The document provides an overview of key concepts related to nonprofit board governance. It discusses that a nonprofit board's main roles include determining the organization's mission and strategic direction, overseeing finances and the executive director, ensuring adequate resources, and enhancing public standing. The board is responsible for selecting the executive director and providing support and performance reviews. Additional responsibilities involve financial oversight, operations oversight, and organizational development. Effective board governance requires regular evaluation of the board's performance in fulfilling its duties.

1. HOMELESS & HOUSING
COALITION OF KENTUCKY
THE ESSENTIALS OF BOARD GOVERNANCE
Fran Whittenburg Alvis, BA, MS
falvis@hhck.org
502-223-1834 ext. 1114

2. What is Governance?
Governance means to steer; set direction

3. What is Board Governance?
Nonprofit organizations are governed by a
volunteer Board of Directors, who are the Legal
Guardians of the Organization.
They are granted the AUTHORITY to make
decision on behalf of the organization, and must
be ACCOUNTABLE for organization performance.

4. Board authority is collective.
Individual members have no authority.
The President/Board Chair is the elected
spokesperson for the Board.

5. Key Roles of the Board
Determine and articulate the Mission and Purpose
Set organizational direction (Strategic Planning)
Provide oversight (Finances and Executive Director)
Ensure adequate resources (Financial and Human)
Enhance agency’s public standing

6. Kentucky Statutory Standards of Conduct for
Officers and Directors
 In good faith
 On an informed basis
 In the best interests of the organization
 “ordinary prudent person” standard
 Reliance on committees and experts
 (KRS 273.215 and 273.229)

7. Board Responsibility to the Mission:
• Define the organization in both the present (what
we do) and future (what results we want to
achieve).
• Approve or affirm the mission.
• Approve or affirm the key goals that will result in
mission accomplishment or vision actualization.
• Ensure that operating plans and strategies lead to
attainment of these goals
• All other responsibilities flow from and depend
on the fulfillment of the mission.

8. Board Responsibility to Leadership:
• Select and support the individual empowered to lead the
organization. Boards must reach consensus on the chief
executive's job description and undertake a careful search
process to find the most qualified individual for the
position.
• Support the executive and review his or her performance.
The board should ensure that the chief executive has the
moral and professional support he or she needs to further
the goals of the organization.
• It is the responsibility of the executive to transform the
mission from concept to action and measurable outcomes.

9.  Select the Executive Director
Boards must reach consensus on the chief executive's job
description and undertake a careful search process to find
the most qualified individual for the position.
Support the executive and review his or her performance
The board should ensure that the chief executive has the
moral and professional support he or she needs to further
the goals of the organization. The chief executive, in
partnership with the entire board, should decide upon a
periodic evaluation of the chief executive's performance.

10. Board Responsibility to Financial Health:
• Formulate policies regarding financial reporting
and controls, control and reporting of
contributions and donations, and financial
auditing.
• Select independent auditor, review, and approve
audit report. Approve financial investments and
financing choices.
• Monitor and appraise
revenues, expenditures, and cash position.
Ensure compliance with board financial policies.

11.  Ensure Adequate Resources
One of the board's foremost responsibilities is to
provide adequate resources for the organization to
fulfill its mission. The board should work in
partnership with the chief executive and
development staff, if any, to raise funds from the
community.

12. The board, in order to remain accountable
to its donors, the public, and to safeguard
its tax-exempt status, must assist in
developing the annual budget and ensuring
that proper financial controls are in place.
 Accountability to the Public

13.  Nonprofits and Sarbanes-Oxley
 Legislation passed in 2002 in response to a large number of
for-profit scandals involving Enron, Arthur Anders, and
others. Extreme fraud, conflicts of interest on
boards, unethical executive compensation practices, and
improper auditing led to the failure of these companies.
 In response, Sarbanes-Oxley set in place a number of
required processes for publically held corporations.

14.  Two Aspects of Sarbanes-Oxley are
especially applicable to nonprofits:
1. Strengthened whistleblower protection
2. Retention of documents related to
lawsuits

15. Board Responsibility to Operations:
• Formulate policies regarding
personnel, facilities, maintenance, safety, financi
al controls, and other legal requirements.
• Approve all policies formulated by management
that involve legal, regulatory, or external, issues.
• Appraise and audit operations to ensure
compliance with board operating policies.

16. Board Responsibility to
Organization and Development:
• Formulate policies regarding board member selection
and expectations, board member orientation, board
development, board committee assignments, board
planning and performance evaluation.
• Approve by-laws and amendments. Select board members.
Elect Board officers. Approve board committee
appointments, board work-plan and annual board budget.
• Develop a board information system to provide the
information needed to carry out the board's oversight role.
Appraise board performance.

17.  Nonprofit Bylaws
Outline the Board’s operations
Legally binding
Unique to each organization
Should be reviewed every few years

18. The board's role in this area is to
determine which programs are the most
consistent with an organization's
mission, and to monitor their
effectiveness.
 Determine, monitor, and strengthen the
organization's programs and services

19. •An organization's primary link to the community, including
constituents, the public, and the media, is the board
•Clearly articulating the organization's
mission, accomplishments, and goals to the public
•Garnering support from important members of the
community are important elements of a comprehensive public
relations strategy
•Use social media such as facebook and twitter with filters ON
 Enhance the organization's
public standing

20. •Directors and Officers Insurance
•Financial Audit
•Legal Audit
•Process for Determining Reasonable, Yet Competitive
Compensation for the CEO/Executive Director
•Policies
Conflict of Interest Policy and Annual Disclosure
Whistleblower Policy
Document Retention Policy
Protecting the Organization

21. • All Boards have a responsibility to articulate and make known
their needs in terms of member experience, skills, and many
other considerations that define a "balanced" board
composition.
• Boards must also orient new Board members to their
responsibilities and the organization's history, needs, and
challenges.
• By evaluating its performance in fulfilling its
responsibilities, the Board can recognize its achievements and
reach consensus on which areas need to be improved.
Recruit and orient new Board Members
and assess Board performance

22. Board Evaluation
Mission:
 Can each member quote the mission?
 Do you have an “elevator” speech?
 Is it reviewed annually?
Meetings:
 Are board meetings productive?
 Agenda and reports distributed prior to the
meeting in order to allow for full review?
 Board attendance policy in place and followed?
 Bulk of meeting spent on important issues?
 Board members actively engaged in the meeting?
 Is a standardized committee report form used?

23. (continued)
Board Development:
 Board member and committee job descriptions?
 Board responsibility (governance) vs. management
responsibility clearly understood?
 Matrix of strengths and needs for board
recruitment?
 New board member orientation?
Fund Development/Membership:
 Is there a written development/membership plan?
 Do all board members make a personal
contribution to the agency?

24. (continued)
Management Oversight:
 CEO/ED evaluated annually?
 Annual compensation analysis?
 Succession plan?
 Policies reviewed and approved?
 Difference between management oversight
(governance) vs. management responsibility
clearly understood?
Strategic Planning:
 Does the plan exist?
 Is the plan relevant/current; support the mission?

25. Individual Board
Member Responsibilities
• Attend all board and committee meetings and functions, such
as special events
• Be informed about the organization's mission, services,
policies, and programs
• Review agenda and supporting materials prior to board and
committee meetings
• Serve on committees and offer to take on special assignments
• Make a personal financial contribution to the organization

26. (continued)
• Inform others about the organization (Ambassador)
• Suggest possible nominees to the Board who can make
significant contributions to the work of the board and the
organization
• Keep up-to-date on developments in the organization's field
• Follow conflict of interest and confidentiality policies
• Refrain from making special requests of the staff
• Assist the Board in carrying out its fiduciary responsibilities,
such as reviewing the organization's monthly, quarterly and/or
annual financial statements, and approving the annual budget.

27. COMMITTEES
1. Establish committees when issues are too complex
and/or numerous to be handled by the entire board.
2. For ongoing, major activities, establish standing
committees; for short-term activities, establish ad hoc
committees that cease when the activities are completed.
Standing committees should be included in the by-laws.
3. Committees recommend policy for approval by the
entire board.

28. (continued)
4. Committees make full use of board members' expertise, time and
commitment, and ensure diversity of opinions on the board.
5. They do not supplant responsibility of each board member; they
operate at the board level and not the staff level.
6. Committees may meet monthly (this is typical to new
organizations, with working boards), every two months, or every three
months; if meetings are not held monthly, attempt to have committees
meet during the months between full board meetings.
7. Minutes should be recorded for all board meetings and for Executive
Committee meetings if the Bylaws indicate the Executive Committee
can make decisions in place of the board when needed.

29. Developing Committees
1. Ensure the committee has a specific set of tasks to
address, and ensure board members understand the
committee's charge
2. Have at least two board members on each committee
3. No board member should be on more than two
committees
4. At each board meeting, have each committee chair report
the committee's work since the past board meeting
5. Consider having non-board volunteers as members of the
committee (common practice for nonprofits)

30. (continued)
6. Consider having a relevant staff member as a member of
the committee (but not the chair of the board)
7. Committee chairs are often appointed by the board
chair; consider asking committees members for a volunteer
to chair the committee
9. The chief executive should serve as ex officio to the
board and any relevant committees (some organizations
might consider placing the chief executive as a member of
the board, including voting rights -- this decision should
be made very carefully)

31. Standing Committees
Board Development - Ensure effective board processes, structures
and roles, including retreat planning, committee development, and
board evaluation; sometimes includes role of nominating
committee, such as keeping list of potential board
members, orientation and training.
Executive - Oversee operations of the board; often acts on behalf of
the board during on-demand activities that occur between
meetings, and these acts are later presented for full board review;
comprised of board chair, other officers and/or committee chairs (or
sometimes just the officers, although this might be too small); often
performs evaluation of chief executive

32. Finance - Oversees development of the budget; ensures accurate
tracking/monitoring/accountability for funds; ensures adequate
financial controls; often led by the board treasurer; reviews major
grants and associated terms
Fundraising - Oversees development and implementation of the
Fundraising Plan; identifies and solicits funds from external sources of
support, working with the Development Officer if available;
sometimes called Development Committee
Marketing - Oversees development and implementation of the
Marketing Plan, including identifying potential markets, their
needs, how to meet those needs with products/services/programs, and
how to promote/sell the programs (social media plays a huge role here)

33. Personnel - Guides development, review and authorization of
personnel policies and procedures; sometimes leads evaluation of the
chief Executive; sometimes assists chief executive with leadership and
management matters. CAUTION: Not to be confused with managing
personnel.
Public Relations - Represents the organization to the community;
enhances the organization's image, including communications with
the press. Often, this role is assigned to the CEO/Executive Director.

34. Ad Hoc Committees exist for a specific
purpose and when the task is complete, they
cease to exist. Examples include:
• Audit Committee
• Nominating Committee
• Executive Search Committee
• Research/Evaluation Committee
• Special Event Committee

35. Governance vs. Management
 The larger the organization is, the easier it is to
define the boundaries between the board and staff.
 Governance determines the “WHAT”, creates the
Vision
 Management determines the “HOW”

36. Discussion:
What conflicts have you seen in
your organization?
How have you resolved conflicts?

37. Glossary of Governance Terms
• Compliance: Acting within the rules /responsibilities
• Delegate: Give a task or authority to someone else
• Diligence: Being careful and persistent, showing care and effort
• Fiduciary: Looking after for someone else, "acting in the best
interest of" the organization
• Integrity: Honest and ethical behavior
• Monitor: Check if something is done or not done, how well it is
going
• Prescribe: Detailed instruction
• Stewardship: Looking after and keeping in good shape for the future
of the organization and its owners. (Sometimes referred to as "acting
as trustee".)
• Viability: Can operate financially and can do the jobs required

38. Resources
• Act Council of Social Service, Inc., www.actcoss.org.au
• Board Source, Building Effective Nonprofit
Boards, www.boardsource.org
• Cullinane Law Group, www.cullinanelaw.com
• Governance Matters for Effective
Nonprofits, www.governancematters.org
• Great Boards for Small Groups, by Andy Robinson
• Kentucky Nonprofit Network (for examples/sample forms and
policies), www.knn.org
• New:Helping Nonprofits Make a Diffference, http://new.org

39. QUESTIONS?