https://www.youtube.com/watch?v=lmyZMtPVodo

Fiduciary Responsibilities and Governance

Risk, Reward, Responsibility Fun, Rewarding and Challenging Rarely Boring Opportunity to Develop Leadership Skills Responsibilities: Administrative Financial Ethical Legal

Fiduciary Responsibilities To act reasonably, prudently, in best interests of the organization To avoid negligence and fraud To avoid conflicts of interest

Fiduciary Responsibilities All boards must follow Applies to everything Keep in mind when making decisions or taking action for the organization

Fiduciary Responsibilities Duty of Care Duty of Loyalty Duty of Obedience

Fiduciary Responsibilities Duty of Care Stay informed and ask questions The level of competence expected of a board member commonly expressed as the duty of “care that an ordinarily prudent person would exercise in a like position and under similar circumstances.” Act in best interests of the organization. Be a steward of the organization.

Duty of Care What it means: Understand substantive matters Attend meetings Ask questions Followup on unresolved matters Consult with experts Read and understand reports given to the Board.

Duty of Care CASE LAW Stern vs Hayes National Training School for Deaconesses and Missionaries Board cannot abandon oversight and financial management

Fiduciary Responsibilities Duty of Loyalty A standard of faithfulness Show undivided allegiance to the organization’s welfare.

Duty of Loyalty Never use information obtained as a member for personal gain Act in the best interests of the organization Support decisions Comply with “Behavioral Norms” Most common Duty problem Conflict of Interests

Conflict of Interests Examples How do you manage?

Fiduciary Responsibilities Duty of Obedience Requires board members to be faithful to the organization’s mission. Act in accordance with law and organization’s governing documents.

Financial Responsibilities Exempt status not a right, can be revoked In 2010, IRS increased oversight of 501c3s. By 2013, 450,000 orgs had lost c3 status by simply not filing 990 forms. Unrelated business income must be reported properly.

Thoughts on Transparency

Direction Board Legal Roles & Responsibilities Engage in strategic thinking and planning Set the organization's mission and vision for the future Establish organizational values Approve budget operational plan Protect the organization Direction

Ensure necessary resources Board Legal Roles & Responsibilities Hire capable executive leadership Ensure adequate financial resources Promote positive public image Build a capable and responsible board Ensure necessary resources

Provide oversight Board Legal Roles & Responsibilities Oversee financial management Minimize exposure to risk Measure progress on strategic plan Monitor programs and services Provide legal and moral oversight Evaluate the CEO & Board Provide oversight

General Governance Best Practices Have 6 months operating reserve Invite incoming board members to participate as observers Offer leadership training Conduct detail performance assessments, Board and Exec. Developing new leaders Data driven decision making Role clarity Crisis planning

Excellent Resource Governing for Growth by Nancy Axelrod