nicholas Deakin, produced a report: Meeting the Challenge of Change: Voluntary Action Into the 21st Century. Based on an intensive programme of evidence gathering from all sectors, the Deakin report stated: ‘A common problem is created by trying to resolve composition dilemmas by adding more people.

Experience in many settings has shown that large boards are generally ineffective. Once numbers rise much above 12 to 15, discussion and debate becomes difficult. What generally happens is that an inner caucus emerges that takes the key decisions and presents them to the board for ratification. This leaves the board with responsibility but not power and is generally ineffectual. While some have gone further and set up two-tier structures of a council and an executive committee the result is rarely satisfactory and cannot with stand the tension of a crisis.’

Generally, I agree with this sentiment. I have seen much dissension and resentment caused by trustees feeling disenfranchised because all the key issues are dealt with by some smaller group. Many trustees have complained that when they wish to have input into a key matter they are told that the issue has already been dealt with by some elite grouping of the board (‘we have already discussed that in the executive committee’ is a typical response).

Notwithstanding this I have also seen larger boards and smaller executive committees operating in a manner that seems to work. There is a risk; however, that responsibility (board) can be divorced from authority (executive committee). For this reason I prefer a smaller board that can delegate without having to abdicate.

Representation

Many organisations have larger boards as a means to ensure proper representation – from members, areas, branches. Some of my clients fall into this category and they have had to develop other models to address the fact that by combining the aspiration of membership representation and role of a governing body in the board of trustees means that sometimes neither role is performed satisfactorily. The aim is to ensure a cost-effective structure that can effectively discharge the stewardship and governance responsibilities of the board and also ensure that the membership views about strategic direction and policy are properly considered. To do this, decision making must be timely without it appearing as if the board ignores the membership.

Many non-profits believed that a large representative board was the answer to this problem. In practice, the large board created new problems and they usually did not meet often enough or develop issues in sufficient context to function effectively. Nonetheless many have persisted with cumbersome boards in the belief that they were a necessary mechanism to represent the wider membership.

Many organisations have seen the separation of the two roles of governance and membership representation as the answer to the dilemma. They continue with the larger body as a general assembly, which acts on behalf of the membership to ensure that members decide upon the charity’s future direction and strategy and that members’ views are brought to the attention of a slimmer board of trustees. The general assembly acts in an advisory capacity to the board. It also endorses the strategic direction and implementation plans.

With some large membership bodies there is often a concern that the general member may be fairly apathetic about what is happening in the organisation. The concern is that a smaller trustee board with no effective check can make errors of judgment or policy that may remain undetected until it is too late. The model of the general assembly and a smaller board allows greater accountability without undue interference. The trustee board is in fact evaluated by the general assembly that considers how the charity’s performance has measured up to the plans set by the trustees.

It may also be of concern that the general assembly has no teeth and to counter that it is usual that the general assembly appoints the board and, in extremis, it can remove them. This is similar to a company with institutional shareholders – the shareholders do not get involved as long as things are running satisfactorily but if they believe that the board is persistently ignoring their views they can vote to remove it.

This model is particularly suitable for the situation where a body is trying to slim down its board. In such cases there is usually a need to get the board members themselves to vote for change.

This can be difficult to pass and has all the hallmarks of ‘turkeys voting for Christmas’; so the process can be made easier by the existing board transitioning to transitioning to the role of the general assembly.

While I do see the benefits of representative boards, some caveats should be observed. Election from a membership does appeal but in my opinion it should be supplemented by selection to ensure that the right skills are included. There is also a danger that when people are elected as representatives of some constituency they can forget that as board members they must act in the greater good of the charity as a whole even if it is to the detriment of their ‘special interest’, be it a region service line or grouping.

Skill mix and workload

It can be argued that smaller boards do not allow for the full complement of skills required. In some cases greater numbers are seen as being necessary due to workload issues. Board members may be expected to participate in many other, non-governance activities, such as fundraising, advocacy, community activity, organising special events, etc. In some cases there is a belief that the role of the trustee must encompass raising and contributing funds so there is an assumption that more trustees means more funds. Others believe that board members are too busy to attend all meetings and so it is better to ‘have a few extra’.

I am not convinced by these arguments and believe they highlight more fundamental issues that need to be addressed. The composition of most boards allows for the right skill mix without exceeding the optimum numbers discussed above. If this is not the case it is more relevant to assess whether the organisation has the right board members rather than adding more. It is important to recognise that the input of management, the ability to use external advisers and the use of non-board subcommittees can address many of these concerns.

There are many different views expressed on the issue of subcommittees. It is important where  subcommittees or ad hoc working groups are set up that they do not undermine the board’s decision making process. The terms of reference and the brief of the committee should be carefully understood by all committee members and the staff. First, the subcommittee must work under delegated authority from the board. There is a risk that subcommittees take all the decisions and merely bring issues to the table for rubber-stamping. Second, a proliferation of subcommittees often leads to a subcommittee getting too involved in issues ostensibly delegated to staff. It is also important to recognise the resource implications for staff of servicing subcommittees.

Review the size of your board

If you have a board less than seven or more than 15 it may be time to consider resizing. As already explained, there are no hard and fast rules and there are a number of issues to balance, such as management presence and how the group works as a team, but nonprofits should be ready to challenge preconceived notions and learn from others that have already addressed this issue. Inevitably, when trying to resize boards, I sometimes encounter cynicism and resistance, yet evidence from other organisations is very compelling.

1. The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems, Michael. C. Jensen, The Journal of Finance, Vol. 48, 1993
2. Start as you mean to go on: Trustee Recruitment and Induction Research Report, Charity Commission, July 2005
3. The Governance and Management of Charities, Voluntary Sector Press, 1995