Building a Better Board Board Orientation

Why Board Training? Strengthen the board’s effectiveness by providing a better understanding of the group’s roles and responsibilities to the organization and its members.

Topics Covered Board Responsibilities Tools for Governance Position Descriptions

What Makes A Great Board? According to a study conducted by the ASAE Foundation of more than 1,500 associations, the top performers all have the following attributes: Strategic Focus Commitment to Assessment and Skills Development Effective Recruitment Process High Participation Levels

Board responsibilities Building a Better Board

Board Responsibilities Governance - The phrase “governance” often refers to the Board’s activities to oversee the purpose, plans and policies of the overall organization Establishing the overall plans and policies Ensuring sufficient resources (financial and personnel) for the organization Ensuring compliance to rules and regulations Representing the organization to external stakeholders, etc.

Board Responsibilities As a member of your organization’s board of directors, you have been chosen by your peers as a leader You may have been just elected or you may have been involved in a leadership position for years In either case your job is very important

Board Responsibilities In your role as a board member you are responsible for considering the overall needs of the membership A board member’s primary role is to establish direction and set policies and goals for the association

Board Responsibilities Legal Responsibilities Fiduciary Duty of Care Duty of Loyalty Duty of Obedience

Board Responsibilities Fiduciary Responsibilities: The board must ensure that the organization operates in a financially responsible manner. This includes but is not limited to: Development and continual monitoring of a financial budget Avoiding a deficit Insuring the collection and remittance of required payroll deductions (income tax, UI, etc.) Ensuring that none of the resources of the organization is used for the personal gain of officers and directors Maintaining financial records Appropriate use of organization’s cash reserves

Board Responsibilities Duty of Care: The board must insure that practices are in place to reduce the risk of harm to its employees, volunteers and clients Meaningful oversight (not management) of the organization Monitoring of finances Reliance on experts Business judgment rule

Board Responsibilities Duty of Loyalty Act only in the “best interest” of the organization Cannot use your position as a director for individual personal advantage Primary relates to Conflict of Interest Confidentiality

Board Responsibilities Duty of Loyalty (cont.) Conflict of Interest Any activity that may give rise to bias or influence the decision of the individual, or Any activity that may create an unfair competitive advantage for an individual or outside organization Adopt a Board policy on conflict of interest and external activities Managing a conflict of interest: Disclosure to the Board – Annual Report Form Refrain from the discussion and/or voting on the matter Refrain from participation in activity while serving on the board

Board Responsibilities Duty of Loyalty (cont.) Confidentiality Nondisclosure or use of information that you receive by virtue of your position. Directors should not disclose any information about the organization, its activities, or programs unless it is already known or available to the public

Board Responsibilities Duty of Obedience Board Education Knowledge to understand how to interpret the association’s financial statements Assess the level of risks the association faces in its day-to-day activities Bylaws and Policies Financial management practices Human resource or personnel management practices Personnel safety and client care practices Conflict of interest policy Board confidentiality

Board Responsibilities Duty of Obedience (cont.) Monitoring of Performance Regular review of income and expenditures (actual compared to budget and explanation of significant variances) Annual review or independent audit of financial results (financial statements) Review reports on activities (i.e. monthly executive director’s report) Monitor implementation of key policies Executive/Management Company Board of Directors

Board Responsibilities Other Considerations Insurance Directors & Officers Insurance Protects against actual breach of “duty” by board members Pays for wrong decisions Generally includes: actual or alleged acts or omissions, errors, misstatements, misleading statements, neglect or breach of duty by board members or officers Fraud Insurance General liability insurance Protects a company’s assets and pays for obligations Covers the cost of your legal defense and any settlement or award should you be successfully sued Work with your insurance broker to find a policy that best suits your organization’s needs

Tools for governance Building a Better Board

Tools For Governance Board Manual For new board members the manual serves as a handbook that provides useful information about the organization, board structure and operations, fellow board members and staff For others the manual becomes an indispensable working tool and a central resource about the organization and board Every board member should have access to the manual Manual should be updated regularly

Tools for Governance Board Manual (cont) General Information Mission, Vision and Values statements Board member listing and positions Board member terms Responsibilities and position descriptions Committee and task force descriptions References Articles of Incorporation Bylaws IRS Determination Letter Past board members

Tools for Governance Board Manual (cont.) Meeting Minutes (recent) Board Policies Potential conflicts of interest Insurance policy coverage Legal liability policy Fraud insurance coverage Travel/meeting expense reimbursements

Tools for Governance Board Manual (cont.) Finance and Fundraising Most recent audit report Current annual budget IRS Form 990 Banking resolutions Investment policy Monthly financial reports

Tools for Governance Board Manual (cont.) Other Information Staff listing (if applicable) Annual calendar Website information Promotional material (i.e. membership brochure) Organization’s products and services

Tools for Governance The Strategic Plan Mission, vision and values position of the organization Goals (usually 3 to 4) are core competencies of organization Strategies should be fresh approaches to advance the goals Tactics and action steps are the realm of committees and staff Plan is realistic, based on capacity Spans a period of 3 to 5 years Plan is a working document and should be open to constant review and adjustment, when needed Organization’s budget should be tied to the strategic plan

Tools for Governance Always: Evaluate usefulness of all governance tools Read and ask questions about the material Keep each item brief

Position descriptions Building a Better Board

Position Description Executive Officers Organization officers have special duties described in the bylaws Officers make of the “Executive Committee” The Executive Committee may meet in between meetings of the board as needed

Position Description - President Principal elected officer Oversee board and executive committee meetings Work in partnership with executive director to insure board resolutions are carried out Call special meetings if necessary Appoint all committee/task force chairs and with executive director, recommend who will serve on committees Assist executive director in preparing agenda for board meetings.

Position Description - President Oversee strategic planning process Assist the society in conducting new board member orientation Work with nominating committee to recruit new board members Act as spokesperson for the organization Periodically consult with board members on their roles and assist with performance assessments

Position Description – Vice President/President Elect Attend all board meetings Serve on executive committee Carry out special assignments as requested by the president Understand the responsibilities of the president and be able to perform these duties in the president’s absence

Position Description - Treasurer Attend all board meetings Maintain knowledge of the organization and its goals and objectives Understand financial accounting for nonprofit organizations Serve as chair of the finance committee Work with chief executive to ensure that appropriate financial reports are made available to the board on a timely basis Present annual budget to the board for approval Review monthly financial reports and present to BOD

Position Description - Treasurer Review the annual audit and answer board members’ questions about the audit

Position Description - Secretary Attend all board meetings Ensure the safety and accuracy of all board records Review board minutes Provide notice of meetings of the board and/or a committee meeting when notice is required

Position Description – Immediate Past President Traditionally serves as chair of the nominating committee Performs such other duties delegated by the board of directors or assigned by the president

Position Description – Board Member Attend all board and committee meetings and organization functions Review agenda and supporting materials prior to meetings Work as a team and support board decisions Be informed about the organization’s mission, services, policies and programs Monitor the performance of the organization in relation to the objectives and core values Approve the budget and monitor performance

Position Description – Board Member Abide by the bylaws, code of conduct and other policies that apply to the board Establish, review and monitor policies that guide core operational practices (i.e. financial management, human resource management Participate in the hiring and releasing of the executive director

Thank you for serving on the board! Final Thoughts The board experience should be a positive one The board is the caretaker of the organization The board speaks as a whole, no board member should have more input or authority than others Use business sense; be respectful at all times Realize you “represent” the organization Always ask questions as they arise (due diligence) Always exercise diligence in following association bylaws, policies and best oversight practices Thank you for serving on the board!

Additional Resources American Society of Association Executives (ASAE) - www.asae.org Board Source – www.boardsource.org Bob Harris (The Nonprofit Center) - www.rchcae.com

For more information contact: Kimberlee Berry: kberry@ieci.org Thank you! For more information contact: Kimberlee Berry: kberry@ieci.org