Board to Death:  Wake Up Your Board of Directors

1 Board to Death

Welcome, this is Board to Death:  Wake up your Board of Directors brought to you by the Café Technical Assistance Center.

2 Objectives

The objectives of this mini e-learning are to better understand and achieve the required and expected levels of involvement by organizational governance bodies. To understand the separate of duties for board and staff, to build capacities for boards and staff, in balancing roles and responsibilities that promote accountability and growth and to strengthen organizations and promote system transformation by fine tuning roles and responsibilities that insure sustainability and success.

5 Why is Board Work Boring?

Welcome back, so why is board work so boring? Why do so many people say no way, I'm not serving on the board? Or they say things like I have to go to a board meeting tonight. Board work should be exciting, you're moving forward a mission, you're helping accomplish great things.

6 What Can We Do?

So what can we do you ask, well first of all you can start right, begin with the right board the right way and then build upon that along the way. Make those adjustments that are necessary and don't be afraid of change.

7 Get the Right People!

Starting right means getting the right people; recruiting and getting the right people on your board is essential. We often forget that we are hiring people for a job, governance and leadership.

8 What You are Looking For?

What are you looking for when you're looking for the right people? Well establish the quality's that you want to help the board to do its job. Know ahead of time what kind of passion, understanding, knowledge and leadership are necessary to accomplish the things on your board that need to be done. Add specific talent needed on top of those basic qualities.

9 Recruit for EACH Open Seat

Recruit for each and every open seat. Attend each position that is open as a separate seat, you are not recruiting an entire board; you are recruiting seats for that board. Treat them as if you were filling an employee position. Use the basic qualities and added specifics to your board needs to design each and every recruitment an outreach.

10 Make It Known

Make it known that you're looking for passionate and excited board members. Advertise at your meetings, networking opportunities, at presentations that you do, in newsletters, on social media and other public opportunities. Make it a regular process whether there are positions open or not, you should be always advertising, always recruiting. Have a pool of good candidates ready to choose from when open positions come up.

11 USE an Application Process

If this is a position, a job, use an application process to make sure that you're screening folks and getting exactly the right people on board. Use a standard application for everyone. Develop a process to share information and learn more about the candidate. Orient the candidate to the organization, its mission and the culture of the work that you do. Interview those candidates using the criteria and qualities desired or needed. Make a selection based upon fit not out of desperation. Do not rush this process, just as with filling a position within a company this is exactly the same thing. You need to make sure that you hire the right person for the right job at the right time.

12 Once They are Aboard

Once they're on board there are several things that you will need to do. First you need to orient them and reorient your entire board to the job ahead. You might consider offering a contract or a memorandum of understanding that outlines exactly what it is that they're going to offer the board. Prepare for full participation, get them ready to be an equal member of the board and evaluate and improve your process along the way.

13 Nonprofit Organizations-501c3

Let's go over a few basics first. A nonprofit organization is an organization that's organized and operates exclusively for exempt purposes set forth in the IRS section 501c3 laws and none of its earnings may inure any of the private shareholders or individuals. In other words, they cannot benefit personally from any of the money that's brought in to accomplish the mission. It must also have organizational document that provide the framework for its governance and its management.

14 Governance and Management

Talking about governance and management, the IRS encourages and expects an active and engaged board. The IRS also reviews the board composition of all charities to determine whether or not the board represents a broad public interest and to identify the potential for insider transactions that could result in misuse of charitable asset. In other words, they look closely to make sure that board members are there for governance purposes not personal gain.

15 Legal Obligations

The board also has some legal obligations. They have an obligation of care, in other words, taking care of the public funds that are being infested for their charitable cause. They have an obligation of loyalty; being loyal to the mission and the vision of the organization as well as obedience to the bylaws. Then finally excusing themselves on anything of which they may have a conflict of interest.

16 Fiduciary Responsibility

They also have a fiduciary responsibility insuring that funds are spent to further the mission not to benefit a private interest.

17 Ten Basic Responsibilities

There are ten basic responsibilities of the members of the board of directors. First they determine the mission and the purpose of the organization. This may be done long before the 501c3 or nonprofit status is acquired. They select the chief executive. This may be called the executive director or the CEO and they support and evaluate the chief executive making sure that that individual is doing the job that they've hired them to do. They insure effective planning, looking at what the organization is doing and monitoring and strengthening its programs and services so that the organization can meet its goals and objectives. They ensure adequate financial resources as well, protecting the assets and providing proper financial oversight; developing budget, managing those budgets and making sure that every dollar spent is done in accordance with IRS law and to meet the mission and vision of the organization. They continue to build a competent board and insure legal and ethical integrity. Finally, one of their responsibilities is to enhance the organizations public standing.

18 Setting Policy

The board also sets policy. They create or update the mission and vision statement. They determine the organizations programs as well as its services and they craft and approve a strategic plan to guide the organizations activities.

19 Monitoring Operations

They also monitor operation. They hire and evaluate the executive director as we discussed earlier. They work and provide support to the executive director and approve the annual budget, the annual report and all of the reports that have to be submitted as a part of being a nonprofit organization. They approve major contracts and grants and they solicit and review program evaluations and then they do other things that are necessary in order for the organization to meet its goals and objectives and its mission and vision.

20 Serving as the Public Face

The members of the board of directors also serve as the public face of the organization. They fundraise by donating directly to the nonprofit and/or soliciting donations from others. They also advocate for the organization in the population it serves.

21 Other Responsibilities

Board members also have other responsibilities. They document policies and decisions to create an organizational history. They also prepare for and attend board meetings so they can make informed decisions. They research and discuss issues before decisions are made and they recruit and orient new board members when a vacancy arises.

22 Other Responsibilities

Their other responsibilities also include establishing and protecting that mission in the direction of the organization, insuring ethical and fiscal accountability, making sure they have policies and procedures to derive all of the work that they do. Identifying resources and promoting that public image. They select, evaluate and support that executive director as we discussed earlier and they continue to develop their board so that they can become stronger and more able to promote the mission and vision of the organization.

23 Board Responsibilities

Board responsibilities are outlined in the bylaws and there are also responsibilities contained within law and government as well as unwritten policies. Let's talk about a few of these.

24 Within Bylaws

The bylaws drive the composition of the board, their roles, their actions, how they make decisions, their authority, their obligations as well as those responsibilities. In other words, the bylaws are going to tell us how many board members there are, where they have to come from, who they represent, what role they play, how they have actions. How do they make decisions? It is a majority? Is it by vote? Is it public? Is it private? What authority do they have? The authority within the organization, the authority to manage the money, the authority to make changes in the bylaws that regulate how they do their business as well so those obligations and responsibilities that may be contained within the contract or the memorandum that you had them sign when they came on board.

25 Within Law & Government

There are laws within government that regulate how nonprofits operate. One of them, of course, is through the internal revenue service, the IRS. This is where the 501c3 was acquired and they have many rules and regulations that outline how a nonprofit is supposed to operate. Then within the state there's the state department of corporations that regulates the way that a nonprofit operates within that given state. There may also be other federal laws that apply to the nonprofit organization as well.

26 IRS

The IRS says that a board of directors must abide by all rules. One of the rules that is very critical and important to the operation of the organization is the conflicted interest rule that should be in the bylaws. This outlines exactly how the organization identifies a conflict of interest and how they're going to tend to that as well as what committees are going to set up, what the responsibility is and what they're going to do to contribute to the mission and vision of the organization. The IRS also had annual reporting duties that are required of the nonprofit if they're going to continue their active status. One of these know as the 9-90 reports what money was brought in by the organization, how that money was spent and it insures that the money that is being spent by the organization is to further its mission. If the organization brings in a certain amount of money, it is required to have what we call an independent audit. An independent audit brings in auditors and looks at every aspect of the organization according to certain nonprofit rules and develops a report to insure that the organization is indeed operating as an authentic nonprofit under IRS rule.

27 Other Rules and Regulations

There are also other rules and regulations that the nonprofit board of directors must follow. One of them are whistle blower protections. To make sure that if someone files a grievance or is unhappy with something that the organization has done that the organization or the board of directors may not retaliate against them for reporting it. Each state has its own corporation laws and those laws must be followed to make sure that the organization is recognized as a nonprofit entity.

28 Accountability

There are also measures of accountability that are required by the board of directors such as auditing and monitoring their investments, resources and outcomes as well as insuring that there's insurance to protect the organization. Providing continued oversight over every aspect of the organization and the work that it does.

29 Unwritten Policies

Then there are many unwritten policies such as the ethics, the behavior and the support that the organizational board of directors had to provide to insure the mission and vision of the organization is accomplished.

30 Staffing Responsibilities

Let's talk a little bit about the staffing responsibilities of the board of directors. If there is a staff, we often run into trouble when we cannot separate the duties of the board of directors as it relates to the organization and the duties of the board of directors as it relates to management of the staff and the daily operation of the organization. We have to begin separating the staff and volunteer roles, their relationship to the board and then organizational management.

31 Board & Staff Responsibilities

Let's look a little bit at board and staff responsibilities. Now there are five areas of which there are commonalities between the board and the staff and their responsibilities; planning, programing, personal, community relations and board committees. Let's look at each of these individually.

32 Planning

In the area of planning, the direct planning process is the responsibility of the board and the board also approves long range goals. They also approve annual objectives providing input into those long range goals should be a joint effort between the staff and the board and formulating annual objectives should also be a joint effort. Monitoring achievement of the goals and objectives is joint as well but preparing performance reports on those goals and objectives, how those are happening, how they're being accomplished is a duty of the staff to be provided to the board.

33 Programming

As we can see from this chart, the board oversees the evaluation of the products, the services and the programs that are developed or provided by the organization. They finalize and improve the budget and based on illicit funding contributions. They also approve expenditures outside of the authorized budget and then they insure an annual audit as required by law. The staff assesses this stakeholder needs, the people that they serve. The staff also prepares and maintains program records and reports and prepares pulmonary budgets for review by the board. The staff contains expenses within that annual budget and they help organize fundraising campaigns.

34 Personnel

In the area of personal, the board as we've discussed before hires, evaluates and fires the chief executive. When additional staff positions are necessary the board also approves that as well but the daily work of the organization is done by the staff and hiring, promoting, and discharging staff members are done by the staff as well, the CEO, the executive director or the direct supervisor. In settling staff discord or differences among staff is done by the staff of the organization not the board.

35 Community Relations

The board interprets organization in community relations and together they provide linkages with other organizations. Generally, writing news stories or developing outreach is done by the staff itself.

36 Board & Committees

Of course, the board of directors work itself and its committees are critical to the ongoing operation of the organization. Board members appoint committee members. The board members also urge committee chairs into action and of course, they're going to continue recruiting new board members. Together staff and board members promote attendance at the meetings both the board meetings and the committee meetings. Together they also plan board meeting agendas and they may jointly take board meeting minutes. Sometimes this is done by a staff person and then prepared for the secretary to present to the overall board of directors for approval. Together the staff and the board will plan and propose committee organizational duties. The staff prepare exhibits, materials and proposals for the board as requested and the staff also insures implantation of all board and committee decisions.

37 Volunteer Responsibilities

Some board members may serve a dual purpose. They may be a board member but they may also be a volunteer that assists the organization. This is often seen in any organization that is small and does not have a large staff to accomplish all of its goals and objectives. Board members who do this are not in a management position as a volunteer and volunteer work should be kept separate from their role as a board member.

38 Operational Responsibilities

The board does not serve in an operational or managerial role and should not engage in the day to day operation of the organization. They should not direct evaluate a higher staff other then the chief executive as we've discussed. They do not make detailed programatic decisions. What they do do is develop a guide or a plan for those decisions but they do not make them. They do not make any commitment as staff or financial resources except with the prior authorization of the chief executive. They do not make any offer or commitment to allow exceptions to organizational policies.

39 Fiscal Responsibility

Board members must maintain an interest in the fiscal affairs of the nonprofit. They often must look at the overall current financial positions as well as assess the reliability of the reports that they receive. They much insure the effectiveness of the nonprofits management of incoming and outgoing funds. The board must require regular timely and complete financial reports because remember, the board of directors is responsible for how the money is spent to further the mission and vision of the organization.

40 Fiscal Responsibility

The board must also hold the staff accountable for meeting the standards of timely reporting. They must ask critical questions about the financial reports that the board receives including the budgets, the periotic financial statement, the annual form 9-90 and any other annual financial statements as well as the audit.

41 Separation of Duties

Despite all of this, there has to be a separation of duties; the board, the management, the staff, volunteers and funders each have separate responsibilities that all overlap and intertwine with one another to insure that the organization is meeting its mission and vision.

42 Tools of Separation

There are many tools that we can use to insure the separation of duties. One of them are job descriptions. Everyone involved in the organization should have a job description whether it's a paid position or not. There should be a job description for board members as well as the staff, the volunteers and the role of funders. The bylaws also assist the organization in identifying how it's going to operate and how it's going to separate the duties; contributing to this, our policy manuals in operational procedures.

43 Key Elements of Separation

Some of the key elements of separation include: the segregation of duties as an internal control. The CEO or executive director manages the daily operations and the chair leads the board in its governance duties. Unless the board determines it is in the best interest of the organization to have the chief executive serve as a board chair, a different person should hold each position. If one person holds both positions the board should point another board member to lead on any issues that require a separation of duties such as reviewing the compensation of the chief executive.

44 Staff Responsibilities

Staff have multiple responsibilities to the board. They should provide accurate, timely, honest and focused information as requested. They should inform the board of new developments, gather information and make recommendations to the board, regularly report fiscal information, use the board as a resource, orient the board on any programs, provide support for board recruitment, staff committee meetings and attend board meetings as requested.

45 Organizational Chart

Organizational charts help us see how duties are separated as well as the flow of responsibility from one level to the other. This chart shows the board at the top and then the board oversees the executive director who in turn oversees the staff and its volunteers.

46 Organizations without Staff

But what about organizations without staff? What about organizations that are so small and have such a small budget they haven't been able to hire staff yet? Well that work is often done by volunteers. Boards generally have to do much of that work and board members are the volunteer work force.

47 Organizational Chart

That organizational chart might look like this with the funders flowing down to the board of directors who then oversee the programs as well as the volunteer work that's done to accomplish the mission, vision and the goals and objectives of the organization.

48 Mission Based Management

No matter what method is used to accomplish the work of the organization, it must utilize mission based management and mission based management means that all components of the organization are managed through the mission.

49 Mission, Mission, Mission

Everything is about the mission, it is the legal reason for the existence of the organization, remember? It was filed back in the beginning when they requested their nonprofit 501c3 status from the IRS and it can be taken away. Any unrelated business that is not related directly to the mission can cause the organization to be penalized or they could be asked to pay back money. The mission must be kept up-to-date. It's recommended that it be updated every three years and you need to check all mission sources for accuracy so in other words the mission that's filed with the 501c3 entity, the IRS, the mission on file with the state Department of Corporations, the mission on your Facebook page, the mission on your website, on your brochure should all say the same thing.

50 The Mission Relationship

Every dollar, every action, every outcome is to be tied to the mission.

51 The Mission Driven Board

The mission driven board understands and implements the mission. They act as a policy setter and a check and balance with the staff. They work in collaboration with the ED CEO and the staff and changes over time to reflect the organizational needs are generally driven by the board. The board has qualified officers and membership and support the organization and its mission to the public. The board of directors should be able to recite the mission without looking at a piece of paper or reading it off the brochure. The mission should drive everything that the board does and how they make those decisions should always move the organization in the direction of the mission.

52 Challenges to a Mission Driven Board

Some of the challenges that boards often face in insuring that their mission driven is that the members are not up-to-date on what's going on in the organization. Possibly they do not get accurate or timely information. There are repeated meetings without a quorum or the board has nothing to do. The leadership within the board could be weak and the committee structure may not be effective or that staff and board lack the skills to support one another. With these things going on within a board of directors, it would be very difficult to be mission driven.

53 Board CPR

What do you do when the board is board to death and needs CPR? Well first of all know and avoid traps, stay out of the crossfire, build and sustain a balance, remain accountable to the mission and be fiscally responsible. Let's talk about each of these in brief.

54 Traps

Some of the traps that a board can fall into is not following the bylaws. The bylaws should be pulled out at every single meeting. They should be what guides the organizational board of directors on how they function. Another trap is overstepping their roles, not keeping that separation between board responsibility and staff responsibility. Or not fulfilling the roles, looking at the contract, looking at what it is that their job description says and not doing what they're being asked, or underestimating the responsibilities and obligations of being a board member. Being a board member is not just something you put on your resume, it is a legal responsibility to the nonprofit organization and it's commitment to utilize public funds for charitable purposes.

55 Crossfire

Then there's the crossfire. When a board member wants more power by becoming the ED or CEO, the president, or in developing a new organization a power struggle can break out between board members. There can also be personality issues between the board and the staff or staff problems that come to the board instead of going to the staff supervisor as required in separation of duties. These can all create a crossfire that will cause the organization to implode.

56 Balance

There must also be a balance between the board and their mission, their vision, the bylaws, the staff and the service that they do for the public. They have responsibility capacity in preventing burnout and protecting that organization to insure that it can meet its mission and vision.

57 Check and Balance

There needs to be a check and balance by building accountability to minimize the risk and vulnerability through informed responsibility knowing what it is and understanding the liability factors, utilizing available tools and technical assistance to monitor organizational compliance and accountability and never leaving accountability up to other people who are not liable. These can all get a board of directors into big trouble.

58 Ensure Fiscal Accountability

The board must also insure fiscal responsibility, to monitor the budget at the beginning of every fiscal year; to implement fiscal controls such as the receipt and use of funds. Budget implementation through receipts and reports, insuring those annual audits and approving an annual operating budget and audit.

59 Troubleshooting Problems

How can we trouble shoot a few problems?

60 Empower Your Organization

First of all, you can empower your organization through transparency making sure that everything that you do is open to the public by doing training and orientation for board members, for staff, volunteers and even funders. Insure accountability of your organization, know what it is that you're responsible for and make sure that it's done. Apply that financial leverage and have unconditional contract compliance; when you're asked to do something, do it. Remember that expenditures are an investment in the mission and vision of the organization.

61 Incredible Resource

There are many incredible resources out there for boards of directors. One of them is the 2009 Independent Sector and Board Source, the principles workbook; steering your board towards good, governance and ethical practice.

62 Web Resources

Here we've listed some additional resources which will be posted on the website.

65 Closing

Welcome back and thank you. You know board work is what you make of it and tokenism is boring. If your board is boring, maybe it's not being run correctly or it's not doing its job. Let's go, wake up that board, let's do what we can to further your mission and vision and have a little fun while we're doing it.

Thanks for joining us.  The Café TAC is supported by SAMHSA to operate one of its five national technical assistance centers; providing technical assistance, training, and resources that facilitate the restructuring of the mental health system through effective consumer directed approaches for adults with serious mental illnesses across the country.