Effective Non-Profit BoardsBOARD 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 Catapult Strategic Consulting, LLC September 2012 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 Catapult Strategic Consulting, LLC September 2012 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 Catapult Strategic Consulting, LLC September 2012 Board Officers 7 Chair Provides leadership to board Runs meetings Interacts closely with CEO Coordinates financial oversight Chairs the finance committee Keeps records for the board Takes minutes of board meetings Treasurer Secretary Catapult Strategic Consulting, LLC September 2012 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 Catapult Strategic Consulting, LLC September 2012 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 Board Member Recruitment Fundraiser Details Grant Quarterly Reports Annual Operating Budget Long Term Planning Volunteer Management Center Curriculum Staff Performance Reviews Fundraising Risk Management Update Mission Statement Donor Recognition Catapult Strategic Consulting, LLC September 2012 Board Governance HOW YOU DO WHAT YOU DO Board Governance 11 Documentation Decision Making Strategic Planning Catapult Strategic Consulting, LLC September 2012 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 Catapult Strategic Consulting, LLC September 2012 Organizational Documents 13 Articles of Incorporation Application for Tax Exempt Status Determination Letter Catapult Strategic Consulting, LLC September 2012 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 Catapult Strategic Consulting, LLC September 2012 Reporting Documents 15 Board Manual Meeting Minutes Form 990 Lobbying Activity Compensation Substantiation Catapult Strategic Consulting, LLC September 2012 Decision Making Process 16 Board Member Board Committee Proposal/ Motion Discussion Decision CEO Catapult Strategic Consulting, LLC September 2012 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 Catapult Strategic Consulting, LLC September 2012 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 Catapult Strategic Consulting, LLC September 2012 Strategic Plan Components 19 Mission Vision Why we are here What the world will look like when we have accomplished our mission 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 weaknesses, taking advantage of opportunities and protecting against threats Broad statements of what we will accomplish during the planning period Specific and measurable steps to attain our identified goals Who is responsible for accomplishing objectives and goals of the plan; includes deadlines and budgets SWOT Priorities Goals Objectives Action Plans Catapult Strategic Consulting, LLC September 2012 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 Catapult Strategic Consulting, LLC September 2012 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 Catapult Strategic Consulting, LLC September 2012 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 September 2012 Catapult Strategic Consulting, LLC Classification of Revenue 24 Unrestricted Revenue Temporarily Restricted Revenue Permanently Restricted Revenue Catapult Strategic Consulting, LLC September 2012 Program Budgets 25 Financial Activities Outcomes Catapult Strategic Consulting, LLC September 2012 Financial Budgeting 26 Grant Receipts Other Program Income $ spent – Direct Program Expenses Overhead Allocation Catapult Strategic Consulting, LLC September 2012 Activity Budgeting 27 Staff Hours Volunteer Hours Clients contacted Classes Taught Catapult Strategic Consulting, LLC September 2012 Tracking Outcomes 28 Clients served Skills Learned Placements Made Client Satisfaction Catapult Strategic Consulting, LLC September 2012 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 Catapult Strategic Consulting, LLC September 2012 Compliance Program Elements 30 Authorization Independence Transparency Documentation Reporting Guidelines Internal Controls Regulations Catapult Strategic Consulting, LLC September 2012 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 Catapult Strategic Consulting, LLC September 2012 Risks of Noncompliance 32 Administrative Sanctions Reductions in Payments Termination of Grant Suspension Corrective Action Plans Fines or Penalties Damage to Reputation Catapult Strategic Consulting, LLC September 2012 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 Catapult Strategic Consulting, LLC September 2012 Financial Documents 35 Financial Statements o Statement of Activities (aka Income Statement) o Balance Sheet Audits IRS Form 990 Catapult Strategic Consulting, LLC September 2012 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) Catapult Strategic Consulting, LLC September 2012 Scarce Resources 37 Cash Personnel Time Space Supplies Donations Catapult Strategic Consulting, LLC September 2012 Allocating Resources 38 Grant Obligations Cost/Benefit Industry Standards Watch Dog Groups Catapult Strategic Consulting, LLC September 2012 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 Catapult Strategic Consulting, LLC September 2012 Day 1 Review 40 Board Member Roles Directors Officers Staff Accountability Program Funds Budget & Management Compliance Governance By-Laws Decision Making Strategic Planning Grant Oversight & Catapult Strategic Consulting, LLC Financial Oversight & Planning Financial Statements Resource Allocation Forecasting September 2012 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 Catapult Strategic Consulting, LLC September 2012 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 Catapult Strategic Consulting, LLC September 2012 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 September 2012 Catapult Strategic Consulting, LLC 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 September 2012 Catapult Strategic Consulting, LLC 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 Catapult Strategic Consulting, LLC September 2012 CEO is the Agent of the Board 50 Board of Directors CEO Staff Catapult Strategic Consulting, LLC September 2012 Well-Informed Board 51 Job Descriptions Board Handbooks Board Orientations Continuing Education Opportunities Regular and Honest Evaluations Catapult Strategic Consulting, LLC September 2012 Recruit Strategically 52 Demographic Diversity Professional Experience Leadership Qualities Community Connections Past Board Experience Capacity to Give Catapult Strategic Consulting, LLC September 2012 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 Catapult Strategic Consulting, LLC September 2012 Suggested Committee Structure 54 • Limit Standing Committees • Use Ad Hoc Committees as Necessary Governance Ad Hoc Ad Hoc External Relations Board of Directors Planning & Program Development Ad Hoc Ad Hoc Performance Oversight Catapult Strategic Consulting, LLC September 2012 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? Catapult Strategic Consulting, LLC September 2012