Ten Basic Responsibilities for Nonprofit Boards. Vicki Clark, Building the Capacity of Organizations, Memphis, TN

Transcription

1 Ten Basic Responsibilities for Nonprofit Boards Vicki Clark, Building the Capacity of Organizations, Memphis, TN

2 Governance IS Leadership The task of the leader is to get his (her) people from where they are to where they have not been. Henry Kissinger

3 Primary Board Responsibilities Establish Strategic Direction 1. Determine mission and purpose 2. Ensure effective planning Ensure the Necessary Resources 3. Ensure adequate financial resources 4. Select the chief executive 5. Build a competent board 6. Enhance the organization s public standing Provide Oversight 7. Monitor and strengthen programs and services 8. Protect assets and provide financial oversight 9. Ensure legal and ethical integrity 10. Support and evaluate the chief executive

4 1. Determine Mission and Purpose A statement of mission and purpose should articulate the organization s goals, means, and primary constituents served. It is the board s responsibility to create the mission statement and review it periodically for accuracy and validity. Each individual board member should fully understand and support it. Your board is responsible for ensuring that the organization s mission is clearly stated and advanced. This usually takes the form of a relatively brief written mission statement, sometimes supplemented with a more detailed statement of the organization s vision or values what it supports or believes. Before developing or revising the mission, wise chief executives and boards consult with the organization s stakeholders.

5 2. Ensure Effective Planning Through the planning process, your board and staff translate the organization s mission into objectives and goals, which can then be used to focus its resources and energy. There are numerous ways to do planning from comprehensive analysis to revising the present plan. The leadership should determine together which approach is best. The board needs to stay focused on The Big Picture not the details. The staff drafts the annual operational plan to implement the strategic plan.

6 3. Ensure Adequate Financial Resources One of the board s foremost responsibilities is to provide adequate funding for the organization to fulfill its mission. The board should work in partnership with the chief executive and development staff, if any, to raise funds from the community. Your board should guard against any tendency to behave as if its development committee alone bears the responsibility for fundraising. Resource development, including fundraising, is a function of the full board. Your board should strive for 100 percent participation in giving. After all, if board members don t substantially support their own organization, why should anyone else?

7 4. Select the Chief Executive Boards much reach consensus on the chief executive s job and undertake a careful search to find the most qualified individual for the position. The chief executive s success is linked to your board s determination to do its part to sustain an effective relationship one marked by mutual respect and an understanding of the distinction between board and executive responsibilities. Providing personal and organizational support for executive leadership, regularly assessing the chief executive s performance, and acknowledging superb service through appropriate compensation are key board responsibilities as well. A highperforming board gives ongoing attention to these matters. rest of your board.

8 5. Build A Competent Board Recruiting committed individuals on your board is not enough. There must be a way to continually educate and provide adequate tools for the board members to carry on their duties in an effective manner. All boards have a responsibility to articulate and make known their needs in terms of member experience, skills, and many other considerations that define a balanced board composition. Four elements of the governance committee s work on your board s behalf relate especially to developing and sustaining effective board performance: clarifying expectations for all board members periodically assessing individual board member performance (as well as the board s) orienting new board members effectively to responsibilities, history, challenges ensuring opportunities for in-service education

9 6. Enhance the Organization s Public Standing An organization s primary link to the community, including constituents, the public, and the media, is the board. Clearly articulating the mission, accomplishments, and goals to the public, as well as garnering support from important members of the community, are important elements of a comprehensive public relations strategy. Board members are also representatives of those they presume to serve through the organization s mission and activities. Together with management, the board is challenged with how to strategically communicate the organization s story and contribute to a healthy and accurate public image for the organization. Good communication plans are an important part of organizational planning and strategic thinking. All board members should have an elevator speech an interesting and compelling explanation, delivered in less than a minute, of the organization s mission and purpose. Board members should be called upon to meet with elected officials, testify before legislatures, court foundation program officers, speak to community groups, and represent the organization at local/national forums. Board members should also remember that whatever they utter about the organization carries great weight, whether intended or not.

10 7. Monitor & Strengthen Programs and Services The board s role in this area is to determine which programs are the most consistent with the organization s mission and to monitor their effectiveness. Board work should focus primarily on the organization s impact, as determined by the extent to which program participants achieved the desired results and changes in behaviors or conditions over the long term. Always aim for a balance between your board s responsibility to ensure quality, cost-effective programs and services, and the staff s responsibility to creatively initiate, conduct, and evaluate them. How does your board monitor and otherwise contribute to strengthening the organization s endeavors, especially when a well-qualified staff is in place? For most boards, fulfilling this responsibility includes the following:

11 Monitor & Strengthen Programs and Services (con t) periodically assessing the efficacy of programs and services (some boards establish a committee to evaluate programs and services, especially user satisfaction with them) asking good questions about proposed programs and services, especially as they relate to the organization s unique mission and purposes studying both the cost-benefit ratio of major undertakings and user satisfaction data (hearing from users of certain programs and services) to facilitate an exchange of information and learning occasionally recommending/ authorizing management to invite qualified third-party consultants to study programs or services that may be causing concern Explicit benchmark data in various visual forms shown at a glance how the organization is doing. Board members should guard against staff or board defensiveness about certain sacred cows, whether those are programs, services, publications, events, or even personalities.

12 8. Protect Assets & Provide Financial Oversight The board, in order to remain accountable to its donors and the public, and to safeguard its tax-exempt status, must assist in developing the annual budget and ensuring that proper financial controls are in place. The board as a fiduciary has the responsibility to safeguard the organization s financial health and reputation. It requires the board, often working in concert with the chief executive, to Review and approve the organization s budget Establish and follow monetary policies that balance short- and long term needs Verify that the organization s financial systems and practices meet accepted standards Ensure that the organization has adequate operational reserves for rainy days and to take advantage of unexpected opportunities Ensure the organization is not subjected to unnecessary risk

13 9.Ensure Legal and Ethical Integrity The board is ultimately responsible for ensuring adherence to legal standards and ethical norms. Solid personnel policies, grievance procedures, and a clear delegation to the chief executive of hiring and managing employees will help ensure proper decorum in this area. The board must establish pertinent policies and adhere to provisions of the organization s bylaws and articles of incorporation. The organization s reputation and public standing require everyone to take three watchwords seriously: compliance, transparency, and accountability. Several public failures in the governance and management of tax-exempt organizations have led to the call for boards to : Ensure the organization adheres to local, state, and federal laws and regulations that apply to nonprofit organizations, such as filing IRS Form 990 and other documents on a timely basis (noncompliance can have severe financial consequences) Ensure the organization registers with appropriate state agencies as required before carrying out operations or fundraising in these states Act in accordance with the provisions of the organization s bylaws and articles of incorporation and by amending them when necessary.

14 10. Support and Evaluate the Chief Executive The board should ensure that the chief executive has the moral and professional support he or she needs to further the goals of the organization. The chief executive, in partnership with the entire board, should decide upon a periodic evaluation of his or her performance. Providing personal and organizational support for executive leadership, regularly assessing the chief executive s performance, and acknowledging superb service through appropriate compensation are key board responsibilities as well. A high-performing board gives ongoing attention to these matters. The chief executive should be able to count on support from the board chair and the rest of your board.

15 Responsibilities of Individual Board Members: Three Hats Legal The 3 D s Ambassador Volunteer

16 Governance: Legal Obligations Duty of Care Using your best judgment Actively participating, paying attention Asking pertinent questions Duty of Loyalty Avoiding conflicts of interest Putting aside personal and professional interests Duty of Obedience Staying true to the organization s mission Obeying the law, both public and organizational

17 Duty of Care A board member must exercise the same care that an ordinary, prudent person would exercise in a like position or under similar circumstances. Using your best judgment Actively participating, paying attention Asking pertinent questions

18 Duty of Loyalty Act in good faith, be faithful to the organization, and pursue its best interests (e.g., put the interests of the organization above self-interest). Avoiding conflicts of interest Putting aside personal and professional interests

19 Duty of Obedience Act in accordance with the organization s rules and policies, and in furtherance of its goals as stated in the mission statement, articles of incorporation and bylaws Comply with state and federal laws Not act outside the scope of corporate powers Staying true to the organization s mission Obeying the law, both public and organizational

20 Ambassador for the Organization Secondary importance to governance But, strongly recommended since: Board members are in a good position to do this Organizational sustainability is critical

21 Volunteer for the Organization Least important of board member responsibilities But, can help build: Board members organizational understanding a positive organizational culture Board members are strictly volunteers in this role, NOT in charge, NOT possessing higher authority, NOT acting on behalf of the full board

22 SUMMARY: R&R of Individual Board Members Members of the governing body: duty of care, duty of loyalty, and duty of obedience Having ultimate responsibility for the organization Only during board meetings when developing policy and acting collectively Ambassadors for the organization Represent organization externally Volunteers for the organization When participating in all other organizational activities, NO special privileges

23 Roles & Responsibilities of Individual Board Members Actively Participate Provide, time talent, treasure Attend meetings/events Serve on committees, carry out assignments Raise money/resources Be Informed About mission, programs, issues Prepare for meetings Stay current: related issues/organizations Ask questions

24 Board Member Responsibilities (con t) Promote the Organization Spread the word Recruit board members and other volunteers Safeguard Ethics and Values Follow conflict of interest/confidentiality policies Refrain from asking special favors from staff

25 Will Rogers Said it Best If you want to be successful, it s just this simple. Know what you are doing. Love what you are doing. And believe in what you are doing.