The Structure and Role of Advisory Boards: A Detailed Overview

Company advisory boards are important to its operations. As much as they are not part of the company’s management structure, they contribute their expertise by addressing key issues and provide insights into projects. They work hand-in-hand and regularly meet to discuss strategic plans to achieve the company’s goal.

We’ll show you what an advisory board is, how it differs from the board of directors, types, roles, and structure of the board in this article.

What is an advisory board?

The advisory board is a group of individuals in a company who offer strategic opinions on specific aspects of a company’s processes. They have no legal responsibility for the organization’s operations, but their advisory services are important to help an organization handle its legal, financial, or managerial responsibilities.

More often than not, an organization, either a nonprofit or for-profit with a nonprofit side, needs the community it’s reaching out to, to perceive it in a positive light. The advisory board definition often mirrors the image of the organization, allowing the organization an opportunity to connect more strongly with its audience and network with members of the outer community.

Advisory boards meet with the leadership of the organization, report their findings, and draft actionable steps that will help to connect with the audience that they represent. They act as a voice on behalf of the community to the organization. The role of the advisory board is to be unbiased in presenting views and opinions that will advance the organization’s cause.

The difference between an advisory board and a board of directors

Have you ever thought about the difference between an advisory board and the board of directors in a nonprofit? Both boards are key aspects of a nonprofit; however, their roles diverge.

Advisory board vs board of directors

• In the simplest form, the advisory board is a board of persons who advise the organization on its operations, while the board of directors acts are in charge of the organization’s day-to-day operations.

• The board of directors bears all legal and financial obligations of the nonprofit, while the advisory board is exempt from these obligations, except working to raise funds for the organization.

• The board of directors defines the goal of the nonprofit, hires, or works directly with management in representing stakeholder interests. Advisory board members advise the organization on steps to take towards achieving set goals, offering expert advice where necessary.

• The board of directors makes strategic short and long-term plans in line with the organization’s vision of the organization while discovering improved ways to achieve them. They also use key metrics to determine the organization’s success at achieving its goals. Meanwhile, advisory boards help to provide key insights into how the goals can be achieved.

• Both boards may act as the face of the organization on separate grounds. While the board of directors acts as the professional public relations officers of the organization, the advisory board members may act as ambassadorial public relations officers — passively or actively.
  
• The board of directors is vested with the power to appoint the organization’s key officers, such as the CEO and the chief financial officer (CFO). Also, they can dismiss these persons of their duties if performance is not up to par. Advisory board members cannot function in these capacities, they have no power to elect nor terminate.

Types of advisory boards

A nonprofit advisory board may be formed for different purposes depending on the goals and structure of the organization. 

• Programmatic 

This type of advisory board is formed from low-income social workers’ clients, who have vast experience on the issues that a nonprofit is poised to solve. They help to provide valuable feedback to the nonprofit on the impacts of its programs. 

• Young professionals

An advisory board of young professionals consists of young people who represent the younger population that an organization is looking to serve. They provide insights into activities and advise the management on creative ways to serve the population they represent. Also, they act as ambassadors of the organization to the younger community. 

• Letterhead

These advisory board members play no physical roles in the nonprofit other than providing the goodwill of their names to a nonprofit’s operation. You find these names on the nonprofit’s correspondence, but beyond that, these advisors have no other input to the nonprofit.

• Fundraising

A fundraising advisory board could be created to advise the organization on prospective fundraising activities and how to reach new donors. Also, the advisory board could be made of an existing donor to the organization’s nonprofit cause.

• Governance

An advisory board may be set up to train members for their future role as members of the board of directors and to test their decision-making skills. They may also lend their expertise to advise on how the leadership is chosen, and their decision may largely influence the outcome, even though they have no direct role to dictate who is or is not appointed.

The primary responsibilities of an advisory board

So what does an advisory board do? In fact, there are no specific rules to how members of an advisory board should act and the responsibilities expected of them. However, there are expectations and unwritten advisory board responsibilities.

First of all, to determine what your advisory board will do, you need to determine the following:

• Why do you need them
• How often do you need them
• When they should meet
• What your expectations are
• Potential candidates for your roles

Now you’ve determined all of these, the possible responsibilities for your advisory board members may include some of the following.

• Performance expectations

Your advisory board will consist mostly of people who have the potential to provide expert insight into your goal and activities. You also need them to provide financial support, the goodwill of their names, volunteer, and engage with your community. Depending on your needs, all of these roles are important to the duties of advisory members.

• Meetings

Meetings are crucial for the board to function effectively; however, a letterhead advisory member may not be obligated to attend board meetings. The meetings could be held virtually or physically, depending on how convenient it may be for the advisors. Once they understand their roles, they’d be able to determine how often they should meet. Since these are experts themselves playing advisory roles, it might not be ethical to place excessive meeting demands on them.

• Goal setting

The board has, with its expertise, helped the organization set goals and make strategic plans. Since they play ambassadorial roles on behalf of the organization, they can see the needs of the community they represent more closely. Then help the organization make strategic plans towards achieving them. To do this, they report to management, who, in turn, makes decisions accordingly.

• Performance assessment

The board will assess the performance of management’s key players and determine if they’re making decisions in line with company goals and objectives.

What an advisory board structure looks like

The structure of the board is up to you, as are their roles. Although, there are simple tips to keep in mind.

It’s best to have an odd number of board members to avoid a tie when voting. The number of members need not be too large — nine or eleven is sufficient and helps to make the decision-making simpler. 

Your advisors should be experienced, especially if you’re searching for investors for your company or donors for your nonprofit. You should have a number that represents the equity of your company, or the audience you’re reaching out to. Also, your advisors should be made up of industry experts, or at least be able to connect with your organization’s audience. 

Your advisory board structure should be about your needs, so your meetings should be structured as frequently as the need demands. If not, quarterly or annual meetings with the CEO should suffice.

Don’t forget to determine how you’re going to compensate board members for their expertise and commitment to your organization. However, you choose, remember that it could help to motivate them all the more.

Advisory board members

The advisory board member job description is simple. In the simplest forms, your advisory board should have a chairperson, vice-chair, board secretary, nominating committee chairperson, treasurer, and the board floor members.

• The board chairperson

The chairperson is in charge of the advisory board — all members answer to them. They oversee the activities of the board and report to management as scheduled. They draft and share responsibilities with all board members and work with them to meet expectations. 

• The vice-chair

The vice-chair works with the chairperson to achieve all the set goals and objectives. They also act as the chairperson in his/her absence. They report to the chairperson on all delegated duties.

• The board secretary

The board secretary is an advisory board member responsible for handling the meeting minutes and maintaining proper records of the advisory’s activities. The person is also in charge of keeping members aware of meeting schedules, drafting reports, and monitoring the overall participation of board members.

• Nominating committee chairperson

This person is in charge of maintaining the current state of the advisory board. They are charged with the responsibility of recommending new advisory members and analyzing the performance of current members in line with the organization’s needs. They report to the board chairperson regularly. 

• Board treasurer

This advisor works directly with a staff member in charge of income reports. They review the report in light of the board’s objective and the efforts that have been invested to achieve them.

• The board floor members

These members should actively participate in meetings, offer expert advice and volunteer services where necessary. They should also commit to assigned responsibilities and collaborate where necessary.