Board Capacity Building May 25, 2010 2:30 - 3:30 PM Candyss Bryant Coordinator, ACC CCBNO [email protected]www.nonprofitaustinorg Setting the Stage Capacity Building The act/art of capacity building is to improve the quality of decision-making, program efficiency, and managerial performance in the planning and implementation of the organization’s mission. The result is more effective organizations, services and programs. Ground Rules for Effective Groups Strategic Thinking to Achieve Effectiveness Great Organizations Why do People Volunteer & Join Boards? Governance and Management Legal Duties of a Nonprofit Board & Roles, Responsibilities & Expectations of Board Members Roles, Responsibilities & Expectations of Officers, CEOS, Staff & Their Inter-relationship Officers CEOs - Staff - Interrelationships Getting Board's Work Done Policies & Procedures Committees/ Working Groups Sarbanes - Oxley Requirements & Implications Governance Committee Effective Board Cycle/ Board Recruitment Resources Nonprofit Austin website - www,.nonprofitaustin.org TANO website - www.tano.org IRS website - http://www.irs.gov/charities/index.html?navmenu=menu1 Board Governance Session.mmap - 3/4/2010 - Mindjet
The act/art of capacity building is toimprove the quality of decision-making,program efficiency, and managerialperformance in the planning andimplementation of the organization’smission. The result is more effectiveorganizations, services and programs.
Ground Rules for Effective Groups
Strategic Thinking to Achieve Effectiveness
Great Organizations
Why do People Volunteer & Join Boards?
Governance and Management
Legal Duties of a Nonprofit Board& Roles, Responsibilities & Expectations of Board Members
Roles, Responsibilities & Expectationsof Officers, CEOS, Staff& Their Inter-relationship
Manages an active and informed governance structure
Secures resources appropriate to its needs,
Engages and serves its community
(Chicago Grantmakers for Effective Organizations - CGEO)
Ground Rules
Many effective groups have explicit ground rules thatguide their behavior. When group members use theseground rules, they:
Improve working relationships;
improve group member satisfaction,
improve the quality of their decisions,
increase the commitment of members to follow through on those decisions, and
decrease the time needed to effectively implement the decisions
Core Values
Valid information
Free and informed consent
Internal commitment
Compassion
Assumptions
I have some relevant information, and other people also have relevant information;
Each of us may see things the others do not;
Differences are opportunities for learning; and
People are trying to act with integrity given their situation
Ground Rules
1 - TEST Assumptions & Inferences
2 - Share ALL relevant information
3 - Use SPECIFIC examples and agree on what IMPORTANT words mean
4 - Explain your REASONING and INTENT
5 - Focus on INTERESTS not POSITIONS
6 - Combine ADVOCACY and INQUIRY
7 - Jointly DESIGN next steps and ways to TEST disagreements
8 - Discuss UNDISCUSSABLE issues
#9 - Use DECISION-MAKING RULE that generates the level of COMMITMENT needed
excerpted Roger Schwarz, The Skilled Facilitator (San Francisco, Jossey=-Bass 2002)
Facilitated by Candyss Bryant - Coordinator , Center for Community Based & Nonprofit Organizations at Austin Community College -www.nonprofitaustin.org - [email protected]
Gov--Ground Rules.mmap - 3/4/2010 - Mindjet
Step 1: Board Understand Its Roles and Responsibilities
We must reject the idea – well intentioned, but dead wrong – that the primary path togreatness in the social sectors is to become “more like a business.” Most businesses – likemost of anything else in life – fall somewhere between mediocre and good. Few are great.When you compare great companies with good ones, many widely practiced business normsturn out to correlate with mediocrity, not greatness. So, then, why would we want to import thepractices of mediocrity in to the social sectors?
Superior Performance
It doesn’t really matter whether you can quantify your results. What matters is that you rigorouslyassemble evidence – quantitative or qualitative – to track your progress.
Distinctive Impact
What matters is not finding the perfect indicator, but settling upon a consistent and intelligent methodof assessing your results and then tracking your trajectory with rigor.
No matter how much you have achieved, you will always be merely good relative to what you can become.
Lasting Endurance
Enduring great institutions practice the principle of “Preserve the Core and Stimulate Progress”, separatingcore values and fundamental purpose (which should never change) from mere operating practices, culturalnorms and business strategies (which endlessly adapt to a changing world.)
Consistency distinguishes the truly great consistent intensity of effort, consistency with core values, consistency over time.
Facilitated by Candyss Bryant - Coordinator, Center for Community Based & Nonprofit Organizations at AustinCommunity College - www.nonprofitaustin.org - [email protected]
Gov-Great Organizations.mmap - 3/4/2010 - Mindjet
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Legal Duties of a Board MemberLegal Duties of a Board Member
Exercise By:• staying informed and asking questions• participating in board deliberations
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Duty of Care/ PrudenceDuty of Care/ Prudence
What does it mean to act in good faith as a director of a nonprofit?
Acting with honesty and faithfulness to the Director’s dutiesActing without an intent to take advantage of the nonprofitActing only after she believes she has sufficient information
Duty of Care/ PrudenceDuty of Care/ PrudenceWhat types of actions should a director take to demonstrate ordinary care in the performance of her duties on behalf of a nonprofit?
Attend meetingsDevote a reasonable amount of time to dutiesReview and understand materialsMake informed decisions
Make informed decisionsAsk questionsFollow the bylaws and other corporate policiesDocument corporate decisionsTake, review, approve and keep minutes
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Review and approve annual financial statementMonitor corporate financesExpenditures for charitable purposesExpenditures of restricted fundsCompensation of executives n the Best Interest of the NonprofitPersonal business or family interest must not prevail over
Personal, business, or family interest must not prevail over the interest of the nonprofitBelief that action is in best interest must be reasonable
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What does it mean to act in good faith?
Acting with honesty and faithfulness to the Director’s dutiesActing without an intent to take advantage of the nonprofitActing only after she believes she has sufficient information
The duty of prudence requires a trustee to exercise at a mmimum the skill of an ordinary prudent person. However, if a trustee has greater skill than others, he is under a duty to use such skill.
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Due DiligenceDue Diligence
The fanciest dive that ever was doveWas done by Melissa of Coconut Grove.She bounced on the board and flew into the airWith a twist of her head and a twirl of her hair.She did thirty-four jackknives, b`ack flipped and spun,"Quadruple gainered and reached for the sun "
Invented a light bulb that plugs into the sun.The sun is bright enoughThe bulb is strong enough,But, oh, there's only one thing wrong ….The cord ain't long enough.
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Duty of LoyaltyDuty of Loyalty
• being faithful to the organization• when making decisions, having undivided allegiance to
organization’s welfare• By:
• disclosing potential conflicts of interest & refraining from participating in both discussion & voting on matter in
Excerpted from Berit M Lakey, Nonprofit Governance, Steering Your Organization with Authority & Accountability published by National Center for Nonprofit Boards
What does your board do to make sure that all board members have a clear picture of the organization’s financial health?
Considering your organization’s progress and activities, what are the risk factors that the board ought to take into consideration as it develops policies
p yCompliance with IntegritySustaining ResourcesResults OrientedIntentional Board PracticesContinuous LearningRevitalization
The Source 12 BoardSource 2005
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Principles of GovernancePrinciples of GovernanceConstructive Partnership
Exceptional boards govern in constructive partnership with the chief executive, recognizing that the effectiveness of the board and chief executive are interdependent.
Mission DrivenExceptional boards shape and uphold the mission, articulate a compelling vision, and ensure the congruence between decisions and care values.
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Principles of GovernancePrinciples of GovernanceStrategic Thinking
Exceptional boards allocate time to what matters most and continuously engage in strategic thinking to hone the organization’s direction.
Culture of InquiryExceptional boards institutionalize a culture of inquiry, mutual respect and constructive debate that leads to sound and shared decision making.
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Principles of GovernancePrinciples of GovernanceIndependent Mindedness
Exceptional boards are independent-minded. When making decisions, board members put the interests of the organization above all else.
Ethos of transparencyExceptional boards promote an ethos of transparency by ensuring that donors, stakeholders, and interested members of the public have access to appropriate and accurate information regarding finances, operations, and results.
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Principles of GovernancePrinciples of GovernanceCompliance with Integrity
Exceptional boards promote strong ethical values and disciplines compliance by establishing appropriate mechanisms for active oversight.
Sustaining ResourcesExceptional boards link bold visions and ambitious plans to financial support, expertise, and networks of influence
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Principles of GovernancePrinciples of GovernanceResults Oriented
Exceptional boards are results oriented. They measure the organization’s advancement towards mission and evaluate the performance of major programs and services.
Intentional Board PracticesExceptional boards intentionally structure themselves to fulfill essential governance duties and to support organizational priorities
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Principles of GovernancePrinciples of GovernanceContinuous Learning
Exceptional boards embrace the qualities of a continuous learning organization, evaluating their own performance and assessing the value they add to the organization.
RevitalizationExceptional boards energize themselves through planned turnover, thoughtful recruitment, and inclusiveness.
Officers
Officers of Board or of Membership
President
supervise and control the affairs of the Corporation
preside at all board meetings and shall exercise parliamentary control
serve as an ex-officio member of all standing committees
with the advice of the Board of Directors and in accordance withthe requirements of these bylaws, set the agenda for eachmeeting of the Board of Directors
Vice-President(s)
act in place of the President in the event of the President's absence,inability, or refusal to act, and shall exercise and discharge such otherduties as may be required by the board.
serve as parliamentarian and interpret any ambiguities of thr bylaws
Secretary
shall take or ensure that someone takes minutes of all meetings of thecommittees and Board of Directors, and shall keep copies of all minutes at theprincipal office of the Corporation
shall attest to and keep the bylaws and other legal records of the Corporation,or copies thereof, at the principal office of the Corporation
shall keep a record of the names and addresses of the Directors at the principaloffice of the Corporation
with the approval of the Board of Directors, set up procedures for any electionsheld by the Corporation
shall keep a record of all votes cast in such elections
ensure that all records of the Corporation, minutes of all official meetings, andrecords of all votes, are made available for inspection by any member of theBoard of Directors at the principal office of the Corporation during regularbusiness hours
shall see that all notices are duly given in accordance with these bylaws or as required by law
shall see that all books, reports, statements, certificates, and other documents andrecords of the Corporation are properly kept and filed
In the case of the absence or disability of the Secretary, or the Secretary's refusal orneglect to fulfill the duties of Secretary, the Vice President shall perform the functions ofthe Secretary.
Treasurer
will have charge and custody of all funds of the Corporation
will oversee and supervise the financial business of the Corporation
will render reports and accountings to the Directors as required by the Board of Directors
shall give to the Corporation a bond with one or more sureties for the faithfulperformance of the duties of the office and for the restoration to the Corporation--in thecase of his or her death, resignation, retirement, or removal from office--all books,papers, vouchers, money, and other property of whatever kind in his or her possessionor under his control belonging to the Corporation. The amount of the bond shall bedetermined by the Board of Directors
shall devise a plan providing for the acceptance and disbursement of all funds of theCorporation which shall be approved by the Board of Directors
with the approval of the Board of Directors, shall set up all checking, savings, andinvestment accounts of the Corporation and deposit all such funds in the name of theCorporation in such accounts
Treasurer's signature shall be the authorized signature for all checking, savings,and investment accounts of the Corporation unless the Treasurer, with theapproval of the Board of Directors, designates another member of the Board ofDirectors or employee of the Corporation as the authorized signatory for aparticular type of disbursement
shall prepare a monthly report for the Board of Directors, providing an accounting of alltransactions and of the financial conditions of the Corporation
shall keep all financing records, books, and annual reports of the financial activities of theCorporation at the principal office of the Corporation and make them available at therequest of any Director or member of the public during regular business hours forinspection and copying
Facilitated by Candyss Bryant - Coordinator, Center for Community Based & Nonprofit Organizations at Austin Community College -www.nonprofitaustin.org - [email protected]
Gov-Officers.mmap - 3/4/2010 - Mindjet
GettingBoardWorkDone
Law & RegulationInternal Revenue Code
Business Organization Code - Title 2: Chapter 22. Nonprofit Corporations
Creation & Governing Documents
IRS 1023 Application
Determination Letter
Articles of Incorporation/ Certificate of Formation
Bylaws
Board/ CEO
Governance is the responsibility of monitoring, overseeing andproviding direction for the organizations pursuit of its mission.
Board
Ensuring that the mission is accomplished and that all administrative,operational and service functions are in place to achieve the strategicdirections sought. Also serve as experts on the agency purpose, work,clients and community needs.
CEO/ Staff
Policies & Procedures
Governing Infrastructure
Board of Directors
CEO
Executive Committee
Committees, Task Forces/ Working Groups
Organizational MaintenancePrograms/ "lines of business"Strategic thinking/ planning/ study
Advisory Council
Facilitated by Candyss Bryant- Coordinator, Center for Community Based & NonprofitOrganizations at Austin Community College - www.nonprofitaustin.org - [email protected]
Gov-Getting Board Work Done.mmap - 3/4/2010 - Mindjet
Policies&
Procedures
Boards normally govern by establishing policies guidelines for how the Board members can best work together
A policy is any written statement approved by theboard or by the membership that:
Articulates and defines important objectives, principles or values
Limits or prescribes what kind of action will be taken in different situations
Defines roles, responsibilities and authority
Bylaws contain basic Policies and Procedures
Policies and Procedures should be set for:
Board/ Organization
Organizational mission, objectives and valuesRole and responsibilities of the boardBoard decision-making and meeting practices (usually coveredpartially by by-laws)Conflict of interestBoard member conductRole, responsibilities, and authority of the executive director or CEOFinancial managementFundraising (including ethical considerations)Advocacy and public educationAccountability to members, stakeholders and community (may be partiallyaddressed by bylaws in references to annual general meeting and annualfinancial report)Board nomination processDocument Retention or DestructionTreatment and protection of consumers, customers, clients or users
Personnel
Personnel, hiring and other human resource practicesHarassment policiesWhistleblower policyConflict of interest and confidentiality policies
Policy Building Tool from Nonprofit Risk Management Center with TANO membership discount
Facilitated by Candyss Bryant - Coordinator , Center for Community Based & Nonprofit Organizations at Austin Community College -www.nonprofitaustin.org - [email protected]
Gov-Policies Procedures.mmap - 3/4/2010 - Mindjet
Sarbanes-OxleyRequirements
Whistleblower Policy
Ensure that there is written policy and procedures for submitting and investigating a report
Document Preservation
Ensure that written policy and procedures exist. Management and staff held accountable for compliance.
Audit Committee
Ensure that audit committee established and in place
Certified Financial Statement
Ensure that board and management receive accurate and timely financial reports on a monthly basis
Accuracy & Timely Submission of IRS 990 form
Actively oversee the preparation and submission of the 990. Ensure document presented to entireboard with detailed explanations.
Higher Level of Board Accountability
Upgrade and adhere to written policies on board membership requirements, orientation content,and performance expectations.
Conflict of Interest Policy and Code of Ethics
Ensures that all board members and senior management submit conflict of interest letters annually.Ensure that written code of ethics for board and senior management alike.
Transparency at all Levels of the Organization
Ensure that there are written protocols for the reimbursement of travel claims and other reimbursableexpenses that are strictly enforced
Internal Controls for all Departments
Require management to demonstrate that internal controls are in place and enforced
Consistent adherence to new policies and enforcement
Board members and senior management are kept apprised of current developments in nonprofitmanagement and legislation
Excerpted from *Peggy M. Jackson, Sarbanes-Oxley for Nonpro fit Boards . John Wiley & Sons, 2006;Facilitated by Candyss Bryant, Coordinator, Center for Community-Based & Nonprofit Organizations at AustinCommunity College - [email protected] - www.nonprofitaustin.org & President & CEO, Texas Association ofNonprofit Organizations (TANO) - [email protected] - www.tano.org
Gov-SOX Requirements and Board Response (2).mmap - 3/4/2010 - Mindjet
Lead the board in regularly reviewing and updating the board’s description of its roles and areas of responsibility and what is expected of individual board members.
Assist the board in periodically updating and clarifying the primary areas of focus for the board, and help shape the board’s agenda for the next year or two, based on the strategic plan.
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Governance CommitteeGovernance CommitteePay attention to board composition
Lead in assessing current and anticipated needs related to board composition
Determining the knowledge, attributes, skills, abilities, influence, and access to resources the board will need to consider to accomplish future
In cooperation with the board chair, contact each board member eligible for re-election to assess his or her interest in continuing board membership and work with each board member to identify what he or she might be able to contribute to the organization.
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Governance CommitteeGovernance CommitteeEncourage Board Development
Provide candidates with information needed prior to election to the board.
Design and oversee a process of board orientation, sharing information needed during th l t f b d i
Checklist when considering Checklist when considering prospective new board membersprospective new board members
Getting the “Right People” on boardWise selection of new board members is critical for the board of directors of every nonprofit agency. While every nonprofit agency needs financial support, wealth may b d i bl b ffi i l
p p pof the organization? Is this vision compatible with the vision of other board members? If not, can the person influence others in new, positive and creative directions?
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Achieving an effective high performing BoardAchieving an effective high performing Board
The Board Building Cycle, Board Source, 2003The Board Building Cycle, Board Source, 2003
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Achieving an effective high performing BoardAchieving an effective high performing Board
Identify – Board ProfilingCultivate – Invite InterestRecruit – Invite CommitmentOrient – Welcome to the BoardInvolve – Board Member EngagementEducate Develop a Well Informed Board
Board Development Assessment Tool by the Learning Institute
Indicator Done? Needs Improvement?
None/NA Some Much
Internal Procedures
1. The organization has a clear sense of who they are and has spent time thinking about the kinds of people they want on their board.
2. The organization has completed a formal review of its current board profile and has identified deficiencies (ie using an instrument such as the board profile worksheet).
3. The organization has identified individuals that have the characteristics that are lacking on the board and have developed a recruitment strategy.
4. The organization has a nominating committee in place.
5. Have there been any major changes in the mission of the organization that might require a change in the make‐up of the board?
6. The organization and governing board have spent time talking about the advantages of having a diverse board.
7. The organization cooperates with other nonprofits in the community in the development and maintenance of a board bank.
8. Potential board members are recruited from within the organization (volunteers, past employees, members, etc.) as well as outside the organization.
9. The board chair and staff (if any) have developed "tools" that keep board meetings interesting, fun and productive. Meetings are evaluated for productivity at least occasionally.
10. Board members serve without payment unless the agency has a policy identifying reimbursable out‐of‐pocket expenses.
11. Board members are accessible to stakeholders and to staff (volunteer and paid).
12. The Board plays an active role in developing and reviewing a strategic plan for the organization.
Operational Procedures
1. The roles of the board are clearly stated and communicated. Board members commit to those responsibilities by signing a board commitment letter.
2. Board meetings are well attended.
Board Development Assessment Tool Page 2 of 3
3. When a board member misses a board meeting without announcing a reason, another board member or the director of the organization calls them.
4. Potential board members are interviewed before they are asked to serve.
Indicator Done? Needs Improvement?
None/NA Some Much
6. The board has a nominating process that ensures that the board remains appropriately diverse with respect to ethnicity, gender, economic status, culture, disabilities, age, skills and/or expertise.
7. Each board member has a board operations manual that summarizes responsibilities (including job descriptions for officers) and operational procedures. This manual includes a copy of the organizations bylaws.
8. The number of current board members is consistent with what is required in the bylaws or state statutes.
9. The board reviews the bylaws on at least an annual basis. Bylaws should clearly state the organization's purpose, service area, defined members, defined board of directors, specific meeting guidelines, defined officers, defined committees, guidelines for amending bylaws, guidelines for dissolution of the organization, guidelines for financial and legal procedures.
10. The board has developed an annual meeting calendar with tasks that routinely need to be done at specific board meetings….i.e. review bylaws in November, Prepare for Audit in August, Nomination Committee prepares slate of nominations in July, etc.
11. The board has a policy and procedure for handling urgent matters between regularly scheduled meetings.
12. The organization maintains a conflict‐of‐interest policy and all board members and staff review and sign to acknowledge and comply with the policy (Could be a part of the board commitment letter)
13. The board has a written policy prohibiting employees and members of their immediate families from serving as board chair or treasurer.
14. All board meetings have written agendas and materials that are given to the board in advance of the meetings. Board reports/minutes are recorded and action taken on the minutes of all meetings.
Fiscal Management
1. Board members have made a strong individual financial commitment to the organization.
2. The board takes the leadership role in fundraising and financial management.
3. The board oversees the annual audit and uses it to strengthen the organization's financial policies.
Board Development Assessment Tool Page 3 of 3
4. The board is doing a good job of insuring that the organization is fulfilling its regulatory and financial requirements.
5. The board prepares a budget (based on a recommendation from the executive director if one exists) which allocates funds to the major priorities identified in the strategic plan of the organization.
Indicator Done? Needs Improvement?
None/NA Some Much
6. A financial plan has been developed to endure financial stability for 3‐5 years and is consistent with the organization's strategic plan.
7. The board involves individuals most knowledgeable about programs/activities in preparing the budget.
8. The board understands the annual budget.
9. The board reviews monthly reports of expenditures and revenues.
10. The board compares actual revenues and expenditures to budgeted revenues and expenditures on a monthly basis.
11. Adjustments to the budget during the year are made based on actual or anticipated changes. The board approves all adjustments/revisions to the budget.
12. The current budget information is used as a base for future budgeting, board meetings….i.e. review bylaws in November, Prepare for Audit in August, Nomination Committee prepares slate of nominations in July etc.
