This is a big topic - one I was discussing over dinner with an executive director friend recently. First of all, the terms "working" and "governing" are a bit slippery and then, putting them as opposites or a binary choice is a problem.
Let's start out defining the terms:
"Working" board generally is used to refer to boards of smaller nonprofits, indicating that these board members are more active than their counterparts serving on larger, more established nonprofits. This is not a good definition. All board members, no matter the size or maturity of the nonprofit, need to work on its behalf. What is different in the kind of work that gets done.
Another common misconception about "working boards" is that they "have to fundraise" while governing boards do not. Wrong. Again, what distinguishes a working board's involvement in a nonprofit's fundraising from what a board focused solely on the governing function does is simply the kind of activity undertaken by each.
So, what "working" board really refers to is board members who work as unpaid staff for the nonprofit. Examples of this are treasurers who are also the nonprofit's bookkeeper or a marketing professional on the board who writes website copy and handles ad buys, or, in the case of fundraising, a board member who also writes the organization's grants. This kind of work does indicate a smaller nonprofit, generally one in its early years that doesn't yet have the financial resources to hire professional staff in these day-to-day positions.
There's nothing wrong with board members functioning in this capacity - where the problem lies is when this is all they do. In other words, all nonprofits must have a governing board - one that provides the leadership of the organization, that sets direction and policy, that provides financial oversight and ensures adequate resources to expenditures. This is commonly referred to as a "governing board" - but the challenge here is that all working boards must also be a governing board. It's not an either or proposition. (And, by the way, all governing boards of nonprofits with professional staff must "work", meaning board members must attend meetings, lead committees, represent the nonprofit in the community and on fundraising calls, etc.)
And the very fact that board members are working as unpaid staff is what can make it challenging to do the primary function of governing. This is simply a matter of perspective - if a group of people spends time working at the staff level, it will need to ensure it shifts perspective to what is required to making good strategic, policy-level decisions. This can be achieved by intentionally setting up the working board's agenda with a segment to address staff level issues, such as a report on how marketing dollars are being spent, and a segment to address governing, such as, whether the marketing budget overall is in line with industry standards (for information on what industry standards are and how nonprofit boards should use them, see Nonprofit-KnowHow, Chapter 4.)
For working boards setting up the agenda in this fashion, I suggest putting the governing segment first. If the staff level comes first, with all its detail and tactical focus, it can be quite challenging to shift to the broader, long-term, more strategic view required to make good governing decisions. It's generally easier to shift "down" than "up"!
Working boards are important in a nonprofit's lifecycle, simply because most nonprofits do not start out with enough resources to hire professional staff, nor do they have enough volunteers to have some acting in staff positions and others on the board. It is far easier if the staff role and governing role are filled by different groups of people (as on a board that is solely focused on governing issues, with a staff to handle the day-to-day), but that's not always possible - especially at the outset. This means that the nonprofit with a working board will need to be vigilant in ensuring that the board fulfills both its "working" function and its "governing" function. Knowing which is which and what's involved with each is a crucial first step. (For more on this, see Nonprofit-KnowHow, Chapter 1.)
Another common issue is the confusion between governing boards and advisory boards...stay tuned for blog posts coming on this topic!