Legally the board is required to ensure that the organization achieves their mission and has a sound plan of action and doesn’t fall into legal or financial difficulties. The manner in which boards are required to fulfill these obligations differs greatly and is dependent on the circumstances.
A common error is that boards become too involved in operational details which should be left to management, or that they are not clear about their legal obligations for the decisions they take and actions they take on behalf of the organisation. This confusion often results from not being able to keep up with the changing demands placed on boards or from unexpected issues such as sudden staff resignations and financial crises. This is usually resolved by taking time to discuss the issues facing directors and supplying them with simple, written materials and orientation.
Another common error is when the board over-delegates its authority and decides not to examine the things it has delegated (except for the tiniest of NPOs). In this scenario the board loses its evaluation function and can not determine if these operational activities contribute to satisfactory performance for the organization as a whole.
The board must also establish the governance structure that includes how it will work with the general manager or chief executive officer. This includes determining how the board will meet regularly, how its members will be chosen and removed and how the board will make its decisions. The board also needs to develop information systems that are able to provide accurate information about its past and future performance in order to assist in making its decisions.