Explaining Board Member Term Limits | Aprio
December 21, 2021
Karen Peacey

Board member term limits and why they’re important

The concept of term limits will come up at some point on all boards. In addition to being important, these questions are often loaded with sensitivity as long-serving board members can be frightened by the discussion of a set length to their tenure.

Let’s discuss the real meaning of board member term limits.

What is meant by board “terms”?

A “term” simply refers to the duration of service required for a member of the board, usually outlined in an organization’s bylaws. Board member terms usually range from two to six years, with an average of about three years. A term of two years might seem a little short, and a term longer than three years might make a prospective candidate wary of working so long, so three years is a happy medium. 

There can also be unique term rules on boards. Some non-profits 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 some cases, board members serve on one board for 20 to 30 years without term limits.

Board of directors terms can be useful for board recruitment and development as they provide protection for board members and act as a provision for seamless operation. 

This article will explain why. 

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.

What are board member term limits?

Consider term limits if you haven’t already. Simply, a term limit restricts how many consecutive terms a board member can serve. 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. 

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 is accomplished by having 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: 

  • Give the board and organization the chance to work with talented individuals who can only devote a few years to serving.
  • Make it easier for your board to be diverse, as it will bring new ideas and new perspectives to the table.
  • Keeping you from stagnation, tiredness, boredom, and loss of commitment can happen when you serve a long term on the board.
  • To prevent 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.
  • Allow committee assignments to be rotated.
  • Identify and provide opportunities for changing and improving group dynamics.
  • Assist 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 will be able to easily update its members as the needs of the organization change.

The impacts of board member term limits

The board can adjust its composition quickly as needs change by setting term limits. According to the IRS, term limits are a good idea since they believe that 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. A non-profit’s bylaws should include the preferred term limits and the maximum number of consecutive terms a board director can hold.

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.

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. Each board should determine the terms of office.

In general, the board of directors term limits best practices allow the board to continuously assess its skill sets to remain competent as society changes, especially concerning technology.

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.

Explaining board member term limits | Aprio

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.

Takeaways

Over time, the organization’s needs may change. So should the board’s composition to ensure it has the necessary skill sets, perspectives, and future networks. Term limits can allow for this to happen. More boards are implementing flexibility and strategic consistency into the governance structure of their organizations, as the number of boards without term limits has declined.

If you are looking to make it easier to undertake board elections, recruitment, and onboarding, or to easily engage board members, and adjust bylaws, the Aprio board portal can be a big help. 

Contact us to learn about our easy-to-use software for a better-run board.

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