Board Training for Nonprofits

Effective Non-Profit Boards

BOARD OF DIRECTOR
TRAINING

Agenda
2

ROLE OF THE BOARD
BOARD GOVERNANCE
GRANT OVERSIGHT AND
ACCOUNTABILITY
FINANCIAL OVERSIGHT AND
PLANNING
POLICY DEVELOPMENT
AREAS FOR FURTHER
EXPLORATION

Catapult Strategic Consulting, LLC September 2012

Board Member
Roles and Responsibilities

THE PLAYERS AND THEIR
PARTS

Who is at the Board Table?
4

 Directors
 Officers
 CEO and Staff


Board Member Obligations
5

 Duty of Care
Use your best judgment in all dealings

 Duty of Loyalty
Be faithful and avoid conflicts of interest

 Duty of Obedience
Stay true to the organization’s mission and
applicable laws


Top 10 Roles of the Board
6

1. Establish organization’s mission and purpose
2. Select the Executive Director
3. Support and evaluate the Executive Director
4. Ensure effective planning
5. Monitor and strengthen programs and services
6. Ensure adequate financial resources
7. Protect assets and provide financial oversight
8. Build a competent board
9. Ensure legal and ethical integrity
10. Enhance the organization’s public standing

Board Officers
7

Provides leadership to board
Chair Runs meetings
Interacts closely with CEO

Coordinates financial oversight
Treasurer
Chairs the finance committee

Keeps records for the board
Secretary
Takes minutes of board meetings


Role of CEO
8

 Ex-Officio Member of Board
 Board Administration & Support
 Program and Service Delivery
 Financial, Tax, Risk & Facilities Management
 Human Resources Management
 Communications & Public Relations
 Fundraising


Who is Responsible?
9

For each item below, identify the group you think should handle the
task. Do you think the task is the responsibility of the directors, the
officers or the CEO and staff?

 Grant Writing  Center Curriculum
 Board Member  Staff Performance
Recruitment Reviews
 Fundraiser Details  Fundraising
 Grant Quarterly Reports  Risk Management
 Annual Operating  Update Mission
Budget Statement
 Long Term Planning  Donor Recognition
 Volunteer Management


Board Governance

HOW YOU DO
WHAT YOU DO

Board Governance
11

 Documentation
 Decision Making
 Strategic Planning


Purpose of Governance Documents
12

 Specify Entity’s Purpose
 Define Legal Rights and Limits
 Prevent Misunderstandings
 Guide Decision-Making
 Provide Flexibility
 Record Activities
 Manage Risk
 Maintain Non-Profit Status


Organizational Documents
13

 Articles of Incorporation
 Application for Tax Exempt Status
 Determination Letter


By-Laws
14

 Organization Name and Purpose
 Membership, if any
 Number, Term, Election and Removal of Board Members
 Board Member Powers and Compensation
 Meetings and Quorum
 Designated Officers and their Duties
 Board Committees
 Board Member Restrictions
 Contracts, Checks, Deposits and Funds
 Amendments


Reporting Documents
15

 Board Manual
 Meeting Minutes
 Form 990
 Lobbying Activity
 Compensation Substantiation


Decision Making Process
16

Board
Member

Board Proposal/
Discussion Decision
Committee Motion

CEO


Keys to Effective Decision-Making
17

 Stick to Strategic Priorities
 Define Problems and their Significance
 Establish Criteria for Evaluating Alternatives
 Distribute Important Information Before Meetings
 Communicate, Communicate, Communicate


Strategic Planning
18

 Update and clarify your mission
 Identify the ideal future
 Define coordinated activities
 Give direction to board and staff
 Quantify necessary resources
 Detect areas of greatest risk


Strategic Plan Components
19

Mission Why we are here

What the world will look like when we have accomplished our
Vision mission

SWOT Our strengths, weaknesses, opportunities and threats

The key areas we will address now to achieve our mission and
vision, while utilizing our strengths, compensating for our
Priorities weaknesses, taking advantage of opportunities and protecting
against threats

Broad statements of what we will accomplish during the planning
Goals period

Objectives Specific and measurable steps to attain our identified goals

Who is responsible for accomplishing objectives and goals of the
Action Plans plan; includes deadlines and budgets


Secrets to
Successful Business Planning
20

 Senior Leadership Supports
 Involves Members of all Stakeholder Groups
 Considers Best Practices of Others
 Innovation is Valued
 Staff By-In
 Communication, Communication,
Communication
If you don't know
where you are going,
you will wind up
somewhere else.
-Yogi Bera


Grant
Oversight & Accountability

PROGRAM FUNDS,
BUDGETS AND
CONTRACTS

Characteristics of Program Funds
22

 Restricted Contributions
 Only Pay for Specific Business Costs
 Spent During Specific Time Frames
 Limited, if Any, Use for Overhead
 Contractual


Board Responsibilities re: Programs
23

 Ensure program funds are only spent on program
activities
 Measure and monitor program progress and
effectiveness
 Make changes as necessary
 Report to funding sources (i.e., government) – how
money was spent and outcomes
 Meet legal requirements outlined in grants
 Ensure continued funding


Classification of Revenue
24

 Unrestricted Revenue
 Temporarily Restricted Revenue
 Permanently Restricted Revenue


Program Budgets
25

 Financial
 Activities
 Outcomes


Financial Budgeting
26

 Grant Receipts
 Other Program Income
 $ spent – Direct Program Expenses
 Overhead Allocation


Activity Budgeting
27

 Staff Hours
 Volunteer Hours
 Clients contacted
 Classes Taught


Tracking Outcomes
28

 Clients served
 Skills Learned
 Placements Made
 Client Satisfaction


Contract Compliance
29

 Grant is a Legal Contract
 Obligations Outlined in Contract Documents
 Document How Program Funds Spent
 Demonstrate How Programs Goals Achieved
 Regular Reporting Intervals
 Keep Program/Contract Officer Informed


Compliance Program Elements
30

 Authorization
 Independence
 Transparency
 Documentation
 Reporting
 Guidelines
 Internal Controls
 Regulations


Common Noncompliance Issues
31

 Sufficient Program Documentation
 Travel Documentation
 Cost-Sharing
 Records Retention
 Separation Financial Administration for Each Award
 Violation of Institutional Conflict of Interest Rules
 Subgrantee Monitoring
 Residual Funds accounting and disposition


Risks of Noncompliance
32

 Administrative Sanctions
 Reductions in Payments
 Termination of Grant
 Suspension
 Corrective Action Plans
 Fines or Penalties
 Damage to Reputation


Financial Oversight & Planning

LINKING MONEY &
MISSION

Leadership Obligations
34

 Understand Service Delivery Model
 Know Fully-Loaded Cost of Providing Services
 Communicate Your Financial Story to Stakeholders


Financial Documents
35

 Financial Statements
o Statement of Activities (aka Income Statement)

o Balance Sheet

 Audits
 IRS Form 990


Financial Statement Interpretation
36

 Statement of Activities
Records all revenue received, expenses incurred, and changes in
net assets during a particular period of time (i.e., month,
quarter, year)

 Balance sheet
Shows the assets, financial resources, debts, and other liabilities
at any given moment in time (i.e., end of fiscal year)


Scarce Resources
37

 Cash
 Personnel
 Time
 Space
 Supplies
 Donations


Allocating Resources
38

 Grant Obligations
 Cost/Benefit
 Industry Standards
 Watch Dog Groups


Forecasting Considerations
39

 Strategic Plan Driven
 Involve All Programs
 Include Contingency Plans
 Cash is King
 Account for Restricted Funds
 Research Material Assumptions
 Roll for 12 Months or 4 Quarters
 Require Board Approval


Day 1 Review
40

 Board Member Roles Accountability
 Directors  Program Funds
 Officers  Budget & Management
 Staff  Compliance

 Governance  Financial Oversight &
 By-Laws Planning
 Decision Making  Financial Statements
 Strategic Planning
 Resource Allocation
 Forecasting
 Grant Oversight &


Questions & Answers

WHAT’S ON YOUR MIND?

King Edwards Incorporated

BOARD OF DIRECTORS
TRAINING

Policy Development

MOVING THE
ORGANIZATION
FORWARD

Board Resolutions
44

 Formal Documents
 Solidify and Document Board Decisions
 Typically Address
 Financial Matters

 Implementation of Policy

 Adoption, Approval or Authorization of Actions being taken by
Organization


Board Meeting Minutes
45

 Document key information and important decisions
 Record board actions, elections and committee and
staff reports
 Legal record of board discussions and decisions


Content of Meeting Minutes
46

 Date and Time of Meeting
 Whether meeting is regular or special meeting
 Whether notice was given or waiver of notice was
signed by all directors
 Names of directors in attendance and directors not
in attendance
 Names of attending guests and their titles
 Whether a quorum was established
 An departures and re-entries of attendees
 Any board actions taken

Great Minutes
47

 Include alternatives considered for important
decisions
 Attach and/or briefly summarize committee reports
 Record when requirements of vote (i.e., majority) are
reached
 Record recusals from discussions and abstentions
from voting
 Include votes against motions
 Include action items


Areas for Further Exploration

BOARD BEST PRACTICES

Role of the Board of Directors
49

 Role is Clear and Distinct from Staff
 Board has Governance Focus
 Members Understand their Roles


CEO is the Agent of the Board
50

Board of
Directors CEO
Staff


Well-Informed Board
51

 Job Descriptions
 Board Handbooks
 Board Orientations
 Continuing Education Opportunities
 Regular and Honest Evaluations


Recruit Strategically
52

 Demographic Diversity
 Professional Experience
 Leadership Qualities
 Community Connections
 Past Board Experience
 Capacity to Give


High Functioning Board Committees
53

 Clearly defined areas of responsibility
 Cut across all organizational functions – not
“program silos”
 Chaired by board member
 Includes non board members
 Senior staff member provides support


Suggested Committee Structure
54

• Limit
Standing Governance
Committees Ad Hoc Ad Hoc

• Use Ad Hoc
Committees
as Necessary External Board of Planning &
Program
Relations
Directors Development

Ad Hoc
Ad Hoc
Performance
Oversight


Board Leadership in a Nutshell
55

 Where should the organization be headed in the
long run?
 Where is the organization now?
 How well is the organization performing
programmatically, financially and
administratively?


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