Excellence in Governance for CAA Boards 2011 Texas Community Action Agency August 3, 2011 Anita...

Excellence in Governance for CAA Boards

2011 Texas Community Action AgencyAugust 3, 2011

Anita Lichtblau, Esq.Executive Director/General Counsel

Community Action Program Legal Services (CAPLAW)www.caplaw.org 617.357.6915

This workshop is not intended as legal advice. Consult with a Texas attorney for advice on legal issues.

© 2011 Community Action Program Legal Services, Inc.

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Agenda– Who, How, and What?• Governance Trends • What law governs CAA boards?• What are a CAA board’s duties?• Head Start board requirements• IRS Form 990• Areas to look at:

– Board composition and selection– Certificate of Formation and bylaws– Board-executive director relationship– Board orientation and training– Board meetings– Board committees– Financial literacy and oversight– Governance and other policies


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Governance Trends

• More active, informed boards• Greater accountability and oversight over nonprofit• Due diligence in selecting board members• Transparency

– Disclosure of financial info and policies on website

• Panel on the Nonprofit Sector – Principles for Good Governance• Revised Form 990• Head Start Reauthorization

© 2011 Community Action Program Legal Services, Inc..

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Grant Thornton 2009 National Nonprofit Board Governance Survey


Formal process to review 73%

executive compensation

Whistleblower policy 84%

Finance committee 83%

Audit committee 65%

Audit committee includes CPA 74%

Auditor met with full board 38%

Board or committee reviews IRS 78%Form 990

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What Law Governs CAA Boards?

• Federal CSBG Act– Tripartite board provision – 42 U.S.C. § 9910– OCS Information Memorandum 82 (IM 82) – guidance only, not binding;

available on OCS website: http://www.acf.hhs.gov/programs/ocs/csbg/guidance/im82.html

• Texas CSBG Statute: Tex. Gov't Code §§ 2306.092 and 2306.097 • Texas CSBG regulations: 10 TAC §§ 5.1 – 5.22 and §§ 5.201–

5.217• Private CAAs – Texas Business Organizations Code, Title 2,

Chapter 22• Public CAAs – delegation of authority from political subdivision• Head Start Act – 42 U.S.C. § 9801 et seq.


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Who?


• CAA Board Composition

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Tripartite Board Composition

• CSBG requires three sectors:– Exactly 1/3 public officials or their representatives – At least 1/3 low-income representatives– Balance from major groups or interests in the

community served

• Directors are to be chosen by grantee– Must use democratic selection process for low-

income directors

• (42 U.S.C. § 9910; 10 T.A.C. §5.213)


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Public Official Directors

• Under federal law, no longer required to include or be chosen by “chief elected officials”– For private CAAs, best to specify in bylaws that CAA itself elects public

official directors – but not to specify which ones– Texas – CAAs may permit governing officials of political jurisdiction to

select and/or recommend officials for board– Texas – For public CAAs, public organization may select elected

officials for board

• If elected officials not available, may select appointed officials instead

• Texas - Officials must either have general governmental responsibilities or responsibilities that require them to deal with poverty-related issues

• (10 T.A.C. § 5.213 (d))


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Public Official Directors cont.

• CSBG Act says “holding office at time of selection” [to CAA Board]– OCS IM 82 recommends that public officials serve only while

they are in office• Seat filled by official or her representative

– Texas – Official may choose permanent representative to serve on board in either full-time capacity or in place of official when she is unable to attend

– Representative must have full authority to act for public official at board meetings

– Or, official may designate alternate– Only permanent representatives may be officers

• (10 T.A.C. § 5.213 (d))


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Low-Income Directors –Private CAAs

• CSBG requires democratic selection to assure that they are representative of low-income people in service area

• If chosen to represent a particular neighborhood, must live there

• (42 U.S.C. § 9910; 10 T.A.C. § 5.213)


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Low-Income Directors –Public CAAs

• Must be representative of low-income individuals and families in service area

• Must live in service area• Must be able to participate actively in

development, planning, implementation and evaluation of CSBG programs

• (10 T.A.C. § 5.213 and § 5.213)


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Do They Need to Be Low-Income Themselves?

• Should represent current low-income residents, but don’t need to be low-income themselves– CAA BEST PRACTICE: Have at least some low-

income directors who are or were low-income themselves


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Democratic Selection

• Broad array of processes available, e.g.:– Nominations and elections by ballot in neighborhood

or entire community– Selection at open community meeting to which poor

are invited– Elected by or designated from elected leaders of

predominantly low-income groups (e.g. Head Start Policy Council, neighborhood ass’n, public housing tenants’ ass’n, community health center board )

– Selected by boards of neighborhood-based groups who themselves are selected by residents

• Selection process must be documented to show democratic process


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Democratic Selection cont.

• Should not be chosen simply by CAA board or nominating committee

• Should not be staff of another low-income service provider picked by CAA board or nominating committee or by executive director of other organization


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Democratic Selection cont.

• Bylaws may, but do not need to, describe democratic selection procedure– If not described in bylaws, selection procedure should

be described in a separate document referred to in the bylaws and approved by the board


16© 2010 Community Action Program Legal Services, Inc.

Private Sector

• Officials or members of business, industry, labor, religious, welfare, education, law enforcement, or other major groups and interests in community served– May include both private and public sector groups and

interests

• CAA may select representatives from organizations or individuals – If choosing reps from organizations, board has more

flexibility if bylaws don’t specify which organizations

• (42 U.S.C. § 9910; 10 T.A.C. § 5.213)

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Residence Requirement

• Texas CSBG regulation:– All board members must live in CSBG service area

(unless waiver given by state)– Board members should be selected to provide

representation for all geographic areas in service area– But can give greater representation to areas with

greater poverty population

• (10 T.A.C. §5.216(d))


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Head Start Rules

• Board of directors must include:– At least 1 member with fiscal mgmt or accounting

background and expertise– At least 1 member who is a licensed attorney familiar

with issues that come before the board– At least 1 member with early childhood education

background and expertise– First two are best practices for all CAAs

• (42 U.S.C. § 9837)


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Head Start Rules, cont.

• If people with such expertise aren’t available to serve on board –• Non-board members with those qualifications may work directly with

board on those issues instead

• Non-board members with those qualifications may work directly with board on those issues instead

– Issue – Paid or pro bono?

© 2011 Community Action Program Legal Services, Inc..

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• Additional governing body members– Must reflect “community served,” including current or

former Head Start parents– Must be selected "for their expertise in education,

business administration, or community affairs"

• Exceptions to board composition requirements for public grantees


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• No financial conflict of interest– Board members may not have financial conflict of interest with

grantee or delegate agency and may not receive compensation for serving on board or for providing services to grantee

• Board members and immediate family members may not be employed by grantee or delegate agency

• Board must operate independently of grantee staff

• See OHS Policy Clarifications OHS–PC–E–027 and OHS–PC–E–029 available at http://eclkc.ohs.acf.hhs.gov/hslc (click “Regulations and Policies” drop down menu, under “Policy Clarifications”)


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• Public Head Start grantees:– If person holds public position as result of public election or

political appointment; and– Position carries with it concurrent appointment to serve as

member of a Head Start grantee board; – That person may serve on grantee board even if:

• s/he receives compensation for serving on Board or providing services to Head Start grantee; or

• s/he or immediate family member works for grantee or delegate agency

• But grantee must report conflict to HHS


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Board Selection Procedure

• Create board development/governance committee to oversee selection process

• Require applications– Applicants sign certification re no disbarment or convictions of

certain offenses and conflicts of interest policy • Determine skills and background needed• Use spreadsheet to track fulfillment of requirements• Full board elects directors once chosen through

appropriate selection process• Unless bylaws specify otherwise, ex officio members not

entitled to vote


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Petitions for Board Representation

• Low-income individuals, community organization, religious organization or representative of low-income individuals that considers its organization, or low-income individuals, to be underrepresented on the CAA board may petition for representation

• CAAs must establish procedures for petition

• (42 U.S.C. § 9908(b)(10))



Board Size

• Neither federal CSBG Act nor TX CSBG regs address board size

• TX corporate law requires at least 3 directors– (TX BUS ORG § 22.204)

• Factors to consider


Term Limits

• Nonprofit CAAs– If bylaws don’t specify term, director holds office until next

annual election of directors – (TX BUS ORG § 22.208)

• Public CAAs– Specified in delegation from public body or bylaws


Term Limits

• Specify board members’ terms in bylaws– Board members from each sector should have

specific term

• May provide for staggered terms• Different sectors may have different length terms


Term Limits

• Texas CSBG regs:– Board may establish term limits in bylaws

(10 T.A.C. § 5.215 (a))

• Since federal CSBG Act does not address term limits, CAA board members may serve for any number of successive terms – Individual CAAs may decide to have term limits

– Some CAAs permit board members who have reached their term limits to re-join the board after a break (e.g., 1 year)

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Vacancies

• Should be filled as soon as reasonably possible• May not have 25% or more of public or low-

income seats vacant for more than 90 days• CAAs must report monthly to TDHCA number of

board vacancies

• (10 T.A.C. § 5.215(b)(1))


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Removal of Directors

• CAA BEST PRACTICE: Include strong removal provisions in bylaws– Permit board to remove any director (including public

officials) • With or without cause?• Examples of cause: false certification on board application,

unexcused absences from a certain number of board meetings, failure to comply with CAA policies, taking actions against the best interests of the CAA, incapacity

• (TX BUS ORG § 22.211)


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How Does the Board Carry Out Its Duties?

• Voting• Certificate of Formation and Bylaws• Meetings• Committees • Training


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Voting Issues

• Alternates permitted (Texas CSBG regs)– If low-income and private sector organizations have alternates, should

select or be designated at same time as regular board member

• Votes by email or phone polling not allowed• Quorum – The lesser of:

– Majority of number of directors set by bylaws or certificate of formation; or;

– Any number, not less than three, set as a quorum by the certificate of formation or bylaws.

– (TX BUS ORG§ 22.213)

• No telephone conference call meetings except if emergency conditions apply– (TX BUS ORG§ 22.002)



Alternates

• Alternates permitted, but…– Alternates not permitted to hold officer positions on

board– If low-income and private sector organizations have

alternates, should select or be designated at same time as regular board member(10 T.A.C. § 5.213 (d)(1)(B)(ii))

– Although proxy voting is permitted by TX nonprofit corporations law, it is prohibited by Texas Open Meetings Act(See Tex. Govt. Code. Ann. Ch. 551; see also Tex. Att’y Gen. LO 94-028 (1994); Op. Tex. Att’y Gen. No. JM-903 (1988))


Alternates

• So, don’t permit alternates to vote, but can permit them to:– Attend meetings and report to primary board member

– Fill vacancies

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Certificate of Formation and Bylaws

• CAA BEST PRACTICE: Review certificate of formation (for private CAAs) and bylaws at least once every 3 years

• Purpose statement should be in certificate of formation for private CAAs– Neither it nor mission statement needed in private CAA bylaws

• Bylaws – see CAPLAW Bylaws Toolkit for main issues CAA bylaws usually address (not all topics apply to public CAA bylaws)– Info on ordering at www.caplaw.org under “Publications”


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Quorum

• Specify quorum requirement in bylaws

• State specifically needed fraction of voting directors then in office – Most nonprofits use majority of directors in office as

quorum


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Board Meetings

• How often does board meet?– Texas CSBG regs:

• Once per calendar quarter and at least 5 times/year – (10 T.A.C. § 5.217(a))

• Notice must be given to board members 5 days in advance of meeting

• Any problems meeting quorum requirements?• Sanctions for failure to attend?• Who sets agendas – board chair/executive committee

and ED or just ED/management?• Are minutes of previous meeting, committee reports,

financial information etc. distributed before the meeting?



Board Meetings, cont.

• Any problems meeting quorum requirements?• Sanctions for failure to attend?• Who sets agendas – board chair/executive committee

and ED or just ED/management?• Are minutes of previous meeting, committee reports,

financial information etc. distributed before meeting• What happens at board meetings–just reporting by

committees or staff or discussion of critical issues for board decision ?

• How active are board members? Read materials in advance? Informed? Ask questions?

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Open Meetings Act

• Under Texas law, CAAs are subject to Open Meetings Act (and Public Information Act)

• In general, board meetings must be open to the public, except for authorized executive sessions

• Public must be given notice of time, place, subject matter of meetings

• (Tex. Gov’t. Code. Ann. Ch. 551)


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Open Meetings: Executive Session

• Consultation with attorney re pending or contemplated litigation, settlement matters or other matters requiring confidentiality

• Certain discussions re real estate, negotiated contracts, prospective gifts or donations

• Certain employment matters• Final action must be in open meeting


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Minutes: Texas CSBG Regulation

• Minutes must be taken of all open meetings– Record of members present by category– Items presented to board for action– Votes on all motions

• Distribute minutes of previous meeting before next meeting

• Available to public upon request

• (Tex. Gov’t. Code. Ann. 551.021)


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Board Committees

• Do committees specified in bylaws and board resolutions reflect CAA’s current operations?

• Were committees created as provided in by-laws?• What authority do committees have?• How often do committees meet?• What do they do? Written descriptions?• Several important committees:

– Executive committee (depending on board size)– Finance/audit committee– Governance/board development committee


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Committees, cont.

• Texas law:– If committee is given full authority of board, it must be

designated by resolution approved by a majority of directors in office

• (TX BUS ORG § 22.218)

– If not given such authority, may be designated by majority of quorum at meeting or by president authorized by such resolution

• (TX BUS ORG § 22.219)



Committees, cont.

• Use committee charters to set out responsibilities

• Require that committees reflect tripartite board structure?

• How often do committees meet?• What do they do? Written descriptions?

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Finance/Audit Committee Functions

• Select auditor• Meet with auditor to determine audit plan• Review audit report directly with auditor• Ensure corrective action taken• Address conflicts of interest and whistleblower

complaints


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Governance/Develop. Committee Functions

• Develop and periodically review key organizational governance policies, including conflict of interest and whistleblower policies

• Periodically review bylaws and other governing documents

• Implement selection process for recruiting new board members, consistent with CSBG Act tripartite board selection requirements


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Fidelity Bond Coverage

• Texas regs require that fidelity bond coverage include all persons authorized to sign or counter-sign checks or to disburse sizable amounts of cash– Don’t have to bond persons who carry petty cash

(less than $250)

• (10 T.A.C. § 5.7)


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Board Orientation and Training

• Does CAA have an orientation process for new board members?– Could include mentoring by existing board members

• Does CAA give board members a board handbook?

• Does CAA provide regular training for board members?


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What are the Board’s Duties?


• Duties/Powers of Board• Public CAA Role• Development, Planning,

Implementation and Evaluation of Program

• Board/Executive Director Relationship

• Financial Oversight• Governance and other policies• Conflict of Interest• Whistleblowers• 501(c)(3) Status

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Powers of CAA Boards

• For private CAAs, board’s powers set by state corporate law– Texas Business Organizations Code §22.201: The

affairs of a corporation shall be managed by a board of directors.

• For public CAAs, tripartite boards’ powers depend on authority delegated to it by political subdivision– Do not need to be merely advisory boards


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Duties of Private CAA Boards

• Directors have “fiduciary” duties under Texas nonprofit law: carry out duties in good faith, with ordinary care, and in manner s/he reasonably believes to be in best interest of corporation– Duty of care in governing CAA

• Be reasonably informed• Participate in decisions, reasonably inquire about matters coming

before the board• Do so in good faith and with the care of a prudent person in similar

circumstances

– Duty of loyalty• Act in the CAA’s best interests, not own or someone else’s

• (TX BUS ORG § 22.221)


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Federal CSBG Act and Texas CSBG Regulation

• Tripartite board administers CAA’s CSBG program– Except for public CAAs in cases where state specifies

another mechanism that assures decision-making and participation by low-income individuals

• Board fully participates in program’s development, planning, implementation and evaluation

• (42 U.S.C. §9910; 10 T.A.C. § 5.213(a))


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Board Powers: Texas CSBG Regulation

• Private CAAs: – Responsible for abiding by terms of contracts– Determine CAA policies to assure accountability for

public funding• Public CAAs:

– Determined by governing officials of political subdivision

• Advisory board or governing board• But must be given authority required by federal

CSBG Act to administer CSBG program and participate actively in development, planning, implementation, and evaluation of programs


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Mission and Strategic Direction

• Understand purposes statement in certification formation and, if one exists, separate mission statement– Note: new IRS Form 990 asks re: mission statement

• Review existing and proposed activities and transactions against mission

• Be sure assets used to further mission• Establish overall strategic direction• Ensure mission and strategic direction are being

followed


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CSBG Duties – Development

• Clarifying mission– In-house panel of “experts” on community needs,

resources and opportunities– Consistent with certificate of formation

• Or amend certificate

– Mission statement• Determine whether it still fits • Create good public “soundbite”


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CSBG Duties – Development

• Needs assessment– Participate actively in ensuring completion of

Community Needs Assessment and in reviewing assessment results to ensure responsiveness to any identified gaps in services

– Source of information/insight on conditions in community

– Create outreach and communication strategies within each sector

– Gov’t- or privately-sponsored studies, assessments of local economic, social, educational and other conditions


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• Active participation in development and ongoing implementation and evaluation of CAA’s Community Action Plan

• Long-range strategic planning– Identify broad goals

– Mobilize programs and activities within and outside CAA

– Establish and maintain procedures for gathering and presenting info on goals and results


CSBG Duties – Planning

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CSBG Duties – Planning

• Annual planning– Identify what CAA hopes to accomplish each year

– Help CAA establish performance expectations – qualitative and quantitative

– Work with CAA staff to establish milestones used to track progress during year

– Identify ways to strengthen operations


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CSBG Duties – Implementation

• Stay informed of CAA programs and activities throughout the year– Track progress toward milestones; ensure that CAA

adjusts performance as necessary to meet milestones

• Receive financial information – budgets etc. – and monitor CAA’s finances; work with fiscal staff to ensure finances are on track

• Oversee compliance with funding source rules• Be involved in preparing for and responding to

monitoring by funding sources


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CSBG Duties – Evaluation

• Obtain information on results of CAA’s programs and activities– Actual changes or improvements in clients and

community• Compare outcomes with performance

expectations developed during planning process• Oversee data gathering for ROMA and similar

evaluation tools for other grants– Participate actively in identification and evaluation of

ROMA Performance Outcomes used in measuring CAA’s effectiveness in achieving 6 ROMA goals

– ROMA = Results Orientated Management and Accountability


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Specific Board Member Duties Under Texas CSBG Regulations

• Attend board and committee meetings regularly;

• Be familiar with certificate of formation, sources of funding, agency goals and programs, federal and state CSBG statutes;

• Carefully review materials provided to the board;

• Make decisions based on sufficient information;

• Ensure proper fiscal controls and legal compliance systems are in place;

• Know about major actions taken by CAA;• (10 T.A.C. § 5.216)


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Specific Board Member Duties Under Texas CSBG Regulations, cont.

– Receive regular reports including:• Review and approve all funding requests (including budgets);

– Certification of board approval of CSBG budget form

– (10 T.A.C. § 5.207(a))

• Review reports on organization's financial situation;• Regular reports on progress of goals specified in

performance statement or program proposal;• Regular reports addressing rate of expenditures compared to

budget;• Modifications to fiscal and management policies and

procedures; and

• (10 T.A.C. § 5.216(b)(7))


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Specific Board Member Duties Under Texas CSBG Regulations, cont.• Updated information on community conditions that affect programs

and services– Board certification that public hearing conducted on proposed use of funds– (10 T.A.C. § 5.210(d))

• CAA must ensure that services are rendered reasonably and equitably. – Services rendered must reflect poverty population ratios in the service

area and should be distributed proportionately based on the poverty population within a county

– (10 T.A.C. § 5.207(c))


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Specific Board Duties Under Texas CSBG Regulations, cont.

• Board members accept responsibility to assure that CAA continues to:– Assess and respond to causes and conditions of poverty in their

community;

– Achieve anticipated family and community outcomes; and

– Remain administratively and fiscally sound

• (10 T.A.C. § 5.216(c))


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CAA Duties Under Texas CSBG Regulations, cont.

• Boards should assure that CAA incorporates integrated case management systems in the administration of CSBG program

• (10 T.A.C. § 5.210(f))


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Board-Executive Director Relationship

• Board sets mission and policy, executive director and management staff implement policy

• Generally, board supervises only one employee:the executive director– Board hires, evaluates, sets compensation for and (if

necessary) terminates ED– ED hires staff in accordance with personnel policies set by board

(and may consult with board)– Staff generally communicate with board through ED– ED meets regularly with board chair/executive committee– Board provides a balance of support and accountability for ED


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Financial Oversight

• Board responsible for overseeing CAA’s finances– Ensure accurate and current financial records

maintained in accordance with GAAP– Regular review, discussion and votes on financial

statements and other financial info – e.g., annual audit, Form 990

• Income and Expense Statements• Cash Flow Statements• Balance Sheets


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Financial Oversight, cont.

– Review and approve CAA’s annual budget and monitor performance against it during year

– Approve grant proposals and budgets– Make decisions on major financial transactions– Establish fiscal policies and internal controls and ensure they

are being followed– Texas law – Board must annually approve financial report and

make available to public• Statement of support, revenue and expenses and changes in

fund balances• Statement of functional expenses• Balance sheet• (TX BUS ORG § 22.352)


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Financial Oversight, cont.

• CAA BEST PRACTICES:– Include one or more financial experts on board– Ensure that other directors are financially literate– Establish audit committee or another committee to

perform functions of audit committee – include financial expert(s)


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Internal Controls

• Extend beyond fiscal policies and procedures – involve management, program and administrative functions

• OCS Information Memo 112– COSO framework

• Summary available at http://www.coso.org/IC-IntegratedFramework-summary.htm

– GAO standards for internal control in the federal government http://www.gao.gov/special.pubs/ai00021p.pdf


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Internal Controls

• COSO framework– Control environment– Risk assessment– Control activities– Information & effective communication– Monitoring

• Sample internal control review checklist for CAAs – in handouts and available online at: http://www.caplaw.org/StimulusPackage/documents/InternalControlsReviewChecklist2.pdf


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Governance and Other Policies

• CAA BEST PRACTICE: Adopt and implement:– Conflict of interest policy– Whistleblower policy

• Complaint resolution policy required for H.S. grantees – Record retention policy– Travel Policy (required by Texas law)

• Must follow either federal or state travel regulations• (10 T.A.C. § 5.9)

• Regular board review of other policies and how they are implemented – e.g., personnel policy, financial policies and procedures, procurement policy, internet and computer use etc.



Conflicts of Interest

• Board member may not participate in selection, award or administration of subcontract supported by CSBG funds if:– Board member– Member of his or immediate family– Board member’s partner; or– Any organization that employs or is about to employ

any of above,– Has a financial interest in firm or person selected to

perform a subcontract• (10 T.A.C. § 5.214 (d))



• No compensation to board members for board service, except reimbursement for board expenses – (10 T.A.C. § 5.214 (c))

• No CAA or TDHCA employees on CAA board – (10 T.A.C. § 5.214 (d)(4))



• No loans to nonprofit board members – (TX BUS ORG § 22.225)

• TX CSBG Contract (and federal grants regs):– Must have written standards of conduct governing the

performance of employees engaged in the award and administration of contracts

– Employees, officers, and agents may not accept gifts, gratuities, or anything of value from any existing or potential subcontractors

– No employee, officer, or agent of subrecipient shall participate in the selection, award, or administration of a contract supported by federal funds if a real or apparent conflict of interest would be involved


Conflict of Interest Basic Principles

• Disclose all existing or potential financial or other interests in transactions with CAA

• Interested person does not participate in discussion, vote, or other decision on transaction

• Determination, based on comparables or other independent information, that transaction is in best interest of CAA

• Document process


Conflict of Interest Policy Implementation

• Who is subject to policy?– Board members– Top management– Staff who make procurement decisions?

• Complete form with specific questions• Sign policy and certify to disclosure on annual

basis • Process for reviewing forms and addressing

conflicts

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Whistleblower Policy

• Several whistleblower laws in Texas that protect whistleblowers from retaliation from their employers under certain circumstances

• The Texas Whistleblower Act protects public employees who report violations of the law by employing agency

– (TEX. GOV’T CODE Ann. § 554.001)

• Federal laws also provides protection for whistleblowers in some circumstances under those acts:– Americans with Disabilities Act;

– Comprehensive Environmental Response;

– Compensation and Liability Act;

– Fair Labor Standards Act;

– Family Medical Leave Act; and

– Occupation Safety and Health Act.


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Why Have a Whistleblower Policy?

• Surface critical information before problems arise

• Encourage employees and other stakeholders to come forward

• Sets “tone at the top”


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What to Include in Whistleblower Policy

• Purposes• Intended audience(s)• Matters covered by the policy• Reporting concerns• Confidentiality or anonymity• Sample whistleblower policy from Texas C-Bar:

– http://texascbar.org/legal_library/nonprofit_management/sample_documents.html


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Additional CAA Board Responsibilities

• Ensure compliance with federal, and applicable state and local, laws and regs – Withholding taxes, for example

• Ensure compliance with program rules and terms and conditions

• Appropriate legal counsel• Legal Liability Audit


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Ensure Maintenance of 501(c)(3) Tax-Exempt Status

• Activities further exempt purposes– Charitable or educational

• No private inurement• No participation in political elections• Limited legislative lobbying• Limited unrelated business activity


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More Board Roles

• Setting and updating CAA mission– Consistent with certificate of formation

• Or amend Articles

– Mission statement– Determine whether it still fits – Create good public “soundbite”


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More Board Roles, cont.

• Public outreach and advocacy– Work with staff to educate community know about

CAA and its programs– Identify issues of significance to low-income

community– Advocate on issues of importance to CAA and its

clients– Comply with lobbying and political activity rules– Speak on behalf of CAA only as authorized by board


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More Board Roles, cont.

• Fundraising– Private sector board members– Think about fundraising capability in selecting private

sector members– Encourage financial contributions, according to

financial capability, and/or participating in fundraising efforts

– Designate a board member or committee to work with staff


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Head Start Grantees: Board Responsibilities

• Select delegate agencies and their service areas• Establish procedures and criteria for recruitment,

selection and enrollment of children• Review and approve all major policies of CAA, including:

– Annual self-assessment

• Develop selection procedures for policy council members

• Where appropriate, establish advisory committees to oversee responsibilities re: program governance and improvement

• Establish and update standards of conduct


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Head Start Grantees:Board Responsibilities, cont.

• Approve personnel policies and procedures, including those for hiring, evaluation, compensation, and termination of executive director, Head Start director, HR director, and CFO

• Establish procedures and guidelines for accessing and collecting information required to be presented to board and policy council

• Board and policy council must receive:– Monthly program info summaries– Program enrollment reports– Monthly reports of USDA meals and snacks– Annual self-assessment– Communication and guidance from HHS


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Resources: Texas C-Bar Nonprofit Legal Toolkit

• Extraordinarily helpful legal toolkit developed for nonprofits existing under Texas law

• Provides overview of state and federal law affecting a nonprofit’s day to day operations

• http://www.texascbar.org/content/legal_library/pubs/downloads/NonProfitLegalToolkit2011.pdf


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Resources: For More Information

• Visit www.caplaw.org

Call CAPLAW at (617) 357-6915• See Governance Resources attachment• CAPLAW Financial and Governance toolkits:

– http://www.caplaw.org/toolkits/governanceonlinetoolkit.html

• CAPLAW CSBG Training Module: – http://www.caplaw.org/trainingmodules/csbg/

csbgtrainingmodule.htm

• Texas Association of Nonprofit Organizations– www.tano.org


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