I’ve worked with nonprofit boards for long enough to know that governance problems don’t usually announce themselves with a bang. They creep in quietly — a board that stops asking hard questions, a conflict of interest that nobody addresses, a treasurer who doesn’t really understand the financials. And then one day, there’s a crisis, and everyone wonders how it happened.

Here are the five governance mistakes I see most often in Australian nonprofits, and what to do about them.

1. The rubber-stamp board

This is the most common problem. A board that meets quarterly, receives a CEO report, nods approvingly, and goes home. No challenging questions. No independent analysis. No genuine oversight.

Rubber-stamp boards happen for several reasons. Board members may not have the confidence or expertise to ask difficult questions. The CEO may present information in a way that discourages challenge. Or the culture of the board may have evolved toward collegiality rather than accountability.

The fix starts with board composition. You need directors who have the knowledge to understand what they’re being told and the confidence to push back when something doesn’t add up. This means deliberate recruitment for skills gaps, proper induction, and ongoing board education.

It also requires a chair who actively invites different perspectives and creates space for challenge. A good chair doesn’t just manage the agenda — they ensure that every significant decision receives genuine scrutiny.

2. Conflicts of interest that nobody addresses

Every nonprofit board has potential conflicts of interest. Board members who are connected to suppliers, related to staff members, or involved in competing organisations. These conflicts aren’t inherently wrong — they’re a normal part of community governance. The problem is when they’re not declared and managed.

I’ve seen boards award contracts to companies owned by board members without any documented conflict management process. I’ve seen boards make decisions that benefit specific directors’ other interests without any disclosure. And I’ve seen these situations deteriorate into legal disputes, ACNC investigations, and organisational crises.

The fix is simple in principle: implement a robust conflict of interest policy, require annual declarations, and ensure that conflicted directors leave the room when related decisions are being made. Document everything. The ACNC provides clear guidance on this.

The harder part is creating a culture where declaring conflicts is normal and expected, not embarrassing or accusatory. The chair needs to model this by declaring their own conflicts openly and treating the process as routine.

3. Financial oversight that doesn’t oversee

The board is ultimately responsible for the organisation’s financial health. But many nonprofit board members don’t have financial expertise, and the financial reports they receive are either too complex to understand or too simplified to be useful.

The result is boards that approve budgets they don’t fully understand, sign off on accounts they can’t meaningfully assess, and discover financial problems only when they’ve become severe.

You don’t need every board member to be a CPA, but you need at least one or two who can read financial statements critically. You need a finance committee or audit committee that reviews the financials in detail before board meetings. And you need financial reports that are designed for non-financial readers — clear, visual, and focused on the key metrics that matter.

If your board is approving the annual accounts without anyone asking a single question, you have a problem.

4. Strategic drift

This is the slow-motion mistake. Over time, a nonprofit can drift away from its mission — adding programs that don’t align, chasing funding that takes it in new directions, or expanding into areas where it lacks capability. Each individual decision seems reasonable. The cumulative effect is an organisation that’s lost its focus.

The board’s role is to maintain strategic clarity. That means having a clear strategic plan (not a wish list), reviewing strategy regularly (not just when it’s time for a new plan), and being willing to say no to opportunities that don’t align.

One of the hardest conversations in nonprofit governance is declining funding. When a funder offers money for a program that’s outside your mission, the temptation to take it is strong. But mission creep funded by grants is still mission creep, and it diverts resources from the work you’re supposed to be doing.

5. CEO management that’s either absent or excessive

The relationship between the board and the CEO is the most consequential governance relationship in any nonprofit. Get it wrong, and everything else suffers.

Two common failure modes:

Absent oversight. The board trusts the CEO completely and provides no meaningful supervision, performance management, or accountability. This works fine until it doesn’t, and when it doesn’t, the resulting problems — financial mismanagement, cultural issues, strategic failures — are often severe.

Excessive interference. The board micromanages the CEO, involving itself in operational decisions, second-guessing management judgments, and blurring the line between governance and management. This demoralises the CEO, confuses staff, and creates dysfunction.

The healthy middle ground is clear delegation with robust accountability. The board sets strategy and policy. The CEO manages operations. The board holds the CEO accountable for performance against agreed goals through regular, formal reviews. And both parties respect the boundary between governance and management.

The meta-lesson

All five of these mistakes share a common root cause: boards that don’t take governance seriously enough. They treat board service as an honorary role rather than a fiduciary responsibility. They don’t invest in their own development. They don’t ask whether they’re doing a good job.

The best nonprofit boards I’ve encountered do something that most boards don’t: they regularly evaluate their own performance. They ask whether they’re providing effective oversight, making good decisions, and fulfilling their duties. And when the answer is no, they do something about it.

Good governance isn’t glamorous. But it’s the foundation that everything else — mission delivery, financial sustainability, community trust — is built on.