A basic briefing for state association volunteers on bringing focus, effectiveness and ethics to association governance.

1. Nuts and Bolts of Association
Work
Mark J. Golden, CAE
Executive Director & CEO
Jeffrey P. Altman,
General Counsel
NCRA State Leadership Conference
2:30 -3:30 p.m., Wednesday July 27, 2011
Las Vegas, NV

2. Why Do Associations Exist?
• Individuals united by a common
interest or concern
• Coming together to accomplish
something it would be impossible to
accomplish alone

3. 1.8 Million Associations in the
United States Alone
• 86,000 trade and professional associations
• 1 Million philanthropic or charitable
• More than 1,000 new associations formed
each year

4. There Is An Association For Everything
(Examples Drawn from National Groups Only)
• International Staple, Nail and Brad Association
• Specialty Fastener Association
• American College of Obstetricians and Gynecologists
– An additional 12 national groups representing specialties within the
field
• Frozen Potato Products Institute
• Society of Investigative Dermatologists
• Society of Dance History Scholars
• International Fellowship of Left Handed, Middle Children Born West
of the Mississippi with Careers in Alternative Architectural Design
• American Society of Association Executives
– Council of Engineering Society Executives
– American College of Medical Association Executives

5. Associations are (Generally)
Corporations
• Not for profit -- State Law
– Members instead of shareholders or owners
• No part of its net earnings inure to the benefit
of any private shareholder or individual
• Tax Exempt Status – Federal Law
– 501 (c)(6): Business League
– 501 (c)(3): Charitable, Scientific, Educational
– PAC/527: Political

6. As Directors or Officers of a Not
For Profit Corporation…
• You still need to operate in a business-
like manner and bring in more dollars
than you spend
• You face the same legal obligations
that directors of a for profit
corporation face

7. Legal Duties
• Duty of Care
– Act honestly, reasonably and diligently
– Stay informed; ask questions
• Duty of Loyalty
– Act in interests of the association
• Not self/business
• Not state/region
• Not professional sector
– Avoid conflicts of interest
– Support the Board once a decision has been made
• Duty of Obedience
– Act in accordance with mission
– Consistent with policies, procedures and positions

8. Antitrust
– No discussions that could be construed as
• Raising, lowering or stabilizing prices or fees
• Restricting availability of services
• Allocating markets, territories or customers
• Encouraging boycotts or exclusions of
persons
– Even when this means appearing to
condone business practices that are fully
legal, but distasteful

9. Antitrust (cont.)
– Noerr-Pennington Doctrine
• Safer harbor immunity protection
• Protects lobbying efforts to change laws and
official rules
• Protects good faith litigation

10. Revised IRS Form 990
Good Governance Practices
Regulation by Question:
• Conflict, Whistleblower & Document
Retention/Destruction Policies?
• Minutes of Board & Executive Committee
Meetings?
• Compensation procedures & disclosures?
• Board review of Form 990 before filing?

11. Revised IRS Form 990
Good Governance Practices (cont.)
• Review, Compilation or Audited Financial
Statements (w/Audit Committee)?
• Public availability of governance docs, 990,
financials?
• Business & family relationships between
directors, officers and key employees?
• Phased in filing requirements

12. Conflicts of Interest
• Legitimate dualities of interest exist, which may or
may not create an actual conflict.
• A conflict is created where a director has a direct or
indirect interest, financial or otherwise, in a matter
involving your association
• Financial investment or interest
• Management position
• Leadership role with decision making authority
• Volunteer or for compensation
• Actual or Perceived

13. Conflicts of Interest
• The Board not the individual
determines if a conflict exists and
determines the appropriate remedy.
• Remedies:
• Disclosure
• Recusal
• Resignation

14. Due Process
• Decisions should be fair and
reasonable
– NOT arbitrary and capricious
• Persons likely to be adversely affected
by action
– Opportunity to be heard
– Fair and impartial decision-maker

15. Board & Member Voting
• State law governs, but generally …
• Board
– Duties cannot be met if there was not an opportunity to
deliberate
– Three permissible modes
• In person at meeting
• By teleconference
• Unanimous written consent w/o meeting
– No voting by proxy or mail
• Provisional action: ratified at later date
• Membership
– More lenient
• Mail, electronically, in person, by proxy as designated in
Bylaws

16. The “Business Judgment” Rule
• You don’t have to be right
• If you acted with due care
– Honestly and sincerely to the best of your ability
– On an informed basis
– In good faith and the best interests of the
association
• Even if you are wrong, you can not be held
personally liable/legally responsible

17. Insurance & Liability Issues
For Directors, Officers, Entity, Staff &
Volunteers
• D&O/APL for economic claims
– HR; Defamation; Plagiarism; etc.
– Shared limits policy available thru NCRA
• General Liability/Business Package
– Accidents – 3rd Party BI/PD claims
– Office property
– Sometimes theft and fiduciary coverage

18. Manager versus Leader
• Give some words to describe the
kinds of functions and activities
Managers should be focused on and
engaged in.
• Give some words to describe the
kinds of functions and activities
Leaders should be focused on and
engaged in.

19. The Overly Simplistic Answer
• Leaders:
– Set Policy
– Set Direction
– Define Outcomes
• Managers
– Follow Directions
– Do the Work
– Achieve the Outcomes

20. The Problem
Chairman: It is all quite simple. The
Board sets policy, which staff and
volunteers then implement.
Interviewer: But how does the Board
know what’s policy and what’s
administration?
Chairman: Whatever a Director wants
to discuss is policy and the rest is
administration

21. Which are you supposed to be?
Manager
Leader

22. Board Members We Have Known
and Loved
• The Lone Ranger
• The Cruise Director
• The Historian/Parliamentarian
• The Traffic Cop
• The Dreamer
• The Stealth Candidate
• The Great Dictator

23. What type of Director do you
want and need on your
Board?

24. Making Board Agendas More Effective
• Organize Agenda by Topic Area
– Around Strategic Planning Goals
– Around Subject Area Or Long Range
Goals
• Separate Issues by Nature of Action
Required
– For Information Purposes Only
– Board Decision Is Necessary

25. Information Only
• Consent Agenda
– Presented as a Whole: Approved in a Single
Motion
– Any Board Member May Ask for Any Item to
“Be Removed from the Consent Agenda”
• Does not require a vote.
• Items Removed from Consent Agenda are discussed
and voted on as an individual agenda Item
• TIP: Schedule a pre-Board meeting conference call to deal
with the consent agenda

26. Dealing with
Emotional/Controversial Issues
• Seek first to understand/then to be understood
– What is perceived is
– Perspective
• Acknowledge and respect validity of personal
emotions
• Create a fact base and build as far as you can from
there
• Understand the importance of context

27. Perception Exercise

28. Group One

29. Group Two

30. All

31. All

32. All
Group
One
Group
Two

33. Dealing with
Emotional/Controversial Issues
• Seek first to understand/then to be understood
– What is perceived is
– Perspective
• Acknowledge and respect validity of personal
emotions
• Create a fact base and build as far as you can from
there
• Understand the importance of context

34. People judge others based on their
behavior; they judge themselves
based on their intentions.
Stephen M R Covey
The Speed of Trust

35. Bias and Value Judgments
• Acknowledge and respect that
personal emotions and individual value
judgments are at work in any dispute
– Yours
– Theirs
• Recognize the difference!

36. Dealing with
Emotional/Controversial Issues
• Seek first to understand/then to be understood
– What is perceived is
– Perspective
• Acknowledge and respect validity of personal
emotions
• Create a fact base and build as far as you can from
there
• Understand the importance of context

37. Data, Data, Data
• Are you making decisions based on
what you know or on what you think
you know?
• Worse still: Are you making decisions
based on what you wish were so?
• Ask, Ask, Ask
– More than just formal surveys

38. Pitfalls to Avoid
• Conclusions based on a sample of one
– Particularly when that “one” is “you”
• Giving too much weight to "Internet
Utterances"
– Missing the existence of the silent
majority
– The Internet Echo Effect

39. Dealing with
Emotional/Controversial Issues
• Seek first to understand/then to be understood
– What is perceived is
– Perspective
• Acknowledge and respect validity of personal
emotions
• Create a fact base and build as far as you can from
there
• Understand the importance of context

40. The Water Glass Exercise

41. Cycle of Leadership Development
5. Evaluation
6. Rotation 1. Identify/Cultivate/Recruit
7. Appreciation/Recognition 2. Orientation
3. Engagement
4. Continuous Improvement

42. 1. Identify/Cultivate/Recruit
• Develop information on what service
opportunities entail
• Board/Committee Candidate School
• Look at who is coming to meeting/seminars
• Call for Volunteers
2. Orientation
• Formal new Board /Committee Member
Orientation
• Web Library of Key Documents and Resources
• Leadership Training Seminars

43. 3. Engagement
• “Board Buddy”
• Task Force Assignments
• Issue Presenter
• Social Interaction
4. Continuous Improvement
• Group Exercises/Training as a Board
• Circulate Management/Association
Governance Articles
• Board Book Club

44. 5. Evaluation
• Board Meeting Evaluations
• Individual Board Member Self Assessments
• Board Self Assessment
6. Rotation
• Departing Board Member Exit Interview
• Post-Board Service
7. Appreciation/Recognition
• Celebrate victories as they occur
• Recognition of Departing Board Members

45. What about the
questions we
didn’t get to?

46. Your Community is Your Own Best
Resource
• State Leadership Bulletin
• State Leadership Network
• NCSA
• State Editors Newsletter
• Leadership
• NCRA Staff
• Etc.
You are not alone!

47. Thank You!