How to establish a social enterprise board
What is a board?
A Board is a legal body with responsibility for overseeing the governance of a commercial or social venture. Board members can be called trustees, directors, board members, governors or committee members – they all refer to the same thing.
What is governance?
Governance is the systems and processes concerned with ensuring the overall direction, effectiveness and accountability of a social or commercial organisation. For many social enterprises this role is taken on by a board of directors or trustees.
What do board members do?
Board members work with the Chief Executive to provide strategic direction, set organisational aims and ensure that the organisation remains true to its purpose.
If you are a sole trader or an informal group without a legal structure, then you won’t need a Board. But as you grow and take on responsibilities for money, staff and clients or users, then you will need some sort of legal structure. The legal structure you select will determine whether or not you are legally required to have a board.
Certain sorts of legal structures require you to have a full Board, others don’t.
Can I choose to have a board?
Even if you are not legally required to have a board you might decide that having a board will be beneficial to your organisation. One of the main benefits is that it will allow you to recruit people with additional skills and experience to provide guidance and strategic direction for your organisation. It is important to think about the pros and cons before deciding on whether to assemble a board.
Understanding the role of a board
A board should:
- Help you decide on your organisational aims and ensure you remain true to this purpose
- Work with you to decide on strategic direction and operational plans
- Ensure you have enough money to fulfil your obligations and that you are spending it wisely
- Check that you follow the law e.g. you prepare your accounts properly and adhere to employment law
- Ensure you meet the conditions you set for yourselves at the beginning (generally written down as the “Memorandum and Articles” at the time your legal structure was set up)
- Help you develop strategy, identify risk and adjust your aims as circumstances change
Selecting appropriate board members
It is good practice to have experienced people from a range of backgrounds as board members. In particular you should look for people who are:
- Genuinely interested in what you are doing
- Supportive of the organisation and what you are trying to achieve
- Objective and able to help you get new perspectives
- Willing to give you access to their expertise, contacts and wisdom
- Able to critique and challenge you in a way that helps you grow