Monday, May 17, 2010

Preparing A Nonprofit Board Welcome Kit and Check-off List:

Some nonprofit and nongovernmental organizations have Board Welcome Kits, material that helps a new board member begin the learning process about the intricacies of the organization.  Such Kits briefly tell the story and the history of the agency (and if the agency is part of a national body that history as well).  The board in most organizations is the leadership for creating and establishing policy, keeping the vision, passion and mission at the forefront.  In most NPOs the board members are expected to give funds and help raise funds for the organization.  The Kit should address the role of the board and list the functions as follows: 
  • Establishing and reviewing the budget
  • Selecting and receiving the report of the auditor
  • Hiring, evaluating, and firing the executive director
  • Setting the mission and broad policy for the organization
  • Approving all grants and contracts (with recognition some applications have to be filed without board approval but are subject to later review)
  • Overseeing accountability to clients/customers, funding sources, and other source-standards
  • Participating in strategic and long-range planning
  • Establishing priorities
  • Evaluating the effectiveness and efficiency of the organization
  • Establishing the role of individual board members contributing to the organization and in fund raising
  • Understanding the legal aspects of board membership, fiduciary responsibilities, ethics of a nonprofit organization, loyalty, conflict of interest, and confidentiality.

There may be limits to the board's authority and responsibilities that are required by law, by ethics or by contracts.  The Kit can describe briefly how staff handles its activities and outline that client/customer information will not be provided to board members except statistically.  There are instances that individual board members may attempt to pressure staff to break policy to assist a relative or friend; the Kit should address the process for ALL clients/customers to receive assistance.  There can be pressure from funding sources and politicians as well to help someone outside of the intake process.  The Kit should address that, but there should be some conscious agreement how that will be handled as well. 

The Kit should address what insurance the organization has and its sufficiency of coverage, how board members may be reimbursed for agency business travel, which they serve without a stipend (although some organizations pay members). Does the budget include a line item for board training and travel?  There should be an indication of the effect of a board member seeking employment with the organization - resign before applying for a job.  A short section in the Kit about the management of the organization clearly stating the executive director hires, evaluates and fires staff, that there are staff meetings, and that there is supervision and formal evaluation of staff.  The Kit can have the following checklist with some detail:
  • Information board members should have (list of board and contact information and staff, organization chart, budgets, etc.)
  • The awareness of when a board may legally have closed meetings within the state and what documents are open records to the community and the media
  • The good faith responsibilities of the board (attend meetings, receive and read material before the meetings, assure minutes are accurate, issues serving on other community boards, etc.)
  • Awareness of organizational operations (incorporation papers, bylaws, human resources, conflict of interest, possible litigation, etc.)
  • Knowledge of the human resources of the agency (clear personnel policies, staff reflective of the community diversity, adherence to all written policies, grievance procedure for staff and for clients/customers, board orientation process, etc.)
  • Information about the finances (internal controls, regular financial reports and projections, annual audit, property inventory, tax forms filed timely and paid timely, role of board as contributor and as a fund-raiser, etc.)
  • Involvement in planning (is there a 3-5 year plan consistent with mission, annual evaluation of program effectiveness and efficiency, etc.) and
  • Participation in community relations (dealing with the media – whose responsibilities, clear guidelines on client information, assessment of community needs and priorities, relationships with other nonprofits and government service offices, representative board, etc.).

One discussion that has to occur periodically is the expectation as part of the corporate culture that board members contribute financially annually according to means and passion, the board historically and the staff that the board have to help raise funds and the board’s expectation it is not the staff's responsibility to raise the necessary money.  There is significant literature that citizens are tired of receiving letters to support this or that.  There are also significant studies indicating that for many nonprofits, the board disagrees with staff about the role of fund-raiser.  Without meeting that issue and having it clear and agreed upon as corporate culture, there will be an unhealthy aspect where the rubber meets the road, where the board perceives its role.

The board needs to have a clear understanding who will maintain the records and that the records belong to the organization, not the person.  The board needs to develop an accounting procedure for reconciling accounts regularly and auditing the accounts by members who are not handling the funds.  What paperwork will be needed in order to generate a check?

The board needs to develop written policies, procedures, forms and recordkeeping capability for fiscal accountability.  Who will maintain the corporate files for fiscal accountability?  How will the board know what is going on?   

If you are involved with a nonprofit organization as a staff member, volunteer, board member, or funder, are you sure that the organization is following all legal and contractual obligations?  Do you have written policies and are you following them?  Where do you place your loyalty, values, passion, vision – this nonprofit group or another nonprofit on whose board you serve? What community do you serve and represent?

As a board member or staff member do you know about your rights and responsibilities about advocating for pubic policy affecting your organization, its clients, customers and the community it services?

Are you thinking about incorporating a not-for-profit organization?  Do you or the organization have a business plan, a mission, a vision, goals and measurable objectives, appropriate activities and are they being met?  What roles are expected of the board or staff and are those expectations being met?  When was the last time the organization was given a wellness checkup?  Just as we humans need medical and dental checkups and our motor vehicle needs a checkup, so do nonprofit organizations need a checkup.  Are you part of a sick organization that needs a tune up or are you humming on all cylinders? Do you want to know how well your group is? 

Here is the start of an online library.

The Sarbanes-Oxley Act and Implications for Nonprofit Organizations – 

Checklist for Accountability -   

Article by Jeffrey S. Gittler, CPA for Guidestar in August 2011, Roles and Responsibilities of Nonprofit Audit Committee Members

Insurance Questions for Nonprofits

Principles for Good Governance and Ethical Practice: A Guide for Charities and Foundations

Evangelical Council for Financial Accountability Standards and Best Practices -

Maryland Nonprofits: Standards for Excellence - An Ethics and Accountability Code for the Nonprofit Sector -

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