2011 leadership nuts and bolts of associations

Nuts and Bolts of Association Work

Mark J. Golden, CAEExecutive Director & CEO

Jeffrey P. Altman,General Counsel

NCRA State Leadership Conference2:30 -3:30 p.m., Wednesday July 27, 2011

Las Vegas, NV

Why Do Associations Exist?

• Individuals united by a common interest or concern

• Coming together to accomplish something it would be impossible to accomplish alone

1.8 Million Associations in the United States Alone

• 86,000 trade and professional associations• 1 Million philanthropic or charitable• More than 1,000 new associations formed

each year

There Is An Association For Everything (Examples Drawn from National Groups Only)

• International Staple, Nail and Brad Association• Specialty Fastener Association• American College of Obstetricians and Gynecologists

– An additional 12 national groups representing specialties within the field

• Frozen Potato Products Institute• Society of Investigative Dermatologists• Society of Dance History Scholars• International Fellowship of Left Handed, Middle Children Born West

of the Mississippi with Careers in Alternative Architectural Design• American Society of Association Executives

– Council of Engineering Society Executives– American College of Medical Association Executives

Associations are (Generally) Corporations

• Not for profit -- State Law– Members instead of shareholders or owners

• No part of its net earnings inure to the benefit of any private shareholder or individual

• Tax Exempt Status – Federal Law– 501 (c)(6): Business League– 501 (c)(3): Charitable, Scientific, Educational– PAC/527: Political

As Directors or Officers of a Not For Profit Corporation…

• You still need to operate in a business-like manner and bring in more dollars than you spend

• You face the same legal obligations that directors of a for profit corporation face

Legal Duties• Duty of Care

– Act honestly, reasonably and diligently

– Stay informed; ask questions

• Duty of Loyalty

– Act in interests of the association

• Not self/business

• Not state/region

• Not professional sector

– Avoid conflicts of interest

– Support the Board once a decision has been made

• Duty of Obedience

– Act in accordance with mission

– Consistent with policies, procedures and positions

Antitrust

– No discussions that could be construed as• Raising, lowering or stabilizing prices or fees

• Restricting availability of services

• Allocating markets, territories or customers

• Encouraging boycotts or exclusions of persons

– Even when this means appearing to condone business practices that are fully legal, but distasteful

Antitrust (cont.)

– Noerr-Pennington Doctrine• Safer harbor immunity protection

• Protects lobbying efforts to change laws and official rules

• Protects good faith litigation

Revised IRS Form 990Good Governance Practices

Regulation by Question:• Conflict, Whistleblower & Document

Retention/Destruction Policies?• Minutes of Board & Executive Committee

Meetings?• Compensation procedures & disclosures? • Board review of Form 990 before filing?

Revised IRS Form 990Good Governance Practices (cont.)

• Review, Compilation or Audited Financial Statements (w/Audit Committee)?

• Public availability of governance docs, 990, financials?

• Business & family relationships between directors, officers and key employees?

• Phased in filing requirements

Conflicts of Interest• Legitimate dualities of interest exist, which may or

may not create an actual conflict.

• A conflict is created where a director has a direct or indirect interest, financial or otherwise, in a matter involving your association

• Financial investment or interest

• Management position

• Leadership role with decision making authority

• Volunteer or for compensation

• Actual or Perceived

Conflicts of Interest

• The Board not the individual determines if a conflict exists and determines the appropriate remedy.

• Remedies:• Disclosure

• Recusal

• Resignation

Due Process

• Decisions should be fair and reasonable– NOT arbitrary and capricious

• Persons likely to be adversely affected by action– Opportunity to be heard– Fair and impartial decision-maker

Board & Member Voting• State law governs, but generally …• Board

– Duties cannot be met if there was not an opportunity to deliberate

– Three permissible modes• In person at meeting• By teleconference• Unanimous written consent w/o meeting

– No voting by proxy or mail• Provisional action: ratified at later date

• Membership– More lenient

• Mail, electronically, in person, by proxy as designated in Bylaws

The “Business Judgment” Rule

• You don’t have to be right• If you acted with due care

– Honestly and sincerely to the best of your ability– On an informed basis– In good faith and the best interests of the

association

• Even if you are wrong, you can not be held personally liable/legally responsible

Insurance & Liability Issues

For Directors, Officers, Entity, Staff & Volunteers• D&O/APL for economic claims

–HR; Defamation; Plagiarism; etc.–Shared limits policy available thru NCRA

• General Liability/Business Package–Accidents – 3rd Party BI/PD claims–Office property –Sometimes theft and fiduciary coverage

Manager versus Leader

• Give some words to describe the kinds of functions and activities Managers should be focused on and engaged in.

• Give some words to describe the kinds of functions and activities Leaders should be focused on and engaged in.

The Overly Simplistic Answer

• Leaders:– Set Policy– Set Direction– Define Outcomes

• Managers– Follow Directions– Do the Work– Achieve the Outcomes

The Problem

Chairman: It is all quite simple. The Board sets policy, which staff and volunteers then implement.

Interviewer: But how does the Board know what’s policy and what’s administration?

Chairman: Whatever a Director wants to discuss is policy and the rest is administration

Which are you supposed to be?

Manager

Leader

Board Members We Have Known and Loved

• The Lone Ranger• The Cruise Director• The Historian/Parliamentarian• The Traffic Cop• The Dreamer• The Stealth Candidate• The Great Dictator

What type of Director do you want and need on your

Board?

Making Board Agendas More Effective

• Organize Agenda by Topic Area– Around Strategic Planning Goals– Around Subject Area Or Long Range

Goals

• Separate Issues by Nature of Action Required– For Information Purposes Only– Board Decision Is Necessary

Information Only

• Consent Agenda

– Presented as a Whole: Approved in a Single Motion

– Any Board Member May Ask for Any Item to “Be Removed from the Consent Agenda”

• Does not require a vote.

• Items Removed from Consent Agenda are discussed and voted on as an individual agenda Item

• TIP: Schedule a pre-Board meeting conference call to deal with the consent agenda

Dealing with Emotional/Controversial Issues

• Seek first to understand/then to be understood– What is perceived is– Perspective

• Acknowledge and respect validity of personal emotions

• Create a fact base and build as far as you can from there

• Understand the importance of context

Perception Exercise

Group One

Group Two

All

All

All

Group

One

Group Two






People judge others based on their behavior; they judge themselves

based on their intentions.

Stephen M R Covey

The Speed of Trust

Bias and Value Judgments

• Acknowledge and respect that personal emotions and individual value judgments are at work in any dispute– Yours– Theirs

• Recognize the difference!






Data, Data, Data

• Are you making decisions based on what you know or on what you think you know?

• Worse still: Are you making decisions based on what you wish were so?

• Ask, Ask, Ask– More than just formal surveys

Pitfalls to Avoid

• Conclusions based on a sample of one– Particularly when that “one” is “you”

• Giving too much weight to "Internet Utterances"– Missing the existence of the silent

majority– The Internet Echo Effect






The Water Glass Exercise

Cycle of Leadership Development

1. Identify/Cultivate/Recruit2. Orientation

3. Engagement4. Continuous Improvement

5. Evaluation6. Rotation

7. Appreciation/Recognition

1. Identify/Cultivate/Recruit• Develop information on what service

opportunities entail• Board/Committee Candidate School• Look at who is coming to meeting/seminars• Call for Volunteers

2. Orientation• Formal new Board /Committee Member

Orientation• Web Library of Key Documents and Resources• Leadership Training Seminars

3. Engagement• “Board Buddy”• Task Force Assignments• Issue Presenter• Social Interaction

4. Continuous Improvement• Group Exercises/Training as a Board• Circulate Management/Association

Governance Articles• Board Book Club

5. Evaluation• Board Meeting Evaluations• Individual Board Member Self Assessments• Board Self Assessment

6. Rotation• Departing Board Member Exit Interview• Post-Board Service

7. Appreciation/Recognition• Celebrate victories as they occur• Recognition of Departing Board Members

What about the questions we didn’t get to?

Your Community is Your Own Best Resource

• State Leadership Bulletin• State Leadership Network• NCSA• State Editors Newsletter• Leadership• NCRA Staff• Etc.

You are not alone!

Thank You!