Promoting Effective Boards of Directors CAA Board Governance Promoting Effective Boards of Directors Joelle Hoeft Minnesota Office of Economic Opportunity, MN Department of Human Services Introduce Connie As State CSBG Offices our legal contracts with local CAAs is with its board of directors. Talk about the Board DVD, why we did it, etc. We’ll spend the bulk of our time today reviewing the DVD and manual But just the basic framework: One of the greatest strengths in our network is the Tri-Partite Board…

Tripartite Board The CSBG Program (Community Action Agencies) must be administered through a Tripartite Board (Sec. 676B, CSBG Act). One-third of the members are elected public officials, One third Low-income Individuals and Families, and One third members of business, industry or labor “Effective tri-partite boards reflect and promote the unique anti-poverty leadership, action, and mobilization responsibilities assigned by law to community action agencies.” (IM 82 – March 2005) For Community Action, the tri-partite structure of private non-profit and public community action board of directors ensures that voices from ALL segments of the community have the opportunity to participate in shaping the direction of the CAA. Without full participation, the CAA lacks valuable points of view in its decision-making process. It is sometimes said: The Public sector brings the power, the low-income sector brings the voice and the private sector bring the resources to the Board Board composition: low-income individuals and families Must be democratically selected and reside in the geographic area being served

Board Responsibilities To ensure that the organization stays in compliance with laws and regulations relating to the corporation. To determine the organization’s mission, strategies and program priorities. To ensure that the organization uses its resources toward fulfillment of its tax exempt status as stated in its application for exemption. Section 676B requires that, as a condition of designation, private nonprofit entities and public organizations administer their CSBG program through tripartite boards that: “fully participate in the development, planning, implementation, and evaluation of the program to serve low-income communities.” Let’s look at Board Responsibilities:

Board Responsibilities To hire an executive director to manage the corporation. Financial management: Each board member should know how to read basic financial reports, statements and projection: To fulfill these responsibilities, board members must be in control of important decisions and have adequate knowledge of the organization’s operations.

CAA Board Training DVD and Manual Share tools with CAAs and encourage them to: Review periodically as a group Use to help orient new board members Offer training sessions for Board Members at state trainings This DVD was produced in 2002. Clothes and glasses show age…but fundamental information is the same… A couple ways we have found this useful: -- Shared with all CAAs for use at local agency (review together periodically, train new board members) -- Use as training tool at statewide and other conferences/training events We find that people often don’t take the time to review the full DVD, and when they do – they find it helpful. So, that’s what we’re going to do today. See for example: Basic responsibilities of an effective board (p. 40) Characteristics of an effective board (p. 46)

State CSBG Offices (or other funder) Expectations Board members must be fully informed as to their roles and responsibilities: Board members must regularly attend the meetings A board should clearly understand the mission of the organization The Board should fully participate in the development, planning, implementation and evaluation of the organizations programs & operations. A board should annually evaluate the executive director The members should regularly review their by-laws. A board should comprehend the financial status of the organization. Board members must regularly attend the meetings A board should clearly understand the mission of the organization The Board should fully participate in the development, planning, implementation and evaluation of the organizations programs & operations. A board should annually evaluate the executive director The members should regularly review their by-laws. A board should comprehend the financial status of the organization. Board Binder includes:

Expectations There should be a board manual available to all members and it should be updated on a regular basis and reflect current practice. If the by-laws require meetings to be open to the public, then steps should be taken to ensure that the public has information regarding the date and time of each meeting. Members of the board are entrusted with the authority to establish policies for the Governance of the Corporation. Corporate and Historical documents Roster Calendar Annual report Board responsibilities/job descriptions Financial and programmatic information Bylaws and amendments Incorporation documents Most recent 990 filed with the IRS If available, a history of the organization Brochures and other descriptive materials Current strategic and annual plans including community assessment, mission and vision statements

Expectations State CSBG Offices expect this responsibility to be carried out with the duty of care, obedience and loyalty. Collectively and individually, board members are legally and ethically responsible for the activities of the agency. The State contract is signed by the board. See handout for explanation of Care, Duty and Obedience

Expectations Board Members, need to have access to information necessary to carry out its responsibilities. Review the books and records of the organization. Know the types of grants received and the programs administered. Carefully review all financial and program reports. Review all minutes of the meetings of the Board and its committees.

Expectations These responsibilities must be carried out in an efficient and informed manner Be aware of the requirements regarding maintaining a viable non-profit corporation. Are work plan and budget documents completed and submitted to the grantors within the appropriate time frame? Should the grants be amended due to changes in the types of programs? Are all required reports filed with the appropriate state and federal agencies?

Assessing Board Effectiveness Attend a Board Meeting Use an Observation tool and take notes Use a Board Interview format & Checklist Listen Monitoring is perhaps the most difficult, sophisticated, and professional task that a funder conducts. Only well trained staff should be doing this important work, which validates compliance with rules and regulations and links grantees to the resources they need to meet their mission. Monitors should be able to discern information beyond compliance vs. noncompliance. The art of discernment is essential when practicing effective monitoring: Yes, aboard may be having board meetings; yes, there are minutes; yes, the required board paperwork is in the files, but in looking beyond compliance, monitors need to be able to see if the board is nothing more than a rubber stamp; that they don’t have an idea of the financial health of the agency, etc.

Board Meeting Observation Roles & responsibilities Financial oversight Program oversight Managing the risks of board service Committee operations Board administration/staff relations Board service effectiveness Observation tool to help monitoring staff to makes sense of the board meeting.

Key Documents IRS Form 1023 IRS Determination Letter Application for Incorporation IRS Determination Letter State Determination Letter Articles of Incorporation Bylaws Conflict of interest policy *For Community Action, Head Start impasse policy (if applicable) IRS Form 1023-is used for both nonprofit and for-profit corporations at the time of formation and requires the organization to state its purpose. IRS Determination Letter-In response to the Application for Public Charity 501(c)(3) Status, the IRS issues a Ruling Letter stating that it has determined that the organization has a nonprofit purpose and has been granted nonprofit status. State Determination Letter-Most legal aspects of nonprofit organizations are determined at the state level. Each state has a Charity official although the titles are different and they are located in different departments depending on the state. However there is an annual registration required. Articles of Incorporation-Sometimes called “certificate of incorporation” or “charter” is a publically filed document that states the organization’s name, the state, it’s purpose and it’s basic legal structure. Bylaws-Various aspects of bylaw are governed by the states. For example in MN Community Action Boards must have a minimum of 15 members. Bylaws should include: Indemnification-a statement that limits the personal liability of board members. Composition of the board including the manner in which the sectors are selected. Minimum and maximum number of board members. The number of members required for a quorum. Terms and term limits of members. Titles of officers, how they are appointed and their terms. Procedure for removing board members. Number of meetings per year. Procedure for emergency board meetings. Standing and ad hoc committees, composition and powers. Conference calls and electronic meetings.

Key Documents Board Roster Board Binder including: Including; contact information & dates on which their terms begin and expire. Board Binder including: Corporate & historical documents, roster, calendar, board responsibilities, financial and programmatic information. Bylaws and amendments, Incorporation documents and, most recent 990 filed with the IRS If available, a history of the organization, brochures and other descriptive materials, current strategic and annual plans including community assessment, mission and vision statements Board Binder includes: Corporate and Historical documents Roster Calendar Annual report Board responsibilities/job descriptions Financial and programmatic information Bylaws and amendments Incorporation documents Most recent 990 filed with the IRS If available, a history of the organization Brochures and other descriptive materials Current strategic and annual plans including community assessment, mission and vision statements

RESOURCES Sec. 676B CSBG Act IM-82 on Tri-Partite Boards CAPLaw NASCSP “The Training Book for Community Action Boards” and other resources – CSBG T/TA Request System Right from the Start – Guidelines for Board Members www.oag.state.ny.us/charities Others

THANK YOU! Questions? Discussion? Joelle Hoeft Joelle.hoeft@state.mn.us 651.431.3813