Why a nonprofit's board matters more than its ratios

Financial ratios describe the past; governance predicts the future. A capable, independent board is the mechanism that catches problems before they become scandals — and the Form 990 discloses more about it than most donors realize.

Signals worth checking

• Board independence. The 990 reports how many voting members are independent — not employed by or doing business with the organization. A majority should be.
• Size and activity. Two or three members is a rubber stamp; a functioning board typically has five or more who actually meet.
• Written policies. Conflict-of-interest, whistleblower and document retention policies (Part VI checkboxes) are basic hygiene.
• Audited financials. An independent audit means an outside professional examined the books — the strongest routine accountability signal a mid-size or large charity can offer.
• Family patterns.Related officers, or the founder's relatives on payroll, concentrate power the board is supposed to check.

CharityIndex surfaces these as the accountability component of the letter grade — board size and independence, the policy checkboxes and audit status all come straight from each organization's filing, and they're shown on the profile alongside the financials.