The concept of term limits will come up at some point on all boards. While important, these discussions can often be loaded with sensitivity and apprehension among long-serving board members. What’s the real meaning behind these limits, why are they so important and how can you best navigate board member concerns?
In this article, we’ll demystify board member term limits and explore their vital role in maintaining good governance.
What is meant by board “terms”?
Board “terms” refer to the designated period of service for members of an organization’s board of directors, typically specified in the organization’s bylaws.
Board member terms usually range from two to six years, with three years being a common average. This duration strikes a balance between providing stability and allowing for fresh perspectives.
There can also be unique term rules on boards. Some nonprofits boards have two consecutive terms of three years. On the other hand, The National Association of Corporate Directors (NACD) recommends term limits of 10-15 years for for-profit corporate boards. In certain cases, board members serve on one board for 20 to 30 years without term limits.
A nonprofit’s bylaws should include the established term limits and the maximum number of consecutive terms a board director can hold.
What are board member term limits?
Simply, a term limit restricts how many consecutive terms a board member can serve. It can be expressed as a specific number of years (e.g., 10 years total) or a number of terms (e.g., two consecutive 3-year terms).
Good officers can always be reelected, but a set term creates an opportunity for re-election where an unproductive (or even inactive) board member may be weeded out. However, term limits are not universal; some organizations prefer continuity and institutional knowledge over frequent turnover, especially in sectors where deep, long-term expertise is valued.
It is easy to add term limits to any organization’s bylaws. Having term limits removes the blame from individual board members should they wish to remove other members in the future. Members are also better able to stay focused on the limited time they have left with the organization.
What can board term limits learn from the term limits movement?
Board term limits have long been a topic of discussion and debate, drawing parallels to the broader term limits movement seen across various levels of government. Just as the term limits movement has influenced constitutional amendments and state legislation, the concept of term limits in board governance seeks to ensure fresh perspectives and prevent stagnation within organizations.
This idea mirrors the push for congressional term limits, which aims to bring new ideas and energy to legislative bodies by limiting the number of terms a member of Congress can serve.
At the federal level, discussions about term limits often extend to elected officials in Washington, DC, including members of Congress and even proposals for the Supreme Court. Advocates argue that imposing term limits on these positions could reduce career politicians’ influence, encourage diversity of thought, and promote a more dynamic and responsive government.
Similarly, board term limits can help organizations maintain vitality and adaptability by ensuring a regular influx of new board members.
While the Supreme Court has not mandated term limits for congressional or state-level elected officials, many states have enacted their own legislation to address term limits for various offices, reflecting a widespread belief in the benefits of such measures. This belief is echoed in the corporate and nonprofit sectors, where board term limits are seen as a way to foster good governance practices, enhance accountability, and ensure that boards remain effective and engaged in their oversight roles.
What is accomplished by having board term limits?
Organizations often take board governance for granted in their early stages of development. Typically, board members view governance reviews as something that will happen in the future.
Here are a few reasons why term limits would help prevent significant problems in governance.
It keeps a board up to date with changing times when term limits are in place. It sometimes takes new ideas rather than just changing minds for people to realize what worked ten years ago no longer works now.
Term limits prevent individuals from getting too much power for too long. New board members find it difficult to argue with those who have been on the board for 10 plus years. People want to avoid disputing with board members who have been there that long.
Boards with term limits can create entry points for new experience, vision, and financial capacity to come onto the board via new board members, especially in small non-profit boards. Initially, a group of committed volunteers could grow into a community institution with reliable resources and a significant impact. However, the original group of volunteers may not do it alone. Term limits help facilitate required change.
Board members are prevented from getting tired by term limits. Most board members juggle a lot. It can be a relief to term out and step down when serving on committees or boards even though past work has been hugely rewarding. Board business will likely start to feel familiar at some point. You may have become cynical, lost the excitement, or just feel like you are constantly checking budgets. Limits help keep you from becoming burned out.
A term limit removes the guilt of board members’ departure. Having burnout or wanting to move on is no longer a problem for board members when they serve with term limits. It is possible to step down gracefully.
What are the benefits of term limits for board members?
One disadvantage of term limits is that organizational memories and expertise are lost. But the advantages far outweigh the disadvantages, in this case.
Some advantages of term limits for board members include:
- Gives the board and organization the chance to work with talented individuals who can only devote a few years to serving.
- Makes it easier for your board to recruit a diverse board and bring new ideas and perspectives to the table.
- Helps avoid issues like low engagement, stagnation, boredom, and loss of commitment that can happen with long-serving board members.
- Prevents a small group of people from accumulating excess power and keeping this group from intimidating new members.
- Staggered board terms ensure a balance between continuity and turnover.
- Allows committee assignments to be rotated.
- Identifies and provides opportunities to change and improve group dynamics.
- Assists in leaving passive, ineffective, or troublesome board members respectfully and effectively.
- As members rotate off the board, you’ll be able to enlarge your circle of committed supporters.
- The board can easily update its members as the needs of the organization change.
The impacts of board member term limits
By setting term limits, the board can adjust its composition quickly as needs change. According to the IRS, term limits are a good idea because static board composition can lead to unhealthy attitudes, which can cause boards to govern out of self-interest rather than serving the community’s interests.
Towards the end of every board member’s term, the chair and executive director should conduct a comprehensive performance review. The organization will then determine whether the member is a valuable asset moving forward. You should emphasize the board’s contribution to the organization’s fundraising efforts. Don’t be afraid to set a “give-or-get” requirement for your board and devote time to fundraising. Identify your board members’ strengths and compare them to your organization’s greatest need. Outline potential areas for strengthening the board.
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Do I have to go when my term is up? What if I need to go earlier?
Members who have completed their term have the option of staying on the board for another term or stepping down. A term limit is simply a jumping-off point where a board member can exit gracefully or so new members can be brought on seamlessly.
Regardless of the term limit, there is no requirement that someone will leave after their term is over.
The bylaws could specify the following as the terms for all board members:
Each full-term is renewable, but no one may serve more than twice in a row.
When a volunteer board member is burned out or ready to move on to another board, they can step down gracefully after their term. You have the chance to plan for the replacement of their board skills and elections at the end-of-term tend to pace out onboarding and orientation with few members changing over each election.
Can term limits help encourage change?
Absolutely. Board rotation promotes change and transformation for a board healthily and naturally. Inviting new board members periodically keeps the board from stagnating.
Staggered terms, where board members’ terms expire at different times rather than all at once, complement board term limits by ensuring a seamless and effective rotation of board members.
The Stanford Social Innovation Review recommends rethinking board size, tenure limits, and participation requirements for fundraising to unlock greater strategic insight and value from your board. As a median non-profit board size of 15 members, management experts challenge the idea of meeting with double-digit participants for decision-making and problem-solving. A maximum of eight participants may be necessary to ensure high-quality discussions, but this is something you should discuss and try with your own board.
Navigating conflict of interest with board members
When a person in a position of trust has private interests that conflict with their official duties, there is a conflict of interest. It can either be real or perceived. Codes of conduct that require board members to be screened for potential conflicts of interest are a good idea to ensure public agencies are run in the public’s interest.
It is strongly recommended that applicants carefully consider and assess the potential conflicts of interest in their personal and professional relationships before applying to serve on the board of a public agency.
Removing a board member
No one likes the thought of removing a board member. There are almost always tensions and emotions involved with this unpleasant task. Relationships can, and often do, suffer as a result. This step should not be taken lightly, and resignation is often the best solution (term limits are easy to handle in this scenario).
But unfortunately, some board members may need to be removed. The lack of participation could be the reason for removal, and these situations are usually easier to handle. There may also be instances when a board member has become intolerably disruptive, abusive, negligent, or even criminal.
Most best-practice provisions require unanimous approval by the other board members. It should be hard so that members who may observe the world from a different perspective won’t be subject to arbitrary or intentionally discriminatory action.
When handled professionally and maturely, conflict can be healthy. If a situation warrants action, the standard procedure is to discuss the situation in a regular or specially called board meeting, put the motion to remove the person up for a vote, and end the session with a yes or no vote.
Elevate your board governance processes with Aprio
As organizations evolve, so should their boards. Board term limits help ensure regular infusion of new skills, perspectives and networks, ensuring the board remains aligned with the organization’s changing needs.
If you are looking to make board governance easier such as board elections, recruitment, onboarding, or to better engage board members, and adjust bylaws, the Aprio board portal can be a big help.
Get in touch with our team to learn about our easy-to-use board governance software. Aprio makes it simple for board members to stay engaged, run productive meetings and securely store board information in one place.
