An advisory board is a group of outside experts who provide non-binding strategic advice to an organization. With their help and knowledge, the organization can grow and maximize value.
What do advisory boards typically do? How do they differ from the board of directors? What are the benefits of an advisory board, and how to structure one? These and other questions are answered in this detailed guide on advisory boards.
Key takeaways
- An advisory board is a group of external experts who provide non-binding advice to an organization (for-profit or non-profit), but they do not make decisions or manage daily operations.
- Advisory board members play key roles in offering strategic guidance, industry expertise, networking opportunities, and accountability, helping companies spot risks and explore new opportunities.
- Unlike a board of directors, advisory boards have no fiduciary duties or voting rights. They serve as advisors, while directors hold legal authority and decision-making power.
- Advisory boards can take many forms, corporate, nonprofit, fundraising, customer (CAB), governance, and young professionals, depending on organizational needs and goals.
- To be effective, advisory boards should follow best practices such as clear communication, regular participation, confidentiality, and continuous learning.
Definition of an advisory board
An advisory board is a group of external experts who provide non-binding guidance to a company’s management team.
An advisory board typically does the following:
- Acts as a sounding board on corporate matters
- Provides advice and expert knowledge in specific areas (marketing, finance, human resources, technology)
- Offers guidance on creating strategies and exploring new opportunities
- Flags risks and provides oversight without legal responsibilities
- Connects executives to industry contacts and provides access to ideas
- Meets regularly to support making decisions without running day-to-day operations
An advisory board generally serves alongside the formal board of directors, but is different in purpose and power. Unlike a board of directors, an advisory board has no fiduciary duties and no voting rights. That means the group provides insights and wise counsel, but the company’s leaders still decide.
The advisory board does not decide or manage. They advise and serve.
Roles and responsibilities of advisory board members
While the list of responsibilities of each separate advisory board differs from organization to organization, they all share one goal: to provide advice on different aspects that help the company grow.
However, most advisory boards typically perform these responsibilities.
Strategic guidance
Advisory board members help a company think long-term. They bring an outside perspective that allows leaders to see opportunities or challenges they miss.
The key thing to understand here is that the advisory board’s role is not to set the strategy, but to provide oversight, highlight possible directions, and share lessons from their own experience. This helps management make more confident choices about the future.
An advisory board might:
- Give feedback on business plans and goals
- Point out gaps or blind spots in strategy
- Share lessons from past successes and failures
Networking and partnerships
One of the strongest values advisory boards bring is access to new people. Members often introduce the company to potential partners, investors, or clients. They open doors to networks that would otherwise take years to build. These connections can lead to collaborations, joint projects, or valuable business relationships.
This includes:
- Introducing leaders to relevant contacts
- Opening opportunities for partnerships or alliances
- Helping the company enter new markets
Industry expertise
Advisory board members are usually seasoned professionals who know their industry inside and out. They keep the company informed about market trends, customer expectations, and competitor activity. By sharing their knowledge, they help the business stay ahead of changes and avoid common mistakes.
This includes:
- Providing insights on market trends and shifts
- Advising on best practices within the industry
- Warning about pitfalls based on past experience
Risk management and accountability
While they don’t carry legal responsibilities, advisory board members still play a part in helping companies act wisely. They can spot risks early, whether financial, reputational, or operational. They also hold management accountable by asking tough questions and encouraging transparency. This outside oversight reduces blind spots and supports better decision-making.
This includes:
- Identifying potential risks before they become problems
- Questioning plans and assumptions to ensure clarity
- Encouraging open discussion and responsible choices
The difference between an advisory board and a board of directors
The main difference between an advisory board and a board of directors is that the advisory board only provides guidance, while the board of directors has legal authority and decision-making power.
Advisory board vs board of directors: FAQs
Is an advisory board the same as a board of directors?
No. An advisory board only provides guidance and has no legal responsibilities, while a board of directors governs the company and makes binding decisions.
Can a company have both an advisory board and a board of directors?
Yes. Many companies use both. The advisory board gives extra expertise and perspective, while the board of directors manages governance and compliance.
Who has more power: the advisory board or the board of directors?
The board of directors has more power because it has fiduciary duties, decision-making authority, and legal responsibility. The advisory board only advises and cannot enforce decisions.
In practice, this means the advisory board supports management with advice, insights, and connections, but it does not control company policies or vote on decisions. The board of directors, on the other hand, has fiduciary duties, oversees corporate governance, and is accountable to shareholders. Together, they serve different purposes, but both contribute to the success of the business.
This table summarizes the main differences between the advisory board and the board of directors’ responsibilities.
| Aspect | Advisory board | Board of directors |
| Role | Provides non-binding advice and insights | Has legal authority to make company decisions |
| Accountability | No fiduciary duties | Fiduciary duty to shareholders and stakeholders |
| Decision-making | No voting rights | Full voting rights on company policies and strategy |
| Focus | Guidance, expertise, and networking | Governance, oversight, and compliance |
| Meetings | Flexible and less formal | Regular, formal, and legally required |
| Impact | Influences strategy indirectly | Directly shapes company direction |
Purpose of an advisory board
The main purpose of an advisory board is to provide expert guidance without being involved in day-to-day management. Advisory boards exist in both corporate and nonprofit settings, but their focus differs.
- In corporate organizations, an advisory board supports growth by advising on strategy, industry trends, scaling, or complex events like mergers and acquisitions (M&A). For example, a startup may form an advisory board to learn from experienced entrepreneurs, or a company preparing for an M&A deal may rely on advisors for risk assessment and integration planning.
- In nonprofit organizations, an advisory board typically helps with governance best practices, fundraising, and building community relationships. Their role is to strengthen the mission and ensure the nonprofit follows effective board governance models that promote accountability and ethical practices.
Note: Most advisory board members contribute their knowledge and time on a voluntary basis. They are often motivated not by financial reward, but by a commitment to help the organization succeed and to shape its long-term impact. However, some advisory boards may receive fixed payments, meeting fees, or equity.
6 types of advisory boards
Advisory boards can take many forms, depending on the organization’s goals. Below are the most common types and how they contribute.
Corporate advisory boards
These boards support businesses with strategic advice, industry knowledge, and valuable connections. They are often formed when companies are scaling, entering new markets, or preparing for M&A.
Nonprofit advisory boards
In nonprofits, advisory boards strengthen governance, provide feedback on programs, and help the organization stay connected to the community it serves. They can also boost credibility by bringing respected names to the table.
Fundraising advisory boards
This type focuses on helping organizations raise money. Members advise on fundraising campaigns, donor outreach, and creative ways to attract new supporters.
Customer advisory boards (CABs)
CABs are made up of selected customers or clients who share feedback on products or services. They give organizations a direct view of customer needs, helping improve offerings and build stronger relationships.
Governance advisory boards
These boards guide leadership structures and practices. They may not make appointments directly, but their input can strongly influence how leaders are chosen and how governance is carried out.
Young professionals advisory boards
This board brings in younger voices to ensure the organization stays relevant to new generations. Members often share fresh perspectives, creative ideas, and insights into what younger audiences value.
Benefits of having an advisory board
An advisory board member brings to the company a lot of information, skills, and experience. In its report, BDC states that 86% of businesses with advisory boards experienced up to a 24% rise in revenue, while company productivity climbed by 18%.
These people are frequently experts in their professions, capable of giving insights and advice. Here are some specific ways an advisory board member might contribute value:
- Leveraging expertise. Employ the useful and practical advice provided by experienced advisors who specialize in boosting company success.
- Improving reputation. A positive reputation fosters increased trust among consumers, partners, and stakeholders, potentially leading to new possibilities and partnerships.
- Building trust. A trustworthy company is more likely to attract and keep customers and partners and acquire the trust of investors.
- Attracting top-tier talent. The presence of a reputable advisory board makes the firm more desirable to top-tier experts looking to join a vibrant and forward-thinking organization.
- Cultivating culture. Advisory board members understand the company’s culture. This helps to maintain continuity and consistency with the organization’s values and goals.
How to structure and manage an advisory board
The advisory board structure is up to you, as are the advisory board roles. However, there are simple tips to keep in mind.
Setting objectives
Start with a clear purpose. Define what the advisory board should help with (for example: market entry, scaling, or product direction) and what it won’t cover. Write a short charter that sets goals, scope, meeting frequency, and how success will be measured.
Member selection criteria
Select individuals with hands-on experience in the areas that require the most attention. Aim for a small group that reflects your market, investors, or donors. Many teams keep their boards lean, often with 3–5 members, and sometimes 7–11, to stay focused and move faster. If you plan to use indicative votes to rank options, pick an odd number to avoid ties.
Meeting structure and agendas
Set a steady meeting schedule (monthly or quarterly works well). Share a brief pre-read with data, decisions needed, and 2–3 questions you want advice on. In meetings, time-box topics, capture action items, and end with clear owners and deadlines. Keep notes short and share a one-page recap after each session.
Compensation approaches
Compensation should match the time and value expected. Options include a modest fixed payment, a per-meeting fee, small equity (for startups), travel reimbursements, or volunteer service for mission-driven nonprofits. Be transparent up front and put the terms in a simple letter.
✔️ Step-by-step checklist to set up your advisory board
- Define the purpose and write a short charter
- Decide size, terms (e.g., 1-year, renewable), and meeting cadence
- List the skills and perspectives you’re missing
- Identify and vet candidates; pick a chair to run meetings
- Agree on compensation and expectations in writing
- Schedule the first three meetings and prepare a pre-read template
- Run focused meetings with clear questions and time boxes
- Send a one-page recap with actions, owners, and dates
- Track outcomes against goals each quarter
- Review composition and refresh members annually
Best practices for advisory boards
Advisory board members can add real value when they follow certain best practices. These habits help you stay effective and trusted by the organization:
- Clear communication. Open and honest communication with leadership is key. Share your views clearly, ask thoughtful questions, and make sure your input supports the company’s overall direction.
- Active participation. It’s truly important to show up. Regular attendance at meetings and discussions demonstrates commitment and ensures that advisors are always informed enough to contribute meaningfully.
- Confidentiality. Advisors often deal with sensitive information. Respect the confidentiality of the company. It builds trust and protects the organization’s reputation while reinforcing the advisor’s role as a reliable source of guidance.
- Continuous learning. You should stay up to date with industry trends, market changes, and new ideas. This way, you can bring fresh insights and keep your advice relevant.
| Pro tip: Consider using a board portal to manage advisory board documents securely. A board portal, such as Ideals Board, for example, simplifies communication, provides advisors with quick access to meeting materials, and protects sensitive information. |
4 main challenges advisory boards face
Creating advisory boards can be a cost-effective endeavor that demands little in the way of management. But, as with any facet of business, challenges invariably arise. These hurdles must be addressed to unlock the full potential of advisory boards:
- Balancing diversity.
- Limited interaction with peers and company leadership.
- Transforming valuable insights into tangible actions
- Keeping member engagement
Balancing diversity
Diverse perspectives and ideas add immense value to the decision-making process. However, there lies a challenge within this opportunity: how to strike the right balance.
- Solution: Diverse boards, especially those in the top quartile for gender diversity, hold a 28% higher likelihood of outperforming peers. It’s a testament to inclusive leadership’s competitive edge.
Limited interaction with peers and company leadership
It is sometimes difficult to comprehend why members do not participate in the discussion. It’s much more upsetting when you don’t see them socializing with external stakeholders and fellow members.
- Solution: To address the problem of communication, try promoting open communication and organizing team-building events.
Transforming valuable insights into tangible actions
When there’s no clear plan to capture insights and turn them into action, it’s easy for valuable ideas to slip through the cracks. It usually leaves other board members feeling disillusioned, and their engagement wanes as they wonder if their input truly matters.
- Solution: Implement a structured approach with robust insights documentation, prioritization frameworks, clear action planning, regular updates, feedback loops, and recognition of member contributions.
Keeping member engagement
While companies may initially launch a robust program with successful meetings, there is often a significant lull between these meetings. During this downtime, both members and internal stakeholders may lose sight of shared goals and outcomes
- Solution: Successful advisory board meeting organizers recognize the importance of maintaining member engagement in between meetings. They do this by establishing ongoing communication channels, such as regular conference calls and webinars.
Future of advisory boards
As the global economy and markets face turbulence, new trends appear. These trends impact each area of business matters, with governance being one of them.
Let’s take a look at the main trends that might have an effect on advisory boards’ operations in the near future:
- ESG. Environmental, Social, and Governance issues have always been central in the list of business priorities. For instance, in 2025, 62% of CEOs see climate change as a major business risk. It only proves that boards will increasingly need ESG-literate specialists who can evaluate ESG issues, advise on compliance, and help shape sustainability strategies.
- Diversity. Though boards are now more diverse than ever, there are still continuing problems. For instance, the share of non-white new directors dropped from 48% (2022) to 31% (2024). Also, while women now hold roughly one-third of board seats (29%), it’s still just 8% of board chair positions. So, advisory boards will be expected to mirror diversity in the company’s markets.
- AI. In a global board-level survey, 31% of respondents said AI was not yet on their board’s agenda. At the same time, 68% of CEOs expect AI to change the way their companies capture value in the next three years. It only highlights organizations’ need for external experts who can advise on AI adoption, ethics, data governance, and oversight.
- Digitalization. The pace of digitalization isn’t slowing. So, with 90% of boards having increased their level of digitalization in recent years, digital solutions like virtual board portals might become even more essential for effective and secure board operations.
Final thoughts
Advisory boards bring outside expertise and guidance that can help organizations grow and adapt to changing markets.
Whether supporting a startup, steering a nonprofit, or guiding a company through M&A, a well-structured advisory board can make a measurable difference. To maximize their impact, organizations should embrace best practices, stay ahead of emerging trends, and equip their boards with the right digital tools.
FAQs
What does an advisory board do?
Advisory board members typically are not paid for their participation. Unlike directors on a board of directors, they usually serve in a voluntary or honorary capacity, although in some cases, they may receive stipends or reimbursements.
Are advisory board members paid?
Not always. Some members volunteer their time, especially in nonprofits, while others may receive modest compensation such as a fixed fee, equity, or meeting-based payments, depending on the organization’s size and needs.
How often do advisory boards meet?
Most advisory boards meet quarterly, though the schedule can vary. Some meet monthly during periods of rapid growth or major change, while others meet only twice a year to provide high-level guidance.
Who should be on an advisory board?
An advisory board should include individuals with skills or experience that the organization lacks. This can mean industry experts, former executives, investors, community leaders, or specialists in areas like finance, technology, or governance.
What is the advisory board vs. the board of directors?
The advisory board gives advice but has no legal authority or voting rights. The board of directors, on the other hand, has fiduciary duties, makes binding decisions, and oversees governance and compliance.