What is a Board Charter and Why You Should Have One

Author: Garth Nowland-Foreman, LEAD Director

A Board Charter or in te reo Māori, kawenata, sounds like the kind of thing that a good board should have. But what is it? And is it really necessary or just one more piece of bureaucracy? The short answer is, “It depends”. For a slightly fuller answer, read on.

As an organisation grows beyond the its initial founders, and especially when it starts employing staff, it becomes necessary to formalise the board structure, divide up roles and responsibilities, and be clear and agreed about overall board responsibilities – including formalise accountabilities internally and to external stakeholders. But this doesn’t mean there is a single predetermined pattern that fits all organisations. You have plenty of flexibility to design those more clearly defined roles and responsibilities that suits your particular organisation at its current stage of development.

So that is what Board Charter Kawenata essentially is – the documentation of what you have designed for your board. It can provide several useful functions:

• Convenience – it draws together in one convenient place key information that may be in lots of different places, scattered throughout your constitution, in the legislation you are incorporated or registered under, and so on;

• Acclimatisation - forgive me I couldn’t think of a word starting with ‘c’, and this was the closest to describe a useful contribution to the orientation of any new board members (or even new senior staff who work with the board) so all are on the same page;

• Clarity – in the case of dispute or disagreement, an independent and authoritative reference on how things were intended to be (which doesn’t mean you can’t change it if circumstances or understanding changes);

• Accountability – writing it down not only increases transparency, but also means it is easier to challenge the ideas, hold to account, and for anyone to make specific proposals to revise when needed; and

• Culture not just compliance – it allows the board to be as specific about its values as much as its legal obligations - as much about what it believes will make a positive culture for how the board and individual board members go about their work, as their legal and regulatory duties.

Which leads us nicely to the tricky question of what should be in a Board Charter Kawenata. It’s tricky because there is no single agreed checklist (in fact different writers seem to take quite different approaches). But also tricky because is not necessarily straightforward in getting the balance right – between too much and not enough, between too specific and too generic.

In our experience it’s better to start by collecting and (electronically or literally) stapling together what you have, and work from there. It’s almost always easier to start with something than with a blank page – for example, extracts from your constitution or equivalent, from the laws under which you are incorporated and/or registered. Start with the minimum black-and-white compliance requirements – but do not stop there. Put together whatever is helpful and convenient for your particular board at your particular stage of development. When it starts getting in the way of getting things done, it’s time to back off and bring out your policy pruning shears. 

For most organisations, it will be useful for a Board Charter Kawenata to cover three (sometimes overlapping) spheres:

LEAD Board Charter.png

 1. Our legal governance duties and responsibilities

Previously board members’ legal duties were only set out in the various judgements that make up case law, but were often summarised as duties of: care (reasonable care and diligence in all your decisions, especialy when entering commitments); loyalty (to the interests of the organisation above other personal or professional interests); and obedience (to the law, the organisation’s constitution and policies etc). When the new Incorporated Societies Act is passed it’s planned to specifically spell out these duties. 

Under this heading it’s also worth including your organisation’s version of the five, seven, ten, or whatever listing of key board responsibilities – such as ‘Determine the organisation’s Vision, Mission & Values’, ‘Ensure effective planning’, ‘Select, support & evaluate the manager’, etc. Check LEAD’s own version here, or for other ideas Boardsource or WildApricot may be good places to start. But it’s important to only use any version as the starting point, making sure you shape it to fit how your board intends to operate.

Then, fill out with any details about how you practically expect to fulfil each responsibility in your specific context – for example, to recruit a new manager, the board will… review if the existing job description is still appropriate, and appoint an appointments sub-committee which will determine the best ways to attract suitable candidates, and the processes for short-listing and selecting recommended candidate to bring back to the board for confirmation, and recommend process for orientation of the appointee, etc, etc.

2. How we structure our board

This includes the basic ongoing structural features of the board – what size board are we aiming for, how often do we expect to meet (if its not a specific number every year, you can provide a range, but if you expect to meet monthly of an evening on second Wednesday of the month, then say that is what is expected). The great advantage of a Board Charter Kawenata is that a board approves it and a board can easily change it if it changes its mind.

Structure also includes what (if any) we plan to have in terms of Office Holders, Portfolios, Sub-committee or Advisory Committees. Neatness is not necessarily the goal but clarity is – so make sure you are able to spell out the purpose and method of operation of whatever of these you want to have in place. It is also worth remembering that each of these possible structures has risks and distractions, as well as strengths and advantages to bring to a board. The important thing is to collectively have this discussion and work out what combination best suits your organisation at this stage in its development.

This can also include the range of skills, qualities or attributes that you would ideally like represented on your board, and the kind of commitments expected of board members – for example, how many hours preparation is usually required for a board member? What other commitments are expected, for example, membership of sub-committees, portfolio responsibilities, expectations of fundraising (if any), attendance at events, planning retreats, board training and development, etc.

3. How we go about our board work

Perhaps the most important sphere (because it is often either ignored or taken for granted) is the ‘how’ we want to go about our board work – the underlying culture and values, and the resulting behaviours that we want to see demonstrated and even be known for. These are the equivalent of the Ground Rules for your board. Have your board members brainstorm ideas for what your board could look like if it was functioning at its highest potential. Then cluster similar ideas and reduce to main concepts that all are willing to ‘sign up’ to (literally or metaphorically). Some characteristics commonly identified as part of a positive and effective board culture might include:

• It’s a safe place to ask question and explore unusual options, without getting put down

• There is trust and honest communication among members

• There is thoughtful and productive resolution of issues or any disagreements

• There is a willingness to address poor behaviour that is negatively impacting the group

• There is mutual respect and a sense of ‘all being in this together’

• Board members commit time and effort to their roles, including fully preparing for and participating in board meetings

• Board members champion the organisation to the outside community and bring the concerns of that community back into the organisation.

• Board members are given the opportunity to make use of their own networks and contacts

• Board members have opportunities to make use of their skills and knowledge

• Board members understand their roles and responsibilities, and are committed to what the organisation is trying to achieve.

It’s often also worth spelling out what observable behaviours would be exhibited if we were effectively putting this culture and values into action at our board meetings and in wider governance roles.

A great culture has the board working like a high performing team. You are more likely to grow a positive board culture if you deliberately commit to it; if you talk about, and write down agreed expectations in a Board Charter Kawenata; keep talking about and appreciating the kind of behaviour you want to see; use participatory methods, engage board members, and encourage them to take responsibility. Perhaps most important of all is the discipline of regularly setting aside time for the board to reflect and review how its desired culture is growing.   

These three spheres can commonly overlap, so it doesn’t matter what is listed under what headings – but it is worthwhile considering the full range of these issues to be covered in any Board Charter Kawenata.

LEAD can help facilitate your board’s development of its own bespoke Board Charter Kawenata. We can also offer participatory in-house, face-to-face or online workshops on Building Your Own Board Charter Kawenata, and The Power (and Limits) of Policies for not for profit leaders. If you’d like to know more please email info@lead.org.nz.