#3 board governance basics ppt

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Strengthening Nonprofits. Strengthening Kentucky.

Welcome!


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Strengthening Kentucky Communities

•Funded by the U.S. Department of Health and Human

Services, Administration for Children and Families

•American Recovery and Reinvestment Act of 2009

Strengthening Communities Fund

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Strengthening Kentucky Communities

•Strengthening Communities Fund Focus: Build the capacity of

nonprofits to address the broad economic recovery issues

present in their communities , including helping low-income

individuals:

osecure and retain employment,

oearn higher wages,

oobtain better-quality jobs,

ogain greater access to state and Federal benefits and tax

credits, including Recovery Act benefits.


What Is the KY Nonprofit Leadership Initiative?

• Mission: Serve, Strengthen and Support Kentucky Nonprofits o Education & Workshops

o Networking Opportunities

o Technical Assistance & Consulting

o Information & Resource Sharing

• Outreach program of the UK College of Agriculture, Department of Community & Leadership Development, founded in 2002


Board Governance Basics

Tuesday, August 24, 2010

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Strengthening Nonprofits. Strengthening Kentucky.Strengthening Nonprofits. Strengthening Kentucky.Strengthening Nonprofits. Strengthening Kentucky.

Danielle Clore, MPADirector

Kentucky Nonprofit Leadership Initiative


Objectives

1. Overview of Nonprofit Board Service

2. The Board’s Legal Responsibilities

3. The Board’s Role

4. Board and Staff Partnership

5. Committees and their Purpose

6. Recruiting Board Members

7. Final Tips


Overview of Nonprofit

Board Service

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What is governance?

• Nonprofit organizations are governed by a

volunteer board of directors

• Governance means to steer, set direction


Why Do People Join Boards?


The Board’s Legal

Responsibilities

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Board Roles and Responsibilities

• Boards = Legal Guardians of the Organization

• Granted the AUTHORITY to make decisions on behalf

of the organization

• Must be ACCOUNTABLE for organizational

performance


According to Nonprofit Corporate Law

• Duty of Care: using your best judgment

• How?

– Ask questions

– Attend meetings

– Read materials as requested

– Keep up to date on organization’s activities



• Duty of Loyalty: putting personal/professional interests aside

• How?

– Approve board conflict of interest policy

– Require that board members sign a conflict of interest disclosure statement annually

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• Duty of Obedience: being true to the organization’s mission

• How?

– Ensure that funds are used for what donors intend

– Ensure that the organization is following the law and complying with regulations



• Duty of Transparency: being open and making certain information available to the public

• How?

- Annual Reports- IRS Form 990

- Annual Audit

ReReadyTalk Technical Support: 800.843.9166



• Kentucky Statutory Standards of Conduct for

Officers and Directors

� in good faith

� on an informed basis

� in the best interests of the organization

� "ordinary prudent person" standard

� reliance on committees and experts

� what happens if the standards are not met?(KRS 273.215 and 273.229)

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Nonprofits and Sarbanes-Oxley

• Legislation passed in 2002 in response to a large number of for-profit scandals involving Enron, Arthur

Anderson, and others. Extreme fraud, conflicts of interest on boards, unethical executive compensation practices, and improper auditing led

to the failure of these companies.

• In response, Sarbanes-Oxley set in place a number of required processes for publicly held corporations.


Nonprofits and Sarbanes-Oxley

• Only two aspects of Sarbanes-Oxley are applicable to nonprofits:

� Strengthened whistleblower protection

� Retention of documents related to lawsuits

The new Form 990 also asks whether you have policies related

to these two areas, making it more important to get them

adopted.



• Protecting Your Organization

• Directors and Officers Insurance

• Financial Audit

• Conflict of Interest Policy

& Annual Disclosure

• Legal Audit

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The Board’s Role


What Do Nonprofit Boards Do?Flickr photo: *Thierry*



Key Roles of the Board

1.Articulate the Mission & Set Organizational Direction

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2.Provide Oversight




3.Ensure Necessary Resources



Individual Board Member Responsibilities: Participate in Fundraising Activities

Why?

• Links to funders

• Those closest to the organization should give first

• Collectively, the board can cast a wide net to find new

donorsFlickr photo: kwilliams

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Board Participation in Fundraising Activities

• Make a personal, meaningful financial contribution

• Provide names of potential funders

• Visit potential funders

• Write thank-you notes

• Attend fundraising events


Best Practices for Board Giving

• All members of the board make an annual contribution to the organization that is meaningful for them

• The organization is one of their giving priorities

• Develop a policy that spells out the expectations and share this requirement up-front in all recruiting efforts.


Individual Board Member Responsibilities

• Attend board and committee meetings and functions

• Be informed about the organization’s mission, services,

policies & programs

• Review agenda, financial statements and other materials

before board and committee meetings

• Serve on committees and take on special assignments

when needed

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Individual Board Member Responsibilities

• Make a personal annual financial contribution to the organization

• Inform others about the organization

• Suggest possible nominees to the board who can make contributions to the work of the board and the organization

• Follow confidentiality and conflict of interest policies

• Allow staff to do their jobs – support, but don’t micromanage


12 Questions a Board Should Ask & Understand

• Where do our revenues come from?

• What is our cash flow?



• What could really hurt – or kill – our

organization in the next few years?

• How are we doing relative to other

organizations similar to ours?

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• If our chief executive were hit by a bus or

won the lottery tomorrow, who could run the organization?

• How are we going to improve, grow and

move forward?Flickr photo: Maddestmouse



• Are we living within our means?

• How much does our staff (and others) get paid?



• How does bad news get to the top?

• What are our internal controls?Flickr photo: Tampen

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• Do we understand what our auditors are

telling us?

• Do I really understand the answers to

questions 1-11?



The Board and Staff

Partnership


The Effective Board/Staff Partnership

• Requirements for Effectiveness:

� Clarity of roles

� Appropriate division of responsibilities

� Attention to the working relationships

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• Organizational health depends

on the effectiveness of this

partnership



� Requires regular and open communication

� Benefits from regular and systematic feedback and assessment

� May need redefinition as organization continues to grow and change

Flickr photo: flowercat


The Board/Staff Partnership Clarified

The Board is authorized by the state of

Kentucky and the organization’s donors to govern the life of the organization

� Establish mission, ensure necessary resources and develop guiding principles

� Retain ultimate responsibility and power

� Is accountable to the public trust and the organization’s constituents

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The Board/Staff Partnership Clarified

The Executive is authorized by the board

of directors to manage the daily affairs of the organization

� Supports the board with strategic information, ideas and connections

� Manages the affairs of the organization through appropriate planning and implements programs as outlined by the mission

� Retains operational responsibility and power


Example: Board Takes the Lead

• Articulates the guiding values through policies that put the mission into action

• Hires, supports & evaluates the chief executive

• Monitors fiscal management, approves budget & hires annual auditor

• Selects, recruits & orients new board members• Opens doors for fundraising


Example: Chief Executive Takes the Lead

� Develops and proposes policy questions

for the board’s consideration

� Hires, supervises and motivates staff

� Develops and implements programs

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Example: Shared Lead

• Develop a strategic plan

• Create a fundraising plan and strategies

• Initiate and implement periodic organizational evaluations

• Prepare for board meetings


Committees and their

Purpose


Why have board committees?

•Board committees, when used effectively,

distribute and expedite the work of the board.

•Effective committees free the board agenda from

routine tasks and discussion to allow focus on major

policies, issues and programs.

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•Regularly assess the need and value of standing

committees and disband ad hoc committees when

their objectives have been achieved.


•Inviting non-board

members to serve on

committees can be a great

way to expand the expertise

on a committee and “test”

out potential board

members.

Flickr photo: Shannon Taylor


•Advisory groups can also be established to

provide technical expertise or assist with

fundraising. Typically, are not board members.

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Recruiting Board Members


Remember: Why Do People Join Boards?


• What Do We Need?

• Skills

• Expertise

• Diversity

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The Board Building Cycle


Materials to Share with Prospective Board Members

� Organization’s info (brochures, etc.)

� Board and committee rosters

� Brief written history of the organization

� Calendar of upcoming board and

committee meetings

� Organization’s expectations of board

members (job description, board member

agreement, etc.)


Orienting the BoardOrient to the Organization:

� Program Information

� Financial Information

� History of the Organization

� Strategic Direction

� Organizational Structure

Orient to Board Service:

� Roles and Responsibilities

� Board Operations

� Board Members

Assess Skills Needed

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Final Tips



Caution:

Reasons That Boards Do Not Engage


→The board is too large – not enough work

for members to do

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→The board is too small – members feel

overwhelmed or suffer from limited

perspectives


→The executive committee is too active –

meets too often and the rest of the board

feels useless


→Members receive insufficient or

ineffective orientation

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→Agendas are weak – lack substance

and relevant discussion


→Members do not feel their skills are

being used


→There is little or no opportunity for

discussion at meetings – members are bored or frustrated

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→The board lacks social glue – members

have little in common except board

service


Keep the Board Fresh

• Use staggered term limits

� Refreshes the board

� Encourages diversity

� Rotates off those members who are ineffective, burnt out or troublesome


Keep the Board Fresh

• Evaluate

� Board meetings

� Board effectiveness

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Shake Things Up


• Use nameplates and change where board members sit

• Restructure the agenda

• Meet in a different location

• Give everyone an index card at the end of the meeting and ask “How could this meeting have been better?”

• Have lunch before a board meeting to build social glue


Additional Resources

• BoardSourcewww.boardsource.org

• Independent Sectorwww.independentsector.org

• Nonprofit Risk Management Centerwww.nonprofitrisk.org

• Crit Luallen’s Recommendations for Public and Nonprofit Boardswww.auditor.ky.gov

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How? Your Action Items:• Appoint a board governance committee focused on building a strong board

• Be strategic in recruiting new board members – avoid warm body recruiting

• Be up front with potential board members about membership expectations

• Create an annual board orientation program for all new members & invite all

members to join you for a refresher

• Build in board member education to each & every meeting agenda

• Staff & Board Presidents: treat board members well – they are volunteers,

recognize success and good work

• Board members: Hold one another accountable

• Board members: If you have questions, ASK

• Staff: Welcome questions & respect the board’s right to discuss issues

without you

• Join the NLI’s Nonprofit Network and other organizations



What Else is Available through the Strengthening Kentucky

Communities Program?

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•Collaboration: Working Together for Greater

Impact

Wednesday, September 8, 10 a.m. - 12 p.m.

•Nonprofit Risk Management Basics

Wednesday, September 22, 10 a.m. - 12 p.m.

•Generating & Diversifying Revenue

Wednesday, October 27, 10 a.m. - 12 p.m.

•Human Resources Management

Thursday, November 4, 10 a.m. - 12 p.m.

•Basic Bookkeeping

Thursday, November 18, 10 a.m. - 12 p.m.

•Successful Marketing & Public Relations

Strategies

Thursday, December 16, 10 a.m. - 12 p.m.

• The 3 R’s of Volunteer Management

Friday, January 14, 10 a.m. - 12 p.m.

• Program Evaluation Basics

Wednesday, January 26, 1:30 - 3:30 p.m.

• Technology & Data Management

Wednesday, February 16, 10 a.m. - 12 p.m.

Register online: www.kynonprofits.org


• Customized, technical assistance to select nonprofit organizations focusing on economic recovery activities

• Capacity building clinics will be held for approximately 20 nonprofit organizations

• 1 ½ day meetings held in spring & summer 2011

• Application process

• Participation includes involvement of staff and board and will include a pre and post organizational assessment

Technical Assistance


Are There Other NLI Resources to Assist Our Nonprofit?

Kentucky Nonprofit Network

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Why Join the Nonprofit Network?

• Save time and money

owith discounts on services and products designed

to make running your organization easier

o job postings with the NLI Career Center

o e-communications services

oNLI annual Forum

o regular schedule of educational events




o FREE board training

o 15% discount on NLI events, including the Annual

Forum




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• Strengthen your organization

o Training and education

• board

• staff

• other volunteers

oConsulting services

oYour membership provides you access to

the answers you need!


• Better Boards through Assessment

Thursday, September 2, 2010

• Nonprofits & Lobbying: Yes You Can! Sponsored by Strategic Funding Group

Thursday, September 23, 2010

• How to Captivate and Engage Your Constituents with Your Website WEBINAR

Wednesday, November 3, 2010

• Getting to Yes – Increasing Sponsorship Revenue for Any-Sized Nonprofit

WEBINAR

DATE

Upcoming NLI Events


• 2010 Kentucky Nonprofit Leadership Forum

o Wednesday, October 13 – Thursday, October 14

o Lexington Convention Center

o 8:00 a.m – 4:30 p.m.

o SAVE! Early registration deadline – September 20

www.kynonprofits.org

Upcoming NLI Events

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• Connect

oother nonprofit leaders

• for networking and collaboration

ovendors who want to make achieving your

mission easier




• Advocate

o For your nonprofit

o For a stronger, more unified nonprofit voice in

Kentucky

o Annual Kentucky Nonprofit Day at The Capitol




• Membership is on a sliding fee scale

• www.kynonprofits.org


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Connect


A Small, but Important Favor:

Please Evaluate Today’s Webinar

• Only 7 Questions

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• Required by our funder

• Is one of the reasons nonprofits THRIVE –

helps us better address future training and

consulting needs


Contact Us

• For information

• To join the Nonprofit Network

• For links and codes for Member Discounts

Kentucky Nonprofit Leadership Initiative

300 Garrigus Building

Lexington, KY 40546

859.257.2542

[email protected]

www.kynonprofits.org

#3 board governance basics ppt

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