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Writer's picturePatrick Stadler
Feb 4, 202010 min read

How an Advisory and Legal Board Can Guide Your Charity



Mentors, advisors, board members… These types of supporters can add a lot to your charity startup. Yet it is essential to follow a few guidelines in terms of picking, managing and structuring them. At the highest level, distinguish between two types of organizational structures:

  • Advisory Board

  • Legal Board

Your Advisory Board includes a broad range of mentors and advisors without any legal decision-making power. Your Legal Board, on the other hand, fulfills the lawmaker’s requirements in terms of overseeing a charity.

ADVISORY BOARD


This sounds more formal than it actually is. Despite its official term Board, the Advisory Board simply incorporates your mentors and advisors. In a broad sense, it includes all the advisors that you rely on. This might be a list of 10 to 20 people. In a narrow sense, it captures only the five to ten most valuable or high-profile advisors. The result of the latter is a list of distinguished individuals that you would, for instance, publish on your website under the title Advisory Board. Members of this public Advisory Board have no legal authority whatsoever. They cannot vote you out of your CEO post, and you are free to disregard any advice they give. Yet these advisors are instrumental in providing insights and recommendations, especially as you start out on your journey as a charity entrepreneur.

​ADVANTAGES/ROLES


An Advisory Board has several advantages. You can think of each advantage as a role that you want to fill with a suitable candidate.

  • Signaling: As a startup, you are a small, unknown organization. Signing up well-known individuals helps you increase the perceived legitimacy and importance of your organization. This can include individuals known to a broader public, for example, a famous philosopher, or those well-respected in a particular sub-field such as animal welfare or development economics. Such positive signaling increases your success in attracting fundraising, negotiating agreements with governments, and finding talented staff.

  • Fundraising: Fundraising provides the lifeblood of every charity. An advisor can add value in three ways. First, as a wealthy individual contributing directly. Second, as someone well-connected who makes introductions to foundations and private donors. Third, as an expert in fundraising tactics. These three characteristics can be spread out over multiple advisors, or combined in one. Regarding the first category, wealthy individuals, it often helps to approach them for advice before asking for financial contributions. By building a relationship, they will get to know you and your project better, which facilitates future fundraising requests.

  • Domain expertise (research): As an evidence-based charity, you build on the available research, conduct your own impact evaluations, and incorporate new findings from third-party studies. Researchers in your area, for instance, food fortification, can help you with all of this. In addition to their domain expertise, some of them will also be able to guide you on your monitoring and evaluation plans, including how to run solid impact studies.

  • Domain expertise (operations): Most charity startups are not research- but implementation-focused. It is therefore critical to have operators in your field as advisors. This could include a senior executive of a non-profit organization. She or he will be able to shed light on solving operational puzzles in your domain.

  • Startup experience: Advisors can also include successful startup operators from the for-profit or non-profit world. You can consult them, for instance, on successful decision-making amidst high uncertainty, managing your time as a leader, or scaling an organization from scratch.

While this is not necessarily a public role, make sure that you also add an advisor who can give you tips on your emotional wellbeing and resilience. This might be a separate person, or one of the advisors listed above with a particular talent for psychological support. In terms of prioritizing the various roles, a public Advisory Board should put particular emphasis on signaling and fundraising value. Less-known advisors can provide input in the background as well, but once you include an Advisory Board on a website, make sure you have some heavyweights in there. In terms of fundraising, having an official Advisory Board raises the likelihood that members feel committed to help out. The advisory position becomes part of their identity, and they start having skin in the game. The advantages of advisors are wide-ranging, but what about the disadvantages? The main pitfall is that you link your organization’s name with those of your advisors. If one of them is suddenly implicated in a controversy, that could also affect your brand. In the best case, you can carry out reference-checking within your community regarding mentor candidates. You should also set clear expectations with your advisors. They should not perceive themselves as running the organization, as they are not in the decision-maker’s seat. Similarly, advisors should be transparent about their affiliation with your organization. They are not speaking on behalf of the organization, so, for example, they should consult you if they are asked to provide a quote to the media or represent you at a conference. A suitable strategy to avoid these pitfalls is to test advisors before you add them to a formal Advisory Board. This also aligns well with the natural progression of your startup. In the beginning, you will scramble to recruit advisors. Eventually, you will end up with a diverse group that matches the roles listed above. You can then pick the best candidate for each role and make such an Advisory Board public.

FINDING ADVISORS


The two-month Charity Entrepreneurship incubation program connects you to established mentors with expertise in all recommended cause areas and the key functions of a charity. The program ensures that you get a skillful, motivated mentor who has reserved time to advise you. Here are some additional guidelines in picking mentors, including for those founders not participating in the program. First, distinguish between general and specific mentors. The latter is an expert in a particular domain; for example, fish farming, or a country such as Taiwan. Such a person might be able to provide excellent guidance in her/his area of expertise; for example, how to engage with fish farmers in Taiwan. This might not, however, be the right person to elaborate on the strategic outlook of your charity. For that, you want to have a small set of general advisors, usually only 1-3, while you can have a greater number of specific advisors. General advisors excel at tackling cross-cutting issues, such as the implications of your impact evaluation on your fundraising strategy. These advisors often have a background in entrepreneurship and can share first-hand lessons learned on operational and strategic challenges, based on their own journey. Given their broadly applicable skill-set, they often make good members of Legal Boards (see below). In terms of traits you are looking for, the reputation or the availability of the person is usually secondary. Some of the best advisors might be very busy or not have fancy titles. Instead, optimize for the following: concern for your mission, tendency to effectively listen to and understand your challenges, ability to provide informed advice and connections, and understanding that her/his own experience might not apply in a particular situation (self-reflectiveness). Make sure to get a good mix of mentors in terms of style. You need some harsher or more skeptical mentors to help you identify blind spots, but encouragement and motivation are also important aspects of a mentoring relationship. The entrepreneur’s journey is sufficiently challenging. For this reason, have harsher and softer mentors. Don’t forget to consider advisors from your country of operations. Local advisors help you understand the preferences of your beneficiaries and navigate stakeholders. This can increase your program’s effectiveness and strengthen government buy-in. Examples include the CEO of a national NGO, a government official, or a professor of an in-country university with good connections to the government.


MANAGING ADVISORS


Once you have identified a mentor, reach out with a specific question and a suggestion for a very brief conversation (e.g. 15-20 min). Mentors are usually very busy and don’t have time for broad and time-consuming requests (i.e. don’t go for “let’s have coffee and chat about malaria bednets”). Once you have established a personal connection with the individual through shorter interactions, longer conversations might become a possibility if you hit it off. As you approach new mentors, think of the piggybank analogy. Don’t just subtract, in the sense of constantly making requests to someone. Try to be helpful by, for instance, sharing relevant articles, offering introductions to valuable members of your network, and reaching out with simple messages of appreciation (without an embedded request). If you would like to add someone to a formal Advisory Board, make sure to get permission to use her/his details and photo on your website. Ask via email to create a written record. In your regular interactions with advisors it is helpful to consider the following:

  • Prepare an agenda for calls with your mentor. This helps you to focus on the key topics and not waste valuable advisor time.

  • Don’t use your 30 minutes with an advisor for internal discussions among co-founders.

  • Share data ahead or during the call to help your advisor understand the facts. This also improves the quality of the advice s/he gives.

  • Understand the limits of an advisor. Don’t use specific mentors as general mentors (see above). Acknowledge that every mentor is usually less familiar with your particular context.

  • Don’t outsource decision-making. You are in charge and have the best understanding of your situation. Combine different viewpoints from different advisors with your own, and then opt for the most promising approach.

Capture the advice provided in a Google Doc and structure it by date or topic. For your closest general advisors, you can also use a stricter template such as the CE Mentor Canvas. This keeps you accountable to yourself and your mentor on key performance metrics.


LEGAL BOARD


While an Advisory Board has no formal authority, the Legal Board is responsible for oversight and legal governance of your charity. If you work in two countries (e.g. HQ and field operations) you will likely have to set up two different Legal Boards. Both bodies are responsible for ensuring that the organization adheres to its mission and to the respective country’s laws. In case of violations, board members (also known as directors) can be held legally accountable. Key responsibilities of a Legal Board include:

  • Reviewing finances on annual returns and submissions to national tax authorities (e.g. IRS 990 in the USA)

  • Hiring the executive team; in particular, the NGO’s CEO, evaluating her/his performance, and determining her/his compensation

  • Providing advice and/or deciding on strategic decisions brought up by the CEO and discussing mitigation measures to the organization’s major risks ranging from financial, legal and operational to security

BOARD 1.0


As you start out with your charity, it is best to keep your investment into the Legal Board light, and focus on the fundamentals in a version 1.0. First, make sure the Board remains small and has members you fully trust, including yourself. Remember, the Board can dismiss you or can negatively affect your strategy. The Board might, for example, force you to move away from an evidence-based intervention towards an unproven one. Second, ensure through the Board that your organization is fully legally compliant. Just cover the essentials here, and avoid getting into trouble with an influential government agency such as the tax authorities, for instance, by submitting your annual returns late. In terms of legal minimum requirements, most countries require at least one Board meeting per year, written meeting notes (minutes), at least three members (sometimes the members must be citizens of the country). You should also strongly consider general liability insurance, as Board members are liable for legal issues. While the threat of successful legal action against individuals is low, it cannot be excluded. A Conflict of Interest policy is helpful from the beginning too. Additional policies such as Whistleblower Protection and Document Retention can be added later, if you are time-constrained.


BOARD 2.0


As you grow, you have more resources to professionalize and expand your Board. Approach proven members of the Advisory Board and ask them if they would like to join the Legal Board. In addition to expert knowledge, they also need a certain willingness to take on legal responsibility and deal with formal issues. Importantly, you still want them to be on your side and share the values of evidence-based charity entrepreneurship. In this respect, be careful with having too much intellectual diversity in the Legal Board, and rather implement this in the Advisory Board, which does not steer your organization. Traditionally, a Board member job is summarized as Wisdom, Wealth and Work. Wisdom is clear: providing advice. Wealth captures the fact that board members often contribute funding themselves or open up their networks for fundraising purposes. Work relates to any tasks that Board members carry out. This can and should go beyond attending meetings. It can, for instance, include working with the CEO on annual returns and financial planning, or drafting high-level policies for the organization. Lawyers and finance executives can add a lot of value in managing your organization’s compliance. Ideally, they bring specific domain expertise in the field of non-profit accounting/law to the table. An executive experienced in non-profit accounting might, for example, take on the role of treasurer. Treasurers oversee all matters related to finance, accounting and auditing in the Board and work closely with the CEO/CFO. As you professionalize your board and bring in increasingly seasoned executives, you will likely still keep Board positions pro bono. The time commitment is reasonable, especially for Board members without special functions such as treasurers. You can consider a Board member contract to clearly outline roles and responsibilities. In terms of finding talented candidates, you can use your community’s network (e.g. the 80,000 Hours Job Board), your traditional employment channels (e.g. Idealist), and platforms tailored to finding Board members. Here is a list of recommended Board member recruitment platforms tailored to US charities:

Platforms outside the US can be found here. Finally, LinkedIn Recruiter Lite is an excellent service to headhunt for specific board member profiles, for instance, treasurer candidates with experience in non-profit accounting. The subscription is expensive at around $100 per month but a free one-month trial is available.

SUMMARY


  • Clearly distinguish between your Advisory and Legal Board.

  • The Legal Board is in charge of the legal oversight of your organization. It should be kept small initially and consist of you and value-aligned individuals. An unfriendly Board can kick you out or move the organization away from a cost-effective strategy. Ensure that you fulfill your key legal obligations as a charity, as you don’t want to risk losing your charity status. If you operate in two countries, you will likely need two different legal boards.

  • The Advisory Board has no legal authority but increases the status of your organization and provides valuable advice. Make sure that you find a group of advisors that combines signaling value with experience in fundraising, research, operations, domain expertise, and general startup wisdom. Only form a public Advisory Board once you have tested the advisors over at least a few months. The status and fundraising abilities of a public-facing Advisory Board are particularly important.​​


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