Boards are required by law to exercise their due diligence in ensuring that the company is able to achieve its mission and has a solid strategic plan and does not run into legal or financial problems. The manner in which boards perform their duties is different and highly dependent on the specific circumstances.
Boards frequently make the mistake of becoming too involved with operational issues that should be left to management what to include in due diligence data room checklist or they are unclear about their legal obligations for the decisions and actions taken by an organization. This confusion usually results from not keeping up with the changing demands placed on boards or from unanticipated challenges like unexpected staff resignations and financial crises. It is often resolved by taking the time to talk about the challenges facing directors and providing them with simple, written materials and orientation.
A second common mistake is when the board chooses to delegate too much authority and not examine the matters it has given to others. (Except in the smallest NPOs). In this scenario the board loses its evaluation function and no longer assess whether the operational activities are contributing to a satisfactory performance of the entire organization.
The board should also create a governance system including how it will interact with the general manager or CEO. This includes setting the frequency of meetings and how members will be elected and removed, and the manner in which decisions are made. The board should also develop information systems that provide valid data on its past and projected performance to help in its decision-making.