Synopsis: Principles Based Governance (called Policy Governance by John Carver) puts the board squarely in the middle lane of your ministry. This model identifies three lanes: owners, governance and operations. Getting its authority from owners, the governing board delegates all operational authority to a ministry leader regardless of title (executive director, principal, pastor). Boards implementing the Principles Based Governance model often mistakenly believe that by delegating operational authority, the board surrenders all responsibility for operational accomplishment. At all times, your governing board maintains all authority, responsibility, accountability and liability for the ministry. How can this be?
The Power of Delegation
I repeatedly hear the Principles Based Governance (PBG) model doesn’t fit every ministry because it doesn’t allow the board to control day-to-day operations. In some cases, the argument goes, the board must assert its authority and run the operations of the ministry. Or some insist the board must retain operational control over (insert key operational elements here). Worse are the boards that, once policies have been written and the PBG model implemented, believe they have no further obligation for what happens operationally. Some board members have gone so far as to say they can’t even speak to the executive leader about any substantive topic related to running the ministry.
The governing board of your ministry, by law, has all authority, responsibility, accountability and liability for the ministry. All means all! In previous articles, we talked about the three duties of a board: duty of care, duty of loyalty and duty of obedience. At all times, a board is responsible for maintaining these duties. However, a board cannot effectively run the day-to-day operations of a ministry, regardless of size. There are at least two factors making this true: running an organization by committee is unwieldy and doesn’t allow for effective accountability; and boards are composed of volunteers with other interests and cannot invest the necessary time to run ministry operations.
PBG, properly understood, solves all the concerns about operational function and keeps the board firmly in the driver’s seat of the ministry. It’s all about delegation and monitoring. There are four global sets of policies as identified by John Carver.
- Ends Policies – These articulate why the ministry exists in the world, for what audience and at what cost or relative benefit. These policies replace or can be known as the mission of your ministry.
- Executive Constraint Policies – These policies are written in proscriptive language and set the boundary around the executive by articulating in as much detail as the board wishes what the executive cannot do in pursuit of accomplishing the ends of the ministry.
- Board-Management Delegation Policies – This is where the board explicitly states how it is delegating operational authority, to whom it is delegated and how the executive will keep the board informed about operational performance.
- Board Governance Policies – The board details how it functions, the expectations of board members, when it meets and how board members are held accountable.
In Executive Constraints, a board addresses all its concerns (worries) about how the ministry will operate and what risks will be mitigated when they say what the executive is not allowed to do. Even in this model a board can micro-manage operations and handcuff their executive through excessively restrictive constraints. The board should avoid this temptation and give the executive as much latitude as possible to pursue operational excellence. A policy that should always be included is this: The executive shall not allow the board to be uninformed about any significant detail regarding the ministry.
Then, in Board-Management Delegation policies, the board provides a specific plan and calendar for the executive to report all the operational details of the ministry. These are known as Monitoring Policies. The board is free to monitor anything it would like and to do so with three different types of monitoring.
- Executive report – this is the most common form of monitoring and consists of the executive delivering a written report to the board on whatever operational aspect is requested, confirming that the ends are being accomplished and the constraints have not been violated. So long as the executive is in compliance with policies and accomplishing the ends, there is no need for board deliberation or conversation.
- Direct observation – The board can assign a subcommittee to review certain operational aspects to verify compliance. This might include reviewing such things as staff handbooks or student behavioral policies. The review is limited to confirming compliance and is not for the purpose of rewriting, editing, critiquing or otherwise interfering with operations.
- Outside audit – Most commonly used for financial integrity, the annual audit by an outside, objective, third-party confirms the proper financial management of the ministry. However, a board is free to bring in an administrative expert, donor relations expert or other objective third-party expert to audit certain operational functions.
A healthy governing board represents the interests of the owners (see our article on ownership linkage) and delegates all operational authority to the executive. It then gets to the work of governing as it guides the ministry into the future. And the board never, ever abdicates its authority, responsibility, accountability or liability for the ministry.
Lutheran Church Extension Fund (LCEF) offers consulting from a Governance Systems Professional to help your board function at peak efficiency. Contact Tim Kurth, Vice President of Ministry Solutions at Tim.Kurth@lcef.org to discuss how you can build a better board as you pursue ministry excellence!