* Describe the board's overall role in a nonprofit organization

Fiduciary Responsibilities

Under Minnesota law, directors of a nonprofit corporation are responsible for the management of the business and affairs of the corporation.  This does not mean that directors are required to manage the day-to-day activities of a corporation or to act in the role of an Executive Director/CEO.  It does mean that directors must appoint officers and assign responsibilities to them so that the officers can effectively carry out the daily tasks of running the corporation.  It also means that directors must supervise and direct the officers and govern the charity's efforts in carrying out its mission.  Guide for Board Members - Fiduciary Duties of Directors of Charitable Organizations, From the Office of the Minnesota Attorney General.

The Merriam-Webster dictionary defines fiduciary as "of, relating to, or involving a confidence or trust."

In carrying out their responsibilities, Minnesota law imposes on directors the fiduciary duties of care, loyalty and obedience to the law.

Care:  Actions must be in the best interest of the corporation



Loyalty:  The good of the organization comes before personal gain of the individual



Obedience:  The organization's governing documents must be followed, and the organization must comply with state and federal laws in carrying out its functions




Role of the Board Chair

Leader of the board
* Chairs meetings of the board and executive committee
* Facilitates effective decision-making processes
* Seeks consensus, not majority rule
* Is actively involved in each member's development
* Selects committee chairs
* Acts as a representative of the organization
* Strongly advocates in the community for the
	organization



Fundraiser
* Donates to the organization
* Assists in critical development needs
* Solicits other board members



Liaison
* Acts as an intermediary between board and CEO
* Resolves conflict, issues between board members
* Is a major participant in CEO evaluation


General Responsibilities of a CEO

In some organizations the Chief Executive Officer is called the Executive Director.

Leader
* Advises the Board
* Advocates/promotes organization and stakeholder change related to organization's mission
* Supports motivation of employees in organization products/programs and operations

Visionary/Information Bearer
* Ensures staff and Board have sufficient up-to-date information
* Looks to the future for change opportunities
* Interfaces between Board and employees
* Interfaces between organization and community

Decision Maker
* Formulates policies and planning recommendations to the Board
* Decides or guides courses of action in operations by staff

Manager	
* Oversees operations of organization
* Implements plans
* Manages human resources of organization
* Manages financial and physical resources

Board Developer
* Assists in the selection and evaluation of board members
* Makes recommendations, supports Board during orientation and self-evaluation
* Supports Board's evaluation of CEO

Fundraiser
* Identifies potential sources of income for the organization
* Develops relationships with contributors


Board and Staff Relationships

The board reports to all stakeholders of the organization.

CEO is hired by and is accountable to the whole board, not only the board chair.  However, for practical purposes, often the board chair is the person responsible for giving direction to the CEO.

Staff is hired by and reports to the CEO, not to the board.

It is important that the CEO has a good working relationship with the board chair.

CEO should be kept "in the loop" on staff and board interaction.  For example, if the board treasurer and the staff accountant were working together, the CEO should be made aware of it.


Organizations function best with the concept of a partnership between the board and the CEO or
executive director.

The relationship may change due to external contingencies, nature of decisions, assets/talents of leaders, transitions of board chairs and/or CEO.

Board members only have authority as a group; no one member can act on behalf of the board unless authorized.

Partnerships and all relationships function best when roles are clear to all parties, communication is frequent, both present and future concerns are considered by all parties, values exist to build rapport, trust and mutual respect.

Situations to avoid:
	CEO dominated boards
	chair-dominated boards
	fragmented boards
	powerless boards

Eight Board Responsibilities

* Strategic planning

* Monitoring and evaluating

* Managing finances

* Fundraising

* Ambassadorship (Representing the organization)

* Hiring and evaluating the CEO

* Providing board leadership and development

* Creating positive organizational climate



Strategic Planning

Strategic planning process
Engage stakeholders
Ensure connection to mission
Generate commitment to action
Key to effective governance

Strategic planning product
Shared vision for organization
Umbrella for all other plans


Components 

Vision = Your stakeholders' "world" as affected by your organization three years or so in the future

Mission = The business you're in

Values = The guiding principles you share as board and staff

Goals/Objectives/Strategies = Milestones

Action Steps = Who is accountable for what and by when?


















Strategic Planning Cycle

Plan the Plan - The first step to this process is putting together a workplan for the strategic planning process.  
You must determine:
* Who will participate (Will just the board and CEO participate, or will key staff be involved? 
	If key staff will not be involved in the whole process, how will you gather their input?)
* How long the planning process will take
* Budget for the process
* If you want to use an outside facilitator.  (If so, where will you find one?)

Gather Feedback - This step entails gathering 
information on what your stakeholders want and need.  
It also includes gathering information on your own strengths and weaknesses as an organization.  Some possible ways to gather feedback:
* Gather the feedback on your programs and the results of your services
* Survey your membership
* Hold focus groups
* Do research on demographic trends, etc.

Evaluate the Situation - In this step, analyze the 
feedback you gathered.  What is this information telling you?  Are there any surprises?

Clarify mission and envision future - This is when you establish your mission and vision, or confirm that your existing mission and vision are compelling given what you have learned in the previous two steps.  
* While mission and vision are not something that you casually change, if they do need to be updated, strategic planning is the time to do it.
* Some organizations that find that their mission and vision are not compelling given the current situation choose to merge with other organizations or close their organization.
* Often this is done during a half-day or daylong retreat.

Identify issues and develop strategies - In this step you establish and prioritize the strategies that will help you achieve your mission and vision.  You should also consider issues, or things that will get in the way of implementing your strategies, and discuss how to address these issues.

Implement strategies - It's important that you have a plan in place for checking progress against strategic plan and making adjustments.  Potential ways to do this:
* Review progress against the plan on a regular basis (e.g. quarterly)
* Bring your strategic plan facilitator back on a regular basis to help assess progress, adjust plans, etc.


Monitoring and Evaluating

There are may different kinds of evaluations, but the board mainly needs to make sure that the organization is engaged on some regular basis both in evaluating the overall organizational performance and in conducting program evaluation.
















Managing Finances

Yearly federal requirements:

File Federal Form 990 and Schedule A with the IRS, unless
	Gross revenues are under $25,000 (based on a five year average) OR 
You are a religious organization


Yearly state requirements:

File for charitable status with Minnesota Attorney General, unless:
	Contributions are under $25,000 AND
	You have no paid staff, AND
	You have no professional fundraiser

A nonprofit with annual total revenues in excess of $350,000 is required to subject its financial reports to an annual audit by a Certified Public Accountant.


Organization recommendations:

* The organization must have a treasurer.
* Board members must review and approve budget.
* Budget should support mission and strategic plan.
* A balance sheet and income statement should be sent, reviewed and approved at every board meeting.
* Financial policies should include separation of duties and check-writing guidelines.


















Top three things to look for when reviewing a Balance Sheet:

1. How much unrestricted cash (vs. unrestricted assets) do you have?  Is it enough to cover the average monthly expenses?

2. What are the receivables expected?  When will they come in?  Are they secured?

3.  Do you have any sizable liabilities?  If so, how will you cover these debts?






Top two things to look for when reviewing an Income Statement:

1. Is revenue coming in as planned given the yearly plan?  If not, why?  And what kinds of adjustments need to be made?

2. Are total actual expenses in line with total budgeted expenses?  If not, why?

Also, make sure the Net Income from the Income Statement matches the Net Income on the Balance Sheet.  If these do not match, the financial statements may be incorrect.

Fundraising for board members

Methods of fundraising:

	Cultivate relationships

	Provide names for solicitation

	Bring people to events

	Participate in solicitation meetings

	Speak at a community event

	Write your own check



Ambassadorship (Representing the organization)

Know your mission
* Be able to state it without reading it

Know your organization
* What does your organization do?
* Who does your organization serve?
* Where does the funding come from that supports 
* your organization?
* How many staff does it have?
* How many people does it serve?
* How long has it been around?
* Has it grown since it started?
* Why is your organization different from others that 
do the same work?

Create talking points 
* Talking points allow board members to offer the same answers to specific questions, or have the questions directed to one person

Tell a success story about your organization wherever you go





Hiring and Overseeing the CEO

In some organizations the Chief Executive Officer is called the Executive Director.

The relationship between the CEO and the board has been called the most important relationship in a nonprofit organization.

Benefits of Evaluating the CEO
Evaluating the CEO is a primary responsibility of the Board.  There are several key benefits from this evaluation, including that the process:

* Ensures the Board is meeting its duty to effectively lead the organization.
* Ensures organizational goals are being met
* Ensures continued development of the CEO to conduct his or her role more effectively.
* Ensures a formal and documented evaluation process that meets standards of fairness and 	practicality.
* Ensure the CEO values his or her role, is benefiting from it and, therefore, is more likely to stay.
* Leaves written record of the Board's impression of the CEO's performance in case this record is needed for future verification, e.g., for salary increase, probationary activities, firing, etc.
* Identifies development opportunities for the CEO.

Special considerations
* Be sure the process is fully documented in a procedure so the process is well understood and 
	carried out consistently year to year
* If staff members are involved in evaluation of the CEO, be sure this procedure is clearly specified and understood by the CEO
* The evaluation should be carried out by a Board committee, not by one Board member










Board Leadership & Development

Follow up-to-date articles and bylaws
These documents may include information on:
* When meetings will be held and how board members will be notified of meetings.
* The definition of a quorum.
* How voting will be conducted.
* Board size, composition and tenure.
* What officers and committees the board will have and what they will do.
* Defines appropriate term lengths.

Recruit and orient new board members
* What skills/talents will this person be able to contribute to the function of the board?
* What is the person's interest in this organization?

An agenda should include these components:
* Date of the meeting
* Start time
* Items to be discussed
* Time allotted for each item
* End time

Board self-assessment
A board self-assessment provides board members with an opportunity to:
* Reflect on their individual and corporate responsibilities.
* Identify different perceptions and opinions among board members.
* Point to questions that need attention.
* Use the results as a springboard for board improvement.
* Increase the level of board teamwork.
* Clarify mutual board/staff expectations.
* Demonstrate that accountability is a serious organizational value.
* Provide credibility with funders and other external audiences.
* Examine internal matters in addition to assessing the CEO and programs.












Develop a committee structure appropriate to your size and function
* A standing committee is continually in place to handle on-going functions of the organization, such as finance.

* An ad hoc committee is a one-time committee in place to handle a specific event of the organization, such as a search committee when hiring a new CEO.  Once the event is completed, the committee is no longer in place.

Signs of a successful committee:
* Purpose of the committee is clear
* Committee workplan is tied to strategic plan
* Members are interested and committed
* Good preparation on part of chair and members 
* Careful time control (length of meetings) might need to establish and communicate ground rules 
* Good communication among members
* Minutes are complete and concise
* Work of the committee is considered carefully by entire board and often accepted
* Periodically self-assess performance 
* Members are recognized and appreciated











Organizational Climate

The tone the board sets for the organization affects the organization on many levels.

With funders
If funders know the board works well together, they are more likely to give their check to that organization rather than to someone else.

With the CEO
A successful relationship between the board and CEO will strengthen the effectiveness of the CEO.

With potential new board members
New board members will be easier to recruit, if the organization has a reputation for an effective board.

With the community
Effective boards are important to gaining the trust of the organization in the community.

With staff
Competent boards can enhance the morale and effectiveness of the staff of an organization.


Ways to contribute to a positive organizational climate:

* Keep meetings strategic

* Keep meetings relevant

* Keeping meetings meaningful

* Know staff boundaries and keep them clear

* Know organizational boundaries and how to build on them

* Know your limits as a board member and stick to them


If you no longer have the passion or time, it is appropriate to resign.




Where to find information:

Sample job descriptions	
	www.mapfornonprofits.org
	Free Management Library

Program evaluation documents		
www.mapfornonprofits.org
	Free Management Library

Most recent financial statements filed - Minnesota	
www.ag.state.mn.us	
	Charities division

Most recent financial statements filed - Federal	
www.guidestar.org

Federal tax forms and tax information
	www.irs.gov

Minnesota state tax forms and tax information
	www.state.mn.us

Standards for nonprofit excellence		
	www.mncn.org/info_principles.htm

Online newsletter for board members
	www.boardcafe.org

Board Roles and Resources - Text Only

	- 1 -

