Donors and government oversight agencies increasingly hold boards of directors accountable for how nonprofits are governed. They demand assurance that the organizations are well governed, and effective and efficient service providers.

Nonprofit organizations achieve these goals if their boards of directors understand and accept their fiduciary roles as the governing body of the organizations they serve. Good boards ensure that organizations:

• are accountable to the community
• provide needed services
• adhere to rigorous ethical and professional standards

Governance Matters recognizes the pivotal role of the funder (private foundations, corporate donors, government agencies, and individuals) as well as that of board members themselves in raising the standards of board performance among nonprofits. We have developed this Good Governance Guide to help both funders and nonprofit board members determine:

• what information is needed from nonprofits
• how to evaluate the data received
• how to engage nonprofit organizations in dialogue aimed at improving board performance and, ultimately, the impact of the donor's grant

Funders should take a consultative approach to the conversation, not looking for perfection but making sure that grantees are aware of shortcomings and are open to addressing them -- possibly with the funders' assistance -- over a reasonable period of time.

Board members should regard these conversations as opportunities to learn both better governance and ways in which service to their clients can be improved.

This tool is meant to be used by all grantmakers whether they provide program or general operating support, and by boards of all organizations whether they are in the start-up phase or are mature and well-established in the community. Its scope is comprehensive so individual grantmakers and board members can select those areas where they need further clarification or development.

The full or partial lack of compliance with any indicator described in the tool should not be held against the nonprofit organization, if the situation is counterbalanced by an understanding of the need to achieve successful governance and the board's willingness to address these areas.

The Board of a nonprofit organization should help establish and support the organization's strategic priorities, and allow roles and responsibilities to change as the organization moves through its life cycles. Larger, more-established organizations are more likely to have invested in formal strategic planning and board development. Regardless of the size of the organization, however, the board must be fully engaged in setting strategic direction and performance goals.

Ongoing board development allows organizations to benefit from a cadre of informed, committed, and forward-thinking trustees. Both savvy funders and conscientious board members will take nothing for granted, and will ask questions that elicit a clear picture of the state of governance within the nonprofit organization.

Who will find this tool useful?

• Grantmakers who actively support capacity building
• Grantmakers who wish to encourage effective governance among grant candidates and existing grantees
• Chief executives and board members who seek a tool for self-assessment
• Chief executives and board members who wish to promote effective governance within the foundations and organizations they lead

Acknowledgments
The Good Governance Guide, a project of the Grantmakers Committee of Governance Matters, was initially funded by generous grants from the Stella and Charles Guttman Foundation and the United Way of New York City.

Our special thanks to John Emerson, the project designer, www.backspace.com, for taking our grid concept and transforming it into an attractive and user-friendly part of the Governance Matters website.

We also thank Daniel Yarovoy, the web developer, and Dennis Zaide, NYCharities.org, for their support and guidance in developing this project, and Molly Sugarman for writing the case studies.

Grantmakers Committee of Governance Matters 2009-2010:

• Rhoda Barr, Volunteer Consulting Group/boardNetUSA
• Heather A. Benveniste, Robin Hood Foundation
• Terence Cook, Fiscal Management Associates, LLC
• Elizabeth Costas, The Frances L. & Edwin L. Cummings Memorial Fund, Co-Chair
• David LaGreca, Volunteer Consulting Group/boardNetUSA
• Anne Lawrence, The Robert Bowne Foundation
• Jane O'Connell, Altman Foundation, Co-Chair
• Donna Panton, Rillbrook Consulting
• Hilda Polanco, Fiscal Management Associates, LLC
• Lori Roth, Columbia Business School
• Nicole Sebastian, Heidrick & Struggles
• Molly Sugarman, Consultant