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NYMACC 2011 Roles and Responsibilities for Your Arts Organization Board



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  • 1. Presented by Andrew Marietta, Regional Manager, New York Council of Nonprofits, Inc. | 800.515.5012 | Roles & Responsibilities for Your Arts Organization Board NYMACC | September 26, 2011
  • 2.
    • Understand the duties & roles of a nonprofit board & your role as a leader
    • Learn about your liability exposure & how best to safeguard your nonprofit’s assets
    • Learn ways to efficiently organize the board for high impact
    • Become aware of the best practice choices for your board
    Key Learning Objectives
  • 3.
    • Board Members Are
    • Volunteer Leaders
    • Who Advance the Mission
    • in a Responsible Manner
  • 4.
    • Why Do You Volunteer To Serve?
  • 5. Not-for-Profit Board Accountabilities Board of Directors IRS NYS Attorney General NYS Tax & Finance Government Funding Sources & Contracts NYS Not for Profit Corporation Law/Board of Regents NYS Dept. of State Licensing Entities Local Ordinances Donors NYS Dept. of Labor Membership Elects (or self-perpetuating) Office of Medicaid Inspector General
  • 6. The Mission
    • The tax-exempt purposes for which resources are to be devoted
      • Exempt activities flow from mission
      • One-third “public support” test
      • Define scope of activities & who you serve
      • Unrelated Business Income Tax ( UBIT )
    • Official statement is in your Certificate of Incorporation ( filed with Dept. of State ) and/or Charter ( registered with Dept. of Education )
      • Check IRS application & IRS Form 990
  • 7. As a Board Member You Are Ultimately Responsible For: Discharging the duties of your position in good faith and with that degree of diligence, care, loyalty, and skill which ordinarily prudent persons would exercise under similar circumstances in like positions
  • 8. Board Members Are Fiduciaries
    • Definition: A duty to act for someone else’s benefit and hold another’s interest ahead of own
    • Special responsibilities in connection with the administration, investment and distribution of assets, where those assets belong to someone else
    • Includes the duties of care, obedience and loyalty
  • 9. Duty of Care
    • Each member exercises the “care and skill that a reasonable person would exercise in a like position and under similar circumstances”
    • The degree of competence and care expected to avoid reasonably foreseeable harm
    • Diligence, attention and informed participation
    • The “Pay Attention” Duty
  • 10. Duty of Obedience
    • The laws and regulations that govern the organization's actions including:
      • Federal, State and Local Laws
      • The Bylaws, Certificate of Incorporation or any Amendments
      • Contractual Obligations
    • Board decisions & policies
      • Respect process
      • Understand & support duly made decisions
  • 11. Duty of Loyalty
    • Demonstrated allegiance and faithfulness to the mission, board, office and organization
      • Be publicly supportive of organization
      • Follow the established chain of command
    • Make decisions in the best interest of the
    • organization
      • Recognize & actively avoid conflicts of interest
      • Disclose material conflicts in a timely manner
      • Consider disclosing other types of conflicts including perceived conflicts
  • 12. Board Members May Be Held Responsible For:
    • Violations of law, including employment related claims
    • Operating outside of the by-laws
    • Unpaid payroll and other taxes
    • Unsatisfied debt upon dissolution
    • Error or Neglect ( under NYS Immunity Laws )
      • Gross error or neglect of fiduciary, legal, & financial responsibilities ( if a volunteer )
      • Neglect of fiduciary, legal, & financial responsibilities (if paid)
  • 13.
    • Sets the rules, composition, election process & procedures for the board
    • Distributes duties & powers to officers, committees, & ED/CEO
    • Defines your decision-making process
    • Serves as a risk management tool
      • Key Clauses: Indemnification, Conflict of Interest, Construction, Removal, etc.
    Know & Respect Your Bylaws
  • 14. Board Members Are Protected By:
    • Immunity Laws
      • No protection for the nonprofit itself
      • No protection for allegations of gross negligence
      • Defense expenses still incurred
      • State laws may expand upon, but do not limit liability from, violations of federal laws
    • Insurance Options
    • Risk Management (including delegating administrative/operational responsibilities)
  • 15.
    • Defends & pays on behalf of officers & directors of nonprofits for allegations of negligent governance or employment practices (wrongful acts as defined by policy ).
    • Examples:
      • Mismanagement or misappropriation of funds
      • Operating outside of bylaws
      • Engaging in Conflict of Interest
      • Wrongful termination, discrimination, harassment, etc.
    Directors & Officers Liability Insurance
  • 16.
    • Broad definition of who’s insured
      • ED/CEO, staff, officers, volunteers, & directors - past, present, & future
    • Entity Coverage (for the organization itself)
    • Defense outside limit of liability
      • Defense costs covered over & above the policy amount
    • Per-occurrence & aggregate limits
    • Prior Acts Coverage
      • Insures even if no insurance was in place at the time
    What to Look for in Your D&O Policy
  • 17. An Accountability Structure... Clearly defines the monitoring, reporting and decision-making roles and tasks at the board and staff levels in order to know who is responsible for what, accountable to whom and in what ways.
  • 18. Major Policy & Monitoring Functions
    • Board Management and Development
    • Personnel Oversight
    • Finances/Fixed Assets Oversight
    • Resource Development
    • Stakeholder/Community Relations
    • Programs: Quality Assurance, Evaluation & Continuous Improvement
    • Planning for the Future
  • 19. Policy and Implementation Spheres Policy-making Implementation Board of Directors Area of Shared Responsibilities Executive Director Area of Shared Responsibilities Staff
    • What Role Does
    • Your Board Play?
    • Spectator?
    • Rubber Stamper?
    • Cheerleader?
    • Watchdog?
    • Micro-manager?
    • Policymaker?
    • Shared Manager?
    © 2009 New York Council of Nonprofits, Inc. All Rights Reserved.
  • 20.
    • To harness the collective talent & energy of your team members, both board & staff, to accomplish your mission, vision, goals & objectives
    Building Your Leadership Team
  • 21.
    • Ensure high performance & ethical behavior
    • Define, communicate & realize expectations of directors & officers
    • Recruit, retain & organize qualified directors & officers
    • Plan leadership succession
    • Manage board deliberation & decision-making processes (Board & committee chairs; officers)
    • Make sure compliance with bylaws & policies and that they “work” for the organization
    • Efficiently & effectively utilize professional & staff supports
    The Board’s Role Board Management & Development
  • 22.
    • Is the “employer” (as a collective, not individuals)
    • Ensures compliance with all pertinent laws, regulations & obligations
    • Establishes & ensures consistent application of personnel policies, including compensation practices
    • Establishes authority for hire, supervise, evaluate & sets compensation for ED/CEO
    • Follow lines of authority on personnel matters
    The Board’s Role Personnel Oversight
  • 23.
    • Define general & lasting parameters in bylaws
    • Have updated, board approved job description or clearly defined contract
    • Ensure consistency with personnel policies (if ED/CEO is not under contract)
    • Evaluate in writing at least annually & in a consistent process
    • Have adequate process for determining compensation of ED & all key employees
    Clearly Define ED/CEO’s Authority, Responsibilities, Goals & Evaluate!
  • 24. Delicate Balance of the Board – ED/CEO Relationship
  • 25. Finances/Fixed Assets Oversight
    • The Board’s Role:
    • Select & monitor a capable Treasurer who is custodian of the corporation’s funds
    • Determine & ensure consistent application of fiscal policies
    • Determine the annual budget & revise as needed
    • Monitor & assess financial condition, viability & internal controls
    • Select & oversee audit firm
    • Receive & accept audit(s)
    • Accept & respond to management letter & ensure follow-up
    • Ensure compliance with all pertinent regulations & filings
  • 26. Resource Development
    • The Board’s Role:
    • Assure adequate resources
    • Determine fund development plan & related policies
    • Represent the agency to funders, donors, government officials & other constituents
    • Establish & adhere to policies regarding board participation
  • 27. Stakeholder/Community Relations
    • The Board’s Role:
    • Serves as “Ambassador” & representative of organization to the community, constituents & other stakeholders
    • Brings issues, community needs, opportunities, etc. to the board & staff
    • Exercises influence within sphere in agency’s interests
  • 28. Programs: Quality Assurance, Evaluation & Continuous Improvement
    • The Board’s Role:
    • Determine program-related policies
    • Monitor & ensure quality assurance
      • Continuous improvement and evaluation
    • Monitor & ensure programs and services produce desired mission-based outcomes
  • 29. Planning for the Future
    • The Board’s Role:
    • Develop a realistic plan for the future that is mission appropriate & based on a strategic vision
    • Monitor progress on plan & revise as needed
    • Assume responsibilities to carry out the plan as indicated
    • Create a strategic culture & act accordingly
  • 30. Strategic Visioning Strategies and accountabilities to achieve vision PRESENT SITUATION OF EACH ORG. POSITIONING VISION FOR EACH AND ALL (3-5 YEARS) Mission & Values
  • 31. Purpose and Types of Committees
    • Governance vs. Operational
      • Is the committee accountable to board or staff?
      • Who does it provide deliberation on behalf of?
      • Who does it recommend to or advise?
      • Note: Governance Committees can legally be relied on for due diligence, deliberation, & recommendation
    • Standing vs. Ad Hoc
      • Permanent (stated in bylaws) or temporary or as needed?
  • 32. Tips for Making Committees Work
    • Define charges & accountability in writing
      • Create only those that can be sustained
    • Appoint able chairs or members who can work well together & consider non-board members as appropriate
    • Identify staff support & boundaries for participation
    • Develop an annual committee schedule & work plan
    • Empower with information, take & distribute minutes to the entire board in a timely manner
      • Discuss and present priorities & action items
    • Rotate members; use your committees to educate & develop future leadership
  • 33. Added Ideas, Comments, Questions???