When the subject matter is sensitive, boards have the option of holding a “meeting within a meeting” that excludes non-board members. Most boards only hold executive sessions when there is a dramatic issue at hand — a lawsuit, an employment problem, or a potential asset transfer. While these are appropriate reasons for an executive session, your nonprofit should hold an executive session at every board meeting.
Purpose of an Executive Session
An executive session provides a format to discuss sensitive issues that might not otherwise be discussed. Board members may be reluctant to raise an issue in front of the executive director or other staff members. An executive session provides a “safe” place for governance-appropriate discussions.
Cause for Anxiety
Because of its secretive nature, an executive session tends to cause anxiety on the part of the executive director. Holding a routine executive session removes the drama about why there is a need for secrecy. It’s simply the board’s duty to provide a forum that promotes free and open communication.
Sure, an executive director might have some natural concern about why a board would suddenly find the need for executive sessions at every board meeting. However, when it becomes part of the organizational culture, this concern will largely disappear. What was once new and different will become normal.
There will be times when it’s appropriate to include the executive director in an executive session. This is an opportunity for the Board to draw on the executive director’s experience while solidifying their working relationship.
Of course, it’s incumbent upon board leadership to have transparent communications with the executive director. An officer (usually the board chair) who speaks for the Board should share a summary of the executive session with the executive director. (That’s right, the executive director works for the Board, not the board chair.) The Board’s spokesperson must never give a play-by-play of “who-said-what” in an executive session.
Placement of an Executive Session
The placement of an executive session is discretionary, although it probably works best at the end of the board meeting. This provides an opportunity to address any issues that may have arisen during the regular meeting. Occasionally, it may make sense to break mid-meeting for an executive session to allow for sensitive discussion. Reconvening in regular session allows the board to vote on any matters discussed.
It’s a powerful governance tool once you decide to hold an executive session at every board meeting. While it’s easy to make excuses for not doing it, ultimately, it’s consistent with the board’s fiduciary duty.
Dan Weiss, founder and President of Counterpart CFO, leads a team of flexible, part-time CFOs specializing in nonprofits. To read more from Dan, follow him on LinkedIn or subscribe to his blog at www.counterpartCFO.com.