Which Board Committees Should a Nonprofit Create First?
We often hear the question, “our board wants to create committees, but which do we create first?” Here is a quick primer for you.
When a nonprofit organization in Stage One of the Board Lifecycle - “The Founding/Working Board” - reaches a point where its board of directors is ready to establish committees, prioritization is key. Committees allow boards to delegate tasks, leverage expertise, and operate more efficiently.
However, not all committees are equally necessary at the outset. For a nonprofit just beginning to formalize its governance structure, three core committees should take precedence: the Governance Committee, the Finance Committee, and the Development Committee. This article explains the reasons why.
Governance Committee
The Governance Committee is often the first committee a nonprofit should establish. It serves as the backbone of the board’s structure, ensuring the organization adheres to its mission, complies with legal and ethical standards, and maintains effective leadership.
Key Responsibilities of the Governance Committee include:
Board Recruitment and Development: Identifies, recruits, and orients new board members to advance the nonprofit’s mission.
Policy Development: Drafts and updates bylaws, conflict-of-interest policies, and other governance documents to ensure clarity and compliance. (We have templates for all necessary documentation; reach out if you need help.)
Board Evaluation: Oversees self-assessments to improve board performance and ensure alignment with organizational goals.
Succession Planning: Plans for leadership transitions, including board chair and executive director roles.
Without strong governance, a nonprofit risks mission drift, legal issues, or ineffective decision-making. A Governance Committee ensures the board remains focused, diverse, and equipped to lead. For nonprofits with founding/working boards, establishing this committee first creates a solid foundation for all other activities.
Finance Committee
Financial oversight is non-negotiable for any nonprofit, making the Finance Committee a close second in priority. This committee ensures the organization’s fiscal health and accountability to stakeholders, including donors, grantmakers, and regulators.
Key Responsibilities of the finance committee include:
Budget Oversight: Reviews and recommends annual budgets to the full board, ensuring alignment with strategic goals.
Financial Reporting: Monitors financial statements, ensuring accuracy and transparency in reporting.
Audit and Compliance: Coordinates external audits and ensures compliance with IRS regulations and other financial requirements.
Risk Management: Identifies financial risks and recommends strategies to mitigate them.
Nonprofits face intense scrutiny over their financial management. A Finance Committee provides the expertise and focus needed to maintain trust and solvency. For organizations with limited resources, this committee can also guide decisions about hiring financial staff or outsourcing bookkeeping.
Development Committee
For many nonprofits, sustainable funding is a constant challenge. The Development Committee focuses on fundraising and resource development, ensuring the organization has the financial and community support to thrive.
Key Responsibilities of the Development Committee include:
Fundraising Strategy: Supports staff in executing fundraising plans, including grants, individual giving, and events. (No staff? We can help you bridge that gap.)
Donor Engagement: Builds relationships with donors and stewards their contributions to maximize long-term support.
Board Involvement in Fundraising: Encourages board members to participate in fundraising efforts, such as making personal contributions or leveraging their networks.
Sustainability Planning: Explores diverse revenue streams, such as earned income or partnerships, to reduce reliance on a single funding source.
Without adequate resources, a nonprofit cannot fulfill its mission. The Development Committee ensures the organization has the funds to operate and grow. For newer nonprofits, this committee can help establish a culture of philanthropy among board members and the broader community.
Timing and Tips
While these three committees are the most critical to establish first, the exact timing depends on the nonprofit’s size, complexity, and stage of development. Small or startup nonprofits may initially combine some functions (for instance, governance and finance) under a single committee until they have the capacity to separate them.
As the organization grows, additional committees, such as Program, Audit, or Marketing, may become necessary, but these can typically wait until the core governance, financial, and fundraising structures are in place.
Here are some tips for success:
Each committee should have a written description outlining its purpose, responsibilities, and authority.
Consider including non-board volunteers with specialized expertise to expand capacity, provided they align with the nonprofit’s mission.
Committees should report to the full board (via liaison or written report) at each meeting to maintain alignment and transparency.
Boards should come together annually for a retreat to cast vision, align priorities, and strengthen personal bonds. (We’d be glad to facilitate your next board retreat!)
What about the Executive Committee?
The Executive Committee is a small, agile group of board officers (typically chair, vice-chair, secretary, and treasurer) empowered to act on behalf of the full board between meetings. It’s another important board committee for nonprofits, but typically not among the first to be created unless specific circumstances demand it. Below, I’ll explain its role, why it’s generally prioritized after the Governance, Finance, and Development Committees, and when it might be established earlier.
Key Responsibilities of the Executive Committee include:
Decision-Making Authority: Handles urgent matters or decisions requiring quick action when convening the full board isn’t feasible.
Strategic Oversight: Supports the executive director and ensures alignment with the organization’s strategic plan.
Coordination: Facilitates communication between committees and the full board.
Performance Review: Often oversees the executive director’s evaluation and compensation.
The Executive Committee is typically established after the Governance, Finance, and Development Committees because:
It relies on the foundational work of governance (for board structure), finance (for fiscal oversight), and development (for fundraising strategy) to function effectively.
Creating an Executive Committee too early can concentrate power among a few board members, potentially sidelining broader board engagement.
Small or new nonprofits may lack enough experienced board members to justify a separate committee, as key leaders are already stretched across other roles.
An Executive Committee might be created earlier if:
The board is large (perhaps 15+ members)
The nonprofit faces frequent time-sensitive decisions, during rapid growth or in a crisis
The executive director needs regular, high-level board support for complex issues
In these cases, the Executive Committee can be established alongside or shortly after the Governance Committee to ensure efficient leadership.
Conclusion
For a nonprofit ready to establish board committees, the Governance, Finance, and Development Committees are the most critical starting points. They address the essential needs of leadership, financial oversight, and resource sustainability, setting the stage for long-term success. By prioritizing these committees, a nonprofit can build a strong foundation, avoid common pitfalls, and focus on advancing its mission effectively. An Executive Committee is equally important and best set up after the other committees have started functioning.
If you have questions about board development at your nonprofit, reach out!