Presented at the 2015 MSCSA Incoming Leader Training

1. Fiduciary Responsibility
 Presentation for 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 Manage Accounts
 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 Operate in
Three Modes
Fiduciary
Strategic Generative

10. Fiduciary Mode
 Best understood, 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
 The art 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 should board members be
engaged in?
◦ Governance
 Planning – strategic and otherwise
 Policy
 Evaluation
◦ Advocacy
◦ Financial health and sustainability
 Budgeting and oversight
 Fundraising

14. And what should board 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 Governance Policies (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
 Participation in 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.