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American College of Cardiology
Presented by Susan Decker BoardSource Senior Governance Consultant
January 30, 2009
Washington, DC
Welcome & Silent Start
• What is governance?
• What are the 2 most important governance issues facing your ACC board today?
Non-Profit Governance Index • 16 voting members average board size• Average length of term is 3.1 years• Serve an average of 2.3 terms• Boards meet average of 6.9 x/year• Meet an average of 16.5 hrs/year• 48% of boards have annual retreat• Have an average of 5.4 committees
Non-Profit Governance Index
• Most pressing organizational challenges– Financial Stability– Fundraising – Strategy– Staffing– Board Development
Demands for the Future
• Effectiveness
– outcomes, results
• Efficiency
– money, time, energy
• Accountability
– trustworthiness, accurate communication with constituency
Agenda
• Basic Board Responsibilities
• Board/Staff Partnerships
• Board Building/Succession Planning
• Strategy and Planning
• Financial Oversight
• Assessment/Evaluation
Basic Board Responsibilities
Basic Responsibilities of Nonprofit Boards
The board is the legal guardian of the organization and is responsible for the
organization’s current and future welfare
Individual Board Members Should
• Actively participate• Be informed• Promote the organization• Safeguard ethics and values
Governance: Legal Obligations• Duty of Care
– Using your best judgment– Actively participating– Asking pertinent questions
• Duty of Loyalty– Avoiding conflicts of interest– Putting aside personal and professional interests
• Duty of Obedience– Staying true to the organization’s mission– Obeying the law, both public and organizational
Ten Basic Roles and Responsibilities
1. Determine mission and purposes
2. Select the chief executive
3. Support and evaluate the chief executive
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 board9. Ensure legal and ethical
integrity10. Enhance the
organization’s public standing
Questions the Board Should Ask
1. What new or emerging changes in the environment or ACC should cause us to reconsider our mission statement’s adequacy?
2. What process do we have in place for supporting/retaining our chief executive?
Questions the Board Should Ask
3. Have we updated our policies and processes regarding performance assessment and compensation?
4. Do our regular board meetings include at least one strategic issue on agenda?
Questions the Board Should Ask
5. What strategic indicators or criteria will best help us monitor ACC’s effectiveness?
6. Do we need to develop more diverse sources of revenue?
Questions the Board Should Ask
7. Are our financial statements/reports reliable, timely and easy to understand?
8. Have we articulated and communicated a comprehensive list of responsibilities/expectations for board members?
Questions the Board Should Ask
9. Are we doing an adequate job of educating every board member about the board’s legal and fiduciary responsibilities?
10.What key talking points do we wish to consistently convey about ACC?
Board/Staff Partnership
The Board/Staff Partnership
• The board governs the life of the organization – has ultimate responsibility– is accountable to the public trust
• The chapter executive coordinates and directs the affairs of the organization – has immediate responsibility– is accountable to the board
Board/Staff Partnership
Board is to organization
as
_____ is to _____
The Board Chairand the Chief Executive/Chapter Executive• A key relationship: the intersection of
governance and management• Requires respect for differences in roles,
responsibilities, and personal styles• Requires clarity of mutual expectations• Requires regular communications (frequency
and form to be negotiated)• Benefits from mutual assessments
Role of the Board Chair
• To serve the board as a guide and facilitator of its work
• To represent the board and the organization in the community
Shared Responsibilities
• Planning the work of the board
• Developing effective board meeting agendas
• Identifying emerging board leaders
• Ensuring that other board offices have the information and support they need
Board Building/Succession Planning
The Board Building Cycle
IdentifyIdentify
CultivateCultivate
RecruitRecruit
OrientOrient
InvolveInvolve
EducateEducate
RotateRotate
EvaluateEvaluate CelebrateCelebrate
Board Recruitment Exercise
In 3 minutes, what would you say to a person you want to encourage to stand for election to your board?
Assign Responsibility for Board Development
• Create a committee (Governance Committee or Board Development Committee) charged with– Ensuring the regular infusion of new blood– Proposing actions designed to strengthen the
board’s performance– Considering the board’s leadership needs and
nominating new leaders as needed
Team Building as Part of the Board’s Regular Work• Provide opportunities for getting to know each
other• Develop norms for board operations and hold
each other accountable• Develop climate that allows frank exchange of
opinions and questions• Take time to evaluate board meetings and
board projects• Express appreciation at every opportunity
Identify Board Needs
• What do we need to move forward– Skills– Knowledge– Perspective– Connections
• What do we have?
• What is missing?
Cultivate Potential Governors
• Identify sources of potential members with the needed characteristics
• Develop relationships • Identify potential members• Cultivate them / get them interested, keep
them informed • Ask them to take on specific short term tasks
on behalf of the organization
Recruit
• Describe why a prospective board member is wanted and needed
• Describe expectations and responsibilities• Invite questions• Don’t minimize requirements• Make sure the prospect understands and
supports the mission• Encourage person to put his or her “hat in the
ring” for election
Orient
• To the organization: program, history, bylaws, pressing issues, finances, facilities, organization chart
• To the Board: recent minutes, committees, board member responsibilities, list of board members and key staff members
Involve
• Discover interests and availability• Involve in committee or task force• Assign “buddy”/mentor • Solicit and act on feedback • Hold everyone accountable• Express appreciation for work well done• Conduct effective board meetings
Educate
• Provide information about issues facing the organization and the community
• Promote exploration of these issues
• Do not hide difficulties
• Assign responsibilities that promote learning about the issues
Transition in the Organization
• One of the most unsettling events in the life of an organization is a change within the chief volunteer or professional position.
• Even when it is planned in advance, it calls for a high tolerance of ambiguity.
• When unplanned, there is a chance that actions can be hasty or ill-considered.
Executive Sessions – Staff Transitions
• Conduct occasional executive sessions without the chief staff member
• Encourage a true discussion of “What if Nancy were run over by a truck tomorrow?”
• This is a blunt but highly constructive question that allows the board to review and update leadership transition plan
Emergency Staff Leadership Management Plan
• Board member who have experience conducting an executive search
• Senior staff member with skills and judgment to serve in a temporary role
• Key contact list to notify individuals of leadership change
• Procedures for conducting effective search• Key spokesperson identified
Strategy and Planning
The great thing in this world is not so much where we stand, as in what
direction we are moving.
Oliver Wendell Holmes
To Establish Strategic Direction
• A board must set aside time and resources for strategic planning which is– a process that seeks the strategic fit between
the mission of the organization and its internal strengths and external opportunities, and
– a process that develops a shared vision among its stakeholders and a blueprint for how to achieve that vision
John A. Yankey and Amy McClellan
Strategic Planning Questions
– What needs will we seek to meet?– Why?– What resources can we bring to this
mission?– What goals must we achieve and what
strategies should we choose in order to meet these needs?
– How will we know when we have been successful?
Analysis and Discussion
• Are our programs still needed as much as they once were?
• Can others meet these needs more effectively than we can?
• Are there unmet needs that we potentially could meet?
• How do our strengths and weaknesses intersect with the needs of the community?
Vision and Strategic Planning
• Once it is clear – where the organization wants to go (vision), and
– where it currently is (strengths, weaknesses, programs, finances, etc.)
• It will be possible to – formulate the major GOALS that need to be
reached in order to reach the destination
Establish Strategic GOALS
• Strategic goals are major achievements that must be accomplished in order for the vision to become reality
• An organization and its board should limit its strategic goals to no more than five or six in order to be able to bring the necessary resources and attention to bear on accomplishing the goals
Measures and Milestones
• The board’s role in strategic planning is not complete until it has – identified measures of success that will
indicate that the goals have been reached– established milestones that will enable the
board to track progress over time
Financial Oversight
Financial Oversight
The entire board of a nonprofit is legally responsible for the organization’s
financial success
Financial Issues Boards Should Address
• Planning and Budgeting• Revenues and Expenditures• Available Cash and Reserves• Ensuring Appropriate Actions• Avoiding Conflicts of Interest• Sarbanes-Oxley Act• Risk Management
Major Financial Roles
• Committees (Finance, Audit, Investment)
• Treasurer
• Chief Executive
• Bookkeeper, Controller, CFO
Systems that Protect Nonprofits
• Internal Controls
• Accounting Policies and Procedures
• External Audits
• Changing Auditors
Test Your Financial Literacy
The purpose of private meetings between the audit committee and the auditors is to:
A. Facilitate performance evaluation of the treasurer
B. Allow the auditors to raise issues with the committee without pulling punches
C. Provide the audit committee with an opportunity to press for lower fees
D. Emphasize independence of committee from management
Improper financial management practices include:
A. Operating with a deficit budget
B. Failing to file IRS Form 990 on a timely basis
C. Not distributing financial information to the board until three months after the end of the period
D. Both A and B
E. Both B and C
If the audit management letter contains material weaknesses, this means:
A. The organization needs to make office repairs and improvements
B. The organization’s programs are inappropriate
C. The organization has significant problems in internal controls
D. Top management is doing an excellent job
Questions for Boards to Ask
• Is our financial plan consistent with our strategic plan?
• Financially, what could go wrong with ACC? What’s in place to respond?
• Do we have the appropriate checks and balances to reduce errors or fraud?
• Do we annually review the Form 990? Does it accurately reflect ACC?
Assessment/Evaluation
Assessment and Evaluation
Why take the time for assessment?
“Even if you’re on the right track, you’ll get run over if you just sit there.”Will Rogers
Characteristics of Good Assessment Processes
• Collecting systematic feedback from a variety of sources
• Asking relevant and fair questions• Making use of the information collected for
developmental purposes, not as a “report card”
• Conducting at regular intervals - even when there are no “clouds on the horizon”
Assessment is a Process
• Identifying what information will be needed
• Gathering information
• Interpreting information collected
• Planning for how to strengthen performance
Organizational Assessment
• How are we doing– In terms of our mission and strategic goals– In terms of the needs of the neighborhood– In comparison with other organizations like ours
• Ways in which to find out– Determine what information is needed, from whom
and in what format• Determine whether to use an external agency
for all or parts of the evaluation
Chief Executive Assessment
Ensure that the Chief Executive Assessment:• is done on a regular basis• is done fairly• is viewed as having a fair and appropriate
process• allows for board input• serves a developmental purpose
Decisions re: Chief Executive Assessment
• What questions will be asked? Use of existing tool or develop own?
• Who will be asked for feedback?• Who will gather and analyze feedback?• How will the results be shared with the
Chief Executive?• How will results be shared with the board?
Why Board Assessment?
• The board is ultimately accountable for the organization’s behavior
• The board must model accountability for staff and volunteers by holding itself accountable for fulfilling its responsibilities
Why Self-Assessment?
“Change is always a threat when it is done to people, but it is an opportunity when it is done by people”Rosabeth Moss Kanter
“People don’t resist change. They resist being changed.” Peter Senge
Board Self-Assessment is a Tool for Change
• It creates tension between desirable and current board performance by– holding up a multi-faceted picture of
effective board functioning– projecting an ideal against which a board
can measure its present performance– giving voice to dissatisfaction with the
status quo
Self-Assessment is a Tool for Change (continued)
• It provides the opportunity to decide how to change from where we are now to where we want to be in the future
Self-assessment Need Not be Self Only• By inviting an outside facilitator to work with
the board on its self assessment, the board can gain– Fresh perspectives– Impartial challenges– Support in exploring different options
• An outside facilitator can support the inclusion of staff input and can raise questions emerging from a review of organizational documents.
Collecting, Compiling, Analyzing• A neutral person must be found to collect and
compile board member responses• The person who will write the assessment
report should be perceived as unbiased as well as knowledgeable about boards and organizational dynamics
• The report should point to areas of board responsibilities where the board is doing well and areas where the board needs to improve
Develop Retrospective Thinking
• What are your board’s successes or setbacks?
• How/why did they happen?• What does this mean for the future?• How do you “tell” ACC’s story?• What does it say about what to do next?• What’s your future perfect?
Catalytic Questions
• What is the biggest gap between what we claim we are and what our actual actions say about what we are?
• What do you hope will be most strikingly different about this organization in 5 yrs?
• On what list would you like this organization to rank at the top?
• Never doubt that a small group of thoughtful, committed people can change the world. Indeed, it is the only thing that ever has.”
Margaret Mead