Fiduciary Responsibility for Board Members

Fiduciary Responsibility for Board Members

• 1.
  Fiduciary Responsibility  Presentationfor MSCSA Governing Council  July 2015
• 2.
  Goals for Presentation Cover legal roles and responsibilities of non-profit board members.  Discuss recommendations for solid nonprofit board governance.  Focus on principles of board engagement/ involvement in governance.
• 3.
  Roles and Responsibilities Determining the organization’s mission and purpose  Supporting and evaluating the chief executive with the goals of the organization in mind  Ensuring effective organizational planning  Assisting in the development of the organization’s annual budget and ensuring that proper financial controls are in place
• 4.
  Roles and Responsibilities Adhering to legal and ethical standards and norms  Clearly defining and articulating the organization’s mission, accomplishments and goals to gain support from the community and enhancing the organization’s public image  Board members have a duty of loyalty to the organization, its staff and other board members.
• 5.
  Duty of Care Read and understand mission, vision, and governing documents.  Attend board and committee meetings.  Be informed and prepared to participate in decision-making and oversight.  Exercise same care as a prudent person would in the handling of their own affairs.
• 6.
  Duty of Loyalty Be prepared to put organizational objectives above self-interest.  Establish and follow written policies concerning conflict of interest situations.  Disclose personal financial interests when needed/excuse yourself from voting.  Avoid entering into business relationships between board members and the organization.
• 7.
  Duty of Compliance Understand and comply with governing documents, including bylaws and code of conduct.  Know and comply with state and federal laws governing non-profit organizations, including registration and reporting requirements.
• 8.
  Duty to ManageAccounts  Develop policies that assure the financial responsibility of the organization.  Keep accurate and complete records of income, expenses, investments, and minutes.  Develop budget as a blueprint for program plans and all organizational spending.  Develop fundraising goals and assist the organization in acquiring adequate resources.
• 9.
  Modern Boards Operatein Three Modes Fiduciary Strategic Generative
• 10.
  Fiduciary Mode  Bestunderstood, if not always embraced.  Fiscal “trusteeship” -- ensuring efficient and effective use of organizational resources.  Participation is securing resources.  Also included is the guarantee of quality programming.  Necessary but not sufficient.
• 11.
  Strategic Mode  Theart of determining the best way to get from A to B.  Should be a nonstop pattern of thinking for boards and board members.  Common pitfalls of traditional strategic planning: ◦ Plan has no traction ◦ No strategies ◦ No real input ◦ Pace of change is slow ◦ Unforeseen outcomes
• 12.
  Generative Mode  Creative– Act of determining “A” and “B”  Making sense of facts and data, defining problems before solving them, and framing the key strategic questions.  Danger is that all information comes from staff – making board members less capable of assisting with the creative work of the organization and less effective than they could be at performing their fiduciary or strategic roles.
• 13.
  Just what shouldboard members be engaged in? ◦ Governance  Planning – strategic and otherwise  Policy  Evaluation ◦ Advocacy ◦ Financial health and sustainability  Budgeting and oversight  Fundraising
• 14.
  And what shouldboard members avoid becoming engaged in?  Day to day operations ◦ Individual spending decisions within adopted budget ◦ Individual personnel decisions taken by CEO in accordance with adopted policies ◦ Individual program decisions – once the board decides what is to be accomplished, they should leave the “how” to staff  Criticizing organization publicly  “Parking Lot” Meetings  Representing organization (unless specifically authorized)
• 15.
  Planning  Strategic Planning ◦Mission ◦ Vision ◦ Values ◦ Goals (long-term and short-term) ◦ Action items: who will do what? ◦ Timelines ◦ Budget  Succession Planning  Annual Fund Planning  Program Planning
• 16.
  Policy  Board GovernancePolicies (Bylaws/Code of Regulations, etc.)  Financial Management Policies (internal controls, reporting, audit, debt tolerance, etc.)  Personnel/Volunteer Policies  Communications Policies  Customer Service Policies
• 17.
  Financial Sustainability  Participationin annual budget process is critical.  Fiduciary obligations cannot be escaped – the existence on a board treasurer or crackerjack staff person does not remove “duty to manage accounts” from anyone on board.  If a board adopts a budget that relies on fundraising… they have an obligation to participate in the fundraising.