Board of Director’s Training

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Board of Director’s Training. December 5, 2012. Board’s Ultimate Responsibility. To ensure that the agency achieves its mission!. How is this a ccomplished?. Basic Responsibilities. Organization’s Mission & Purpose Hiring the Executive Director Financial Oversight Resources - PowerPoint PPT Presentation

Text of Board of Director’s Training

PowerPoint Presentation

Board of Directors Training

December 5, 2012

1Boards Ultimate ResponsibilityTo ensure that the agency achievesits mission!

2How is this accomplished?

3 Basic ResponsibilitiesOrganizations Mission & PurposeHiring the Executive DirectorFinancial OversightResourcesLegal & Ethical Integrity/AccountabilityOrganizational PlanningRecruit Board Members/Assess Board PerformanceEnhance Organizations Public StandingDetermine, Monitor, & Strengthen the Organizations Programs & ServicesSupport the Executive Director & Assess Performance

4Legal ResponsibilitiesEnsure the organization functions within the framework of and in furtherance of - its mission

Resources are adequate and appropriately protected

Sufficient oversight

5Questions to ask?What kind of oversight am I expected to provide?Fiduciary Responsibility

When and how can I be found personally liable?Inactive in overseeing their charge AND consequently may have failed to adhere to the standards of fiduciary responsibilities.

How can I avoid, or at least minimize, personal liability?

Abiding by the 3-Ds AND not acting as a solo but a collective body.6 Legal Responsibilities and its RelationshipTo the 3-DsDuty of Care

Requires the Board and individual board members to pay attention to the organizations activities and operations Duty of LoyaltyRequires board members to exercise their power in the interest of the organization and not their own interest or interest of another entity.7Duty of ObedienceRequires board members to comply with applicable federal, state, and local laws, adhere to organizations bylaws, and remain the guardians of the mission. Legal Responsibilities and its RelationshipTo the 3-Ds (Continued)8Questions to ask?Do we have a copy of our state laws, and are we operating in accordance with the statutes?

Are the clauses in our articles of incorporation and bylaws consistent?

Have we amended our legal documents if we have changed our mission, scope of activities, or major structures in any way?

Who in our organization is responsible for keeping the legal documents? Is it easy to have access to them if we need them?9Managing Legal LiabilityLiability is closely tied to accountability.

Most common reasons why Nonprofits get sued are:Employment claims (hiring, firing, benefits)Discrimination claims (employment, programs, volunteers)Torts/negligence (injuries, theft)Discrimination claims (employment, volunteers, programs)Release of records (availability of agencys records)Defamation10If the board has NOT carried out its oversight duties adequately, it may get implicated in a lawsuit due to negligence of its duty of care obligation.The KEY to protection is a proactive, positive action. INDEMNIFICATIONOne party promised to protect another party from losses resulting from risks while carrying out specified duties.11InsuranceInsurance coverage transfers the risk of liability to an independent third party an insurance company.

General Liability policy cover negligent acts that result in property, personal, or bodily injury.Errors and Omissions policy cover harm resulting from executive decision making.Bonding policy protects from wrongful financial actions.12Directors and Officers (D&O) policy is an extension to other insurances. This is NOT a one-size-fits-all programs.Entity Coverage ensures the coverage available extends to the nonprofit as well as to directors, officers, and others.

A broad definition of insured traditional D&O policies contain narrow definition of insured limiting coverage to current directors and officers. A policy that is tailored to meet the needs of a nonprofit will contain a broad definition of insured. The definition may ensure coverage for the nonprofit, as well as current and former directors, officers, staff, volunteers, etc.

13Broad definition of claim and wrongful act

In addition to defining who is covered, a policy also defines what types of claims will be covered. Some D&O policies provide broad coverage for a wide range of claims.some policies restrict coverage to only claims for money damagessome policies provide coverage for defense of administrative proceedings (i.e. complaints filed with EEO or human rights commissions. A definition of claims should be spelled-out on the policy (i.e. civil, criminal, administrative, etc.)Directors and Officers (D&O) policy (Continued)14Coverage for a wide range of employment practices

First, it may be available under a commercial general liability policy.Traditional commercial general liability policies specifically exclude coverage for employment-related events, but this is not universal.It may be purchased as a stand-alone employment practice liability policy OR it may be included under a D&O as an endorsement to a D&O Policy.

Directors and Officers (D&O) policy (Continued)15RisksMicro Manage Refers to a board member who is paying too much attention to details AND is not focusing on the agencys BIG picture.

Examples

Approving individual staff salariesVerifying receipts and invoicesParticipating in hiring and defining job descriptions (besides ED)

16Key Areas of Board ServiceCommitmentTeamworkEthics and ConductWillingness to Learn the Board Members Role17Risk Management Begins withACCOUNTABILITYIDENTIFYING RISKSMINIMIZING THE LIKELIHOOD OF HARM

18Board Members are expected to

Conduct themselves in accordance with time-honored legal principles emphasizing good-faith and the ever-governing term reasonable in relation to judgment and decisions. 19

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