70% of nonprofits have term limits and the average term limit is 6 years. As for board size, the average nonprofit board size is 19. Read the Letter to Learn More!

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FOURTH LETTER TO THE BOARD OF DIRECTORS
OF GOLDEN VALLEY HEALTH CENTERS
December 15, 2014
SUBJECT: TERM LIMIT POLICY & OPTIMAL BOARD SIZE
Dear Board of Directors,
We write to bring to the attention of the Golden Valley Health Centers (GVHC) Board of
Directors two important issues: (1) Term Limit Policy; and (2) Optimal Board Size. We
recommend that the Board immediately implement a Term Limit of 8 years, with a 4 year
break before a Board member can serve again. As to Board Size, we recommend that the Board
immediately expand the Board to a 13-member board, which is allowable under the current
GVHC By-Laws. 1
In addition, we respectfully remind the Board of its fiduciary duties, including
the duty of care, loyalty, and obedience to GVHC and its Mission.
TERM LIMIT POLICY
A term limit policy identifies the maximum number of consecutive terms a board member can
serve. The use of term limits is a common governance practice. Among independent
institutions, 64% have term limits, and among public institutions, 41% use this practice. The
term limit policy, as well as the length of each term, should be clearly defined in the GVHC By-
Laws. Term limits can be a healthy way to infuse the GVHC Board with new ideas and new
energy. With term limits, we believe the GVHC Board will have regular opportunities to ensure
it has the range of skills and experiences it needs. When a new candidate is found, it can be
easier to add him or her to the Board if there are term limits. Term limits also provide a graceful
way to rotate ineffective members off the Board.
2010 Survey Data for Boards of Public Institutions
 41 percent of public boards have term limits.2
 The average number of consecutive terms allowed is two.
1
It should be noted that HRSA looks at 19 Key Health Center Program Requirements for FQHC compliance, among
them are: “17. Board Authority” and more importantly; and “18. Board Composition,” the main issue herein. See:
http://www.bphc.hrsa.gov/about/requirements/index.html . Health Center Program Statute: Section 330 of the
Public Health Service Act (42 U.S.C. §254b); Program Regulations: 42 CFR Part 51c and 42 CFR Parts 56.201-56.604;
Grants Regulations: 45 CFR Part 74.
2
This represents a 25 percent increase from 2004.

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 The average length of a term is 5.7 years.
2010 Data for Boards of Independent Institutions
 64 percent of boards of independent institutions have term limits.
 The average number of consecutive terms allowed is three.
 The most common length for a single term is four years.
 90 percent allow a trustee who has served the maximum number of terms to serve
again after a hiatus of one year.
Here are the top 5 reasons why we believe term limit is in the best interest of GVHC.
1. Recharge
Being an active and committed board member to any organization requires hard work,
especially when it is a volunteer board such as the GVHC Board. In between regularly scheduled
board meetings, board members should be doing the following:
 Serving on or leading vital committee work3
;
 Reviewing upcoming meeting materials4
;
 Engaging in fundraising outreach; and
 Volunteering the actual mission work5
.
Properly serving on a nonprofit board is literally a part-time job, entailing several hours per
week in many cases. For Chairman of the Board, it might even be considered a full-time job.
We appreciate your services to GVHC and understand how taxing it can be on your professional
and personal lives. And after one or two terms of doing this, fatigue can and will set in or worse
yet apathy. Therefore, we believe that automatically providing for an ending time frame allows
Board members of GVHC to stay focused during the term(s) of service. It also insures there is
time away to “recharge the batteries”. We, as providers and staff, know how important it is to
recharge as quality patient care demands 150% commitment. Lastly, we also think that a term
limit ensures an outside perspective is gained prior to a Board member possibly returning to
the Board service later.
3
Per our Second Letter to the Board (Ethics and Compliance), we hope that the Board will create a special
committee to create and implement an Ethics and Compliance program.
4
This letter, including previous and future letters, should carefully be reviewed and considered by the Board.
5
Board members with health care skills (e.g., doctors) should be donating their time at the clinics of GVHC.
According to the BoardSource Nonprofit Governance Index
2010, 70 percent of nonprofit boards have term limits.

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2. Involving More Board Members Aids Fundraising
Former board members are usually the very best ambassadors for GVHC and its mission. So,
simply put, if GVHC has more former board members (who are not retiring merely because of
age), GVHC will be better served as the former board members has a better understanding of
GVHC’s mission and will carry it outward to the world. Stated another way, why not have as
many former board members as possible to supplement or even lead fundraising campaigns?
3. New Members Bring Additional Talents and Perspectives
This is important and obvious. Each new board member brings a fresh perspective of what the
rest of the world thinks about GVHC and our mission. New members must be listened to,
especially during the recruiting and orientation process. GVHC has thrived for more than 40
years because we adapt and innovate. Therefore, we should embrace and new talents and
perspectives from new board members.
4. It Allows Removal of Bad Board Members
As with any board, it is more or less inevitable a few less than stellar board members will
emerge. GVHC is no exception. Term limits provide a painless way for board members who
aren’t doing a good job to retire gracefully and automatically.
5. Term Limits Allow Younger Members to Your Board
The concept of reaching out and embracing future generations is often mentioned but seldom
put into practice. We respectfully request the Board to look at the current GVHC Board age
demographics.6
We strongly believe that the Board should create a bridge to future
generations by having 1-2 board members below the age of forty. Imagine how much value
such individuals will be if they roll off the board at age 40 and then come back at age 50. GVHC
could have avid ambassadors for a decade – during their prime professional lives.
Succinctly, term limits lead to healthier boards. Also, board chair term limits reduce the
likelihood that a few individuals will dominate board discussions and decisions. Term limit
provide periodic injections of new energy and ideas and help prevent board-chair burnout. So,
for the above reasons, we strongly support a term limit policy, comprising of the following: (1)
each Director is limited to 4 consecutive 2-year term (no more than 8 years as a board
6
See also Section 330, PHS Act.
In 2012, nonprofit board members on average served
approximately six years, according to BoardSource reports.

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member)7
; and (2) a Director can re-apply for the board only after 2 consecutive 2-year term
break (a 4 year hiatus is required before a Director can serve on the board again).
BoardSource advises staggering terms so that one-half or one-third of the board is elected
every one or two years for terms of 2-4 years. This allows the expertise of the longer-standing
board members to remain, while the fresh perspective of new members is incorporated into
the board's work. We hope that GVHC Board will, on good faith and in the best interest of
GVHC, fully consider our recommendations on term limits, which are supported by facts and
best practices of nonprofit governance.8
OPTIMAL BOARD SIZE
Section 330 of the Public Health Service (PHS) Act requires that all organizations which receive
health center funding under Section 330, Federally Qualified Healthcare Center (FQHC), have a
governing body which assumes full authority and oversight responsibility for the health center.
The governing board must maintain an acceptable size, composition, and meeting schedule.
Furthermore, the responsibilities of the board include the authority to control the health
center's budget and major resource decisions, set center policies, and approve the selection
and dismissal of the health center program director or chief executive officer.
More specifically, Section 330(k)(3)(H) of the PHS Act and 42 CFR Part 51c.304 requires the
following:
 The health center governing board is composed of individuals, a majority of
whom are being served by the center and, this majority as a group, represent the
individuals being served by the center in terms of demographic factors such as
race, ethnicity, and sex. Specifically:
o Governing board has at least 9 but no more than 25 members, as
appropriate for the complexity of the organization.
o The remaining non-consumer members of the board shall be
representative of the community in which the center's service area is
located and shall be selected for their expertise in community affairs,
local government, finance and banking, legal affairs, trade unions, and
other commercial and industrial concerns, or social service agencies
within the community.
7
Note that our recommended term limit of 8 years is two years more than the average of 6 years for nonprofit
board members.
8
Term limits provide natural turnover on the board. Staggered term limits prevent the entire board from changing
at the same time, providing a way to preserve institutional memory. Finally, term limits should be enforced in a
systematic manner.

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o No more than one half (50%) of the non-consumer board members may
derive more than 10% of their annual income from the health care
industry.
o A majority (at least 51%) of the board members receive services (i.e., are
patients) at the health center.
o As a group, the “patient/consumer” board members must reasonably
represent the individuals who are served by the health center in terms of
race, ethnicity, and sex.
The most important issue at hand that we want to focus on in this letter is optimal board size.
Currently, the GVHC Board consists of 5 Consumer Directors and 4 Independent Directors, the
minimum required by Section 330. However, Section 330 states the board size must be
appropriate for the complexity of the organization. GVHC, over a forty year period, has
evolved into a highly complex organization with more than 20 sites and 120 providers.
What is the optimal size for GVHC? According to the BoardSource Nonprofit Governance Index
2010, the average nonprofit board size is 19 and the median is 17. BoardSource reports that
nonprofits with budgets of $10 million or more have an average of 18 members and those with
less than $1 million typically have 14 members.
The GVHC Bylaws mandate a board size between 9-13 members. Further, the GVHC Bylaws
mandate at least 3 working committees; they are: (1) a Personnel Committee; (2) a Program
Planning and Facilities Committee; and (3) a Finance Committee.9
Each committee shall have a
chairperson and the chairperson shall select four additional interested persons to participate. Under the
current GVHC Bylaws, the GVHC Board needs at least a 15-member board in order to fully staff each of
these committees.10
Therefore, expansion of the current board is wholly reasonable and appropriate.
Furthermore, we highly recommend that in view of the current situation, the Board create one
or more advisory committees to serve at the pleasure of the Board. Appointments to such
advisory committees need not, but may, be Directors. The Board may appoint and discharge
advisory committee members. The Board can create committees that do not have the authority
to bind GVHC or act on behalf of the Board. See Cal. Corp. Code § 5212(b). These “advisory
committees” should be created if the Board wants to charge specific individuals with
information-gathering, researching, planning, and making recommendations to the Board.
In fact, the Board can use advisory committees for purposes of recruiting directors. These
committees can be used to ensure that prospective directors share GVHC’s commitment to its
9
See Section 7.02 (Designation of Working Committees) of the GVHC Bylaws.
10
In addition, we recommend that the Board create a new committee to address “Ethics and Compliance”, as
outlined in our letter of December 9, 2014 to the Board of Directors.

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Mission and to introduce them to GVHC before asking them to join the board. Appointments to
advisory committees are also a great way to recognize a person’s contributions to GVHC
without having to increase the size of the board or impose on the person the legal obligations
of a board member. Lastly, advisory committees will provide the Board with channels for
accessing and leveraging other expertise.11
In view of the above, the Board must consider the critical question of what is the optimal board
size for GVHC, especially in view of the complexity of GVHC as an organization today. That said,
we submit the following suggestions to the Board for consideration:
 Build a board that is sufficiently large to carry out GVHC board’s responsibilities,
including advisory committees. As of today, it appears that the GVHC Board is
deeply overwhelmed.
 We recommend a minimum of 7 independent board members and a minimum of
8 consumer board members.12
 We recommend the optimal board size to be in the vicinity of 15 operational
members, with additional members for representational and relationship
functions (e.g., non-fiduciary groups such as advisory boards).
 Factors to consider include:
o Functional requirements in terms of professional expertise to help with
strategic priorities or to bring needed expertise to the board — for
example, financial expertise to handle audit committee responsibilities,
legal to handle labor law issues, and public healthcare experts.
o Diversity requirements in terms of age, ethnicity, and gender.
o Representational requirement in terms of the stakeholders in the
organization (e.g., patients, staff, and providers).13
o Regulatory requirements such as the Consumer board.
The GVHC Board needs to determine the right size for the GVHC Board, in the best interest of
GVHC and its stakeholders, including providers, staff, patients, donors, and government
agencies. The Board needs to sit down and carefully examine the current situation and
determine an appropriate size. As for immediate action, we recommend that the Board expand
the membership to 13, the maximum allowable under the current GVHC Bylaws. More
specifically, 2 additional Consumer Directors and 2 additional Independent Directors are
11
We believe that advisory committees are appropriate and necessary in view of GVHC’s status – that is, since
GVHC is a FQHC, it is required to have 51% Consumer board.
12
In fact, with more than 20 GVHC sites, we believe the Board may want to consider additional consumer directors
beyond our recommended number of 8. Ideally, each site should be represented on the board.
13
We fear that if the interests of providers are not represented on the board, GVHC providers may unionize,
leading to a more stressed and adversarial relationship between management and providers.

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needed to help steer GVHC through these turbulent times. Our recommendations are
supported by facts, the GVHC Bylaws, and are in consideration of the increased complexity of
GVHC and its current challenges.
FIDUCIARY DUTIES
Given that this letter focuses on board governance, we would like to take this opportunity to
highlight the fiduciary responsibilities (legal duties) of board members of GVHC (directors); they
are threefold: (1) The duty of care; (2) The duty of loyalty; and (3) The duty of obedience.
The Duty of Care
The duty of care requires the GVHC director to do what would be expected of any prudent
person in the same position. It requires the director to read relevant documents, prepare
carefully for board meetings, pay attention to what is going on, and ask questions to clarify
actions that are being taken. For example, directors should require management to provide
sufficient information to make an independent decision. If board members/directors find that
the information is invalid or incomplete, they are expected to ask questions about it.14
The Duty of Loyalty
The duty of loyalty requires the director to give undivided allegiance to GVHC, without regard
to personal interest, business interest, or the interest of any other region or organization.
Simply put, GVHC must come first. Furthermore, it is a breach of the duty of loyalty for a
director to use inside information gained in the performance of his or her responsibilities for
personal benefit, or to benefit his region, business or any other organization. This constitutes
conflict of interest and is cause for removal from office and other personal liabilities.
The Duty of Obedience
The duty of obedience requires the director to act within the scope of legal authority, including
the GVHC's articles of incorporation, Bylaws and Mission.
NOTE: Directors are subject to lawsuits if they fail to observe their fiduciary responsibilities.
Complying with these obligations can protect the GVHC Board. As long as decisions of the
directors are made on an independent and informed basis, in good faith and in the best
interests of GVHC, Board directors are protected. If, however, a board member has an
interest in the transaction or dispute or was otherwise disloyal, uninformed or lacked
independence, the board member may be found to be in breach of his/her fiduciary
responsibilities and may be personally held liable for damages and other penalties under
14
We fear that many GVHC Board members may have neglected or may not have exercised their right to ask
questions – not just about what is presented, but about what is not presented. We, therefore, encourage the
Board to ask questions, early and often.

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state and federal laws. We, therefore, highly recommend that the Board proceeds with
caution and seriously considers our recommendations.
CONCLUSION
In conclusion, we respectfully request the Board to immediately consider two important board
governance issues: (1) Term Limit Policy; and (2) Optimal Board Size. Some questions that the
Board should consider are:
 How does the GVHC Board’s term limit policy compare to those of peer institutions?
 Can the Board use a Board member’s expiring term to increase the diversity on the
Board or to add a new member with a specific set of skills that the Board currently
lacks?
 What does the GVHC Board stand to gain with a term limit policy?
 What can the GVHC Board gain with an additional 4 board members?
 How can the additional 4 board members help steer the Board through these turbulent
times?
We strongly believe that implementing our recommendations herein on Term Limit and Board
Size will help restore trust and confidence in this Board. We also understand that these are
difficult issues and hope that the Board will make good faith decisions that are in the best
interest of GVHC and its mission. Thank you for your services as GVHC Board members and we
look forward to receiving a response from the Board on these important issues.
Respectfully Submitted,
On behalf of GVHC Providers, Staff, and Patients
NOTICE: We hereby invoke state and federal laws protecting employees against
discrimination, retaliation, and whistleblowing. It is illegal in the State of California to
retaliate against any employee who provides information to a government or law
enforcement agency where the employee has reasonable cause to believe that the
information discloses a violation or noncompliance with a state or federal statute, rule, or
regulation. An employer cannot discharge, demote, suspend or discipline in any manner an
employee who engages in this protected activity. Further, California recognizes a public
policy exception to the at-will employment doctrine. An employer may not discharge an
employee for a reason that violates fundamental principles of public policy. Notably,
California has a general whistleblower protection statute that protects employees who
disclose illegal activity or refuse to participate in illegal activities. Whistleblowers are thus
protected under both this statute and the common law public policy exception. Also, several

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other California statutes contain anti-retaliation provisions, including statutes protecting
employees who raise concerns regarding safety and conditions of a health care center and
patient care and quality.