Family Ties Don’t Belong in the Boardroom

Why I don’t recommend having multiple family members on a not-for-profit board.

It may work perfectly well. Until it doesn’t.

Over the past two decades, I’ve come across a few not-for-profit boards with two or more family members serving together.

Usually, there’s a perfectly reasonable explanation.

Perhaps one family member has a particular skill the board needs. Maybe the organization is struggling to fill vacant seats. Or perhaps it simply seems easier to ask someone you already know and trust.

And sometimes, everything works just fine.

So, what’s the problem?

Boards need to think beyond what works today. Good governance means anticipating potential challenges before they become actual problems.

Having multiple family members on a board can create a dynamic that is difficult to manage if disagreements arise, particularly when one family member feels obligated to support or defend the other.

Let me explain with a story.

Years ago, I worked with a board where the President strongly believed his wife would be a terrific Treasurer. The board had no formal recruitment process and had an urgent need to fill the position.

So, they took the easy route. They agreed.

What they didn’t anticipate was that they had now created a very strong voting block around the board table. The husband and wife consistently voted together and began pressuring other directors to support their positions.

The board also agreed to give signing authority to just those two executive officers. At the time, it seemed efficient. It eliminated the inconvenience of involving other directors and made managing the finances easier.

But in reality, the board had handed significant control of the organization’s finances over to one family unit.

Things began to deteriorate.

The Treasurer became increasingly absent from board meetings and financial reports were often late or even non-existent. Her husband fiercely defended her and became angry with anyone who raised concerns.

And when the two of them went on vacation, no one else had access to the bank accounts.

You can probably guess where this story goes.

Eventually, receipts and financial records were missing. Questions arose about the use of funds. The organization’s financial reputation suffered, and the bank account was seriously depleted.

By the time the board came to its senses, it had a very serious problem on its hands.

That is exactly why I encourage boards to think carefully before placing family members in positions where their personal relationship could affect board decision-making.

This isn’t about saying family members can never serve on the same board. It’s about recognizing the risk and putting good governance practices in place before you need them.

Remember:

• A strong recruitment process helps prevent those last-minute, “We need someone… who do we know?” decisions.

• A solid succession plan helps ensure that board members are selected because they are the right people for the job; not simply because they are available.

• Clear policies around financial controls, signing authority, conflicts of interest and director conduct provide important safeguards when relationships get complicated.

The best time to put these things in place is before you need them.

Good governance isn’t about expecting the worst. It’s about being prepared for it.

And trust me, your future board will thank you for doing the boring stuff now, before the “interesting” stuff starts.