HOW TO BUILD A STRONG & COMMITTED NONPROFIT BOARD October 15, - PDF document

10/15/2015 HOW TO BUILD A STRONG & COMMITTED NONPROFIT BOARD October 15, 2015 Ron J. Huddleston, CFRE, FAHP President The Huddleston Group www.thehuddlestongroup.com BUILDING EFFECTIVE BOARDS OFTEN ARISES AS A KEY CLIENT CONCERN “The motion has been made and seconde ded that “Perhaps it would help if I go over it one more we stick our heads in sand” d” time” 1

10/15/2015 THE MOST EFFECTIVE BOARDS “ Those whose members are deeply committed to the organization’s mission, who bring expertise in key areas, and who represent diverse points of view—evolve over time through careful planning.” The Board Building Cycle: Nine Steps to Finding, Recruiting, and Engaging Nonprofit Board Members, BoardSource; 2007 3 4 IF YOU LEARN JUST ONE THING… “The responsibility for the board's effective work -- both governance and support -- is ultimately the responsibility of the executive director.” ~ Peter Drucker 2

10/15/2015 GOALS OF SESSION  Understanding the types of boards  Outline the process of building an effective board of directors  Discuss tools and techniques that can facilitate the organization’s work in developing a competent/effective board 5 6 THREE NONPROFIT STAGES ORGANIZATIONAL BOARDS “Garage Band” Small, informal, dominated by founders & friends. Often take change personally, so resist it. GOVERNING BOARDS Larger, more independent, more settled and stable. Start formalizing rules & procedures. Less start-up mentality, more long-term sustainability focused INSTITU TUTIONAL BOARDS Larger organizations, more sophisticated structures (very formal policies, procedures, roles & responsibilities), standing committees (that work). Larger staff to support them. Often honorific with representative stakeholders 3

10/15/2015 BARRIERS TO BOARD EFFECTIVENESS Temptation to micro-management   A barrier because…  Board is charged with overseeing the EXECUTIVE, who, in turn, manages his/her staff  Oftentimes results in wasting time on trivial matters Ineffective nominating committee   Must be fine-tuned because…  Nominating committee determines the future make-up of the board of directors No plan for rotation   A barrier because…  Limits opportunities for a real change  Why needed? New members can help promote creativity and innovation in decision- making Failure to remove unproductive members   A barrier because…  Prevents board from fully serving its purpose and fulfilling organizational mission  Po Possible Solution: Must have system for evaluating board performance and making recommendations for future board service MORE BARRIERS TO BOARD EFFECTIVENESS Too small  A barrier because…   Must have enough individuals to fulfill the multiple responsibilities and competencies of a board of directors Possible solution:Recommended numbers fall anywhere from 11 to 21  Lack of functioning committee structure  A barrier because…   Most of the work that supports and implements major board decisions are done in committees No strategic plan  A barrier because…   Board members often spend too much time talking about issues that are of little importance because there’s no real direction  Results in a lack of long-range development plan that will help the organization prepare and thrive in the future No plan for orientation or training of new and old members  A barrier because…   New members must be carefully joined so as to create a well-functioning TEAM  Training is essential for growth and adapting to the ever-changing environment 4

10/15/2015 9 GOVERNING BOARD  Share overall fiduciary and strategic responsibility for the organization  Fill and evaluate the chief executive position  Ensure adequate financial resources for the organization 10 ADVISORY BOARD • Focus on providing technical or specialized expertise to an organization • May support program, fundraising, or other specific task • Do not usually make overarching strategic decisions or executive hiring/firing 5

10/15/2015 BUILDING: FROM RECRUITMENT TO ENGAGEMENT 11 BUILDING AN EFFECTIVE BOARD  BOD roles and responsibilities  Board composition  Recruitment  Training  Assessment  Education/development  Governance 12 6

10/15/2015 13 FORMAL BOARD ROLES Ensure the organization stays in compliance with  laws & regulations Determine organization’s mission, strategies, and  program priorities Ensure organization uses its resources toward  fulfillment of it’s tax-exempt purpose Hire and oversee an executive director or CEO  Maintain control of important decisions and have  adequate knowledge of the organization’s operations 14 OTHER BOARD ROLES Fully participate in board meetings, deliberations,  and decisions Read, evaluate, and ensure accuracy of all  reports, including minutes, financials, and evaluations Ensure the organization has sufficient resources,  including people, funding (fundraising), and other key assets Prepare and review policy documents  Replace and orient new board members  Act in the best interest of the organization &  advocates for it in their networks and community. 7

10/15/2015 IDENTIFY BOARD COMPOSITION “Recognize the importance of effective boards to these nonprofits. Nonprofits themselves, and their boards, must assist this process by rethinking old assumptions about who should or could serve effectively on their boards and about how people can be identified, developed, and recruited.” Benjamin R. Shute Corporate Secretary Rockefeller Brothers Fund 15 BOARD COMPOSITION  Nominating Committee  Review of mission and organization’s strategic direction  Development of Board Profile 16 8

10/15/2015 BOARD COMPOSITION (CONT’D)  Board Profile  Thinking about mission & strategic direction – what perspective/expertise needed?  What is the current composition of board?  What gaps will we need to fill over the next few years? 17 18 KEYS TO A HEALTHY BOARD Recruit Train Retain 9

10/15/2015 RECRUITMENT “No board function is more critical for long-term effectiveness than active, successful recruitment…Where this task might have begun in the past with recommendations of friends and colleagues, today its is a complex and substantive process that…involves all board members.” Jameson A. Baxter, President Baxter Associate Inc. Palatine, IL 19 Recruit BOARD RECRUITMENT Form a Board Development Committee  Do a Board Assessment  What Roles & Expertise are needed to  achieve your mission and 1-5 year strategic goals? Create a Board Matrix  Brainstorm Potential Recruitment Targets  Do your Research!  10

10/15/2015 Recruit BOARD RECRUITMENT Determine characteristics of your ideal candidate  Create an application and selection process  Recruit several candidates  Interview & Rate them  Recommend to the board & ED  2nd Discussion with candidate: expectations (pre-  orientation) Invitation  TRAINING “Board members don’t always have an intuitive mystique or skills to do the job. If this is important work, then proper training must be done.” Elaine Jacobson Board Member Planned Parenthood of Southern Arizona 22 11

10/15/2015 Train BOARD TRAINING Form a Board Development Committee  Do a Board Skills & Knowledge Assessment  What kind of training or orientation are  needed to achieve your mission and 1-5 year strategic goals and to ensure the board’s effective performance? Create a training calendar  Seek funding and experts if needed  Train BOARD TRAINING Training vs. Orientation  Timing & Frequency  Suggested Participants  Content  Organizational Overview  Orientation to Board Manual  Roles & Responsibilities  Overview of Board Structure / Committees  Overview of Board Operations (policies, etc.)  Strategic Plan Review  12

10/15/2015 WHAT’S IN A BOARD BINDER (ONLINE) ? Welcome Letter 1. 1-page Organizational Overview 2. 1-page Strategic Checklist 3. Corporate/Historical Documents (annual report, 4. bylaws, incorporation docs, latest 990) Rosters - board, committees, staff, org chart 5. Meeting & Event Calendar 6. Responsibilities & Key Policies 7. Financial Info - budget, latest audit report & 8. statements, list of funders & individual contributors Tools - membership for, letterhead, collateral 9. ASSESSMENT “Exceptional boards embrace the qualities of continuous learning organization, evaluating their own performance and assessing the value they add to the organization.” The Source: Twelve Principles of Governance That Power Exceptional Boards BoardSource 26 13

10/15/2015 Retain BOARD ASSESSMENTS Annual Satisfaction Assessments  Appreciation Events & Tokens  Pair Passion with Participation  Form, Function, & Fellowship  Valuable Meetings  Reinforce Personal Enrichment/Benefits  Meaningful Impact  “Clean out the Closets”  EDUCATION AND DEVELOPMENT “Continuous learning occurs formally and intentionally in and out of board meetings. Exceptional boards learn continuously by planning for learning and responding to learning opportunities.” Melissa Davis Director, Governance YMCA of the USA 28 14