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The Perkins Law Five-Finger Philosophy of Nonprofit Board Composition

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The concept behind the Five-Finger Philosophy of Nonprofit Board Composition is that all of us resemble one of the five fingers on your hand. Which finger are you? Which ones do you want on board? Which ones do you want to steer clear from? For copies of the referenced worksheet, connect with Eric through LinkedIn.

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The Perkins Law Five-Finger Philosophy of Nonprofit Board Composition

  1. 1. The Perkins Five-Finger Philosophy of Nonprofit Board Composition November 30, 2011
  2. 2. Key Issues for Nonprofit Board Members • Who owns the organization? • What are my legal duties to the organization? • What are the three most likely sources of trouble for my organization? • What is D&O coverage and why do I care?
  3. 3. Sources of Trouble • The IRS • The State Attorney General’s Office • The Disgruntled
  4. 4. The Ultimate Nightmare for a Nonprofit Director • Imagine you’re a director or officer of The Second Mile Foundation • PA Governor Tom Corbett says, “I need to know what the board members knew.” • Organization (founded in 1977) is basically in wind-up mode at this point.
  5. 5. Other Recent Examples of Nonprofit Troubles • New Caste Youth Football Program—Managers investigated by state AG for misuse of funds, state police involved, criminal charges filed.
  6. 6. D & O Coverage • D&O = Directors and Officers • Protects against breach of fiduciary duty claims • Biggest benefit: Covers legal fees and costs of defense
  7. 7. The 5-Finger Philosophy The Concept: Every person on your board of directors (including YOU) fits into one of five categories, each resembling one of the fingers on your hand.
  8. 8. Benefits of the 5-Finger Philosophy • Maximize Effectiveness of Current Board • Better Recruiting and Retention • Self-Actualization (Abraham Maslow) AN IMPROVED, HIGHER FUNCTIONING NONPROFIT ORGANIZATION
  9. 9. The Index Finger • The most important • Need at least 1-2 on your board
  10. 10. The Thumb • • • • Reliable Loyal Hardworking Perfect candidate for corporate secretary or treasurer
  11. 11. The Ring Finger • Inconsistent participant • Flashes of brilliance and passion • Potential leader • Underutilized asset
  12. 12. The Pinky • • • • Poor attendance Minimal input at meetings Minimal activity Nonfactor
  13. 13. The Middle Finger • Type A personality, argumentative, uncooperative, narcissist, controlling, patronizing, etc. • The trouble with these people • What do you do?
  14. 14. The Worksheets • Evaluate Your Board RIGHT NOW • Take Extra Worksheets for Your Colleagues • Make It Part of Your Annual Nominating or Strategic Planning Process
  15. 15. What Happens Next? • • • • Address Current Problems Improved Engagement Levels More Strategic Succession Planning Better Leadership Development
  16. 16. You Are Now a Guru on Assembling an Effective Nonprofit Board of Directors!
  17. 17. _________________________ 4870 Sadler Road, Suite 300 Glen Allen, VA 23060 Phone: 804-205-5162 Email: eric@ericperkinslaw.com www.ericperkinslaw.com

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