NCA Regional ConferenceCarnegie Abbey Club

November 8, 2012How to Add Organizational Strength and Value to Clubs through effective

Boards and Committees.

Ned McCrory, CPA George Zoglio, CPA, MBA

Batchelor, Frechette, McCrory, Michael & Co. CPA40 Westminster Street Suite 600

Providence, RI 02903(401) 621-6200

www.bfmmcpa.com

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Rhode Island State House

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Roger Williams Statue

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Roger Williams National Park

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U.S. Senator Claiborne Pell

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Mr. Potato Head

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Green Army Men & G.I. Joe

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Miss U.S.A 2012 – Olivia Culpo

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DJ Pauly DJersey Shore (Reality TV Show)

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Discussion topicsGovernance conceptsCharacteristics of volunteer

committee and Board membersStructures and practices of

effective Boards/committeesEnhancing leadership skillsEstablishing boundaries between

governance and management12

Why the Need for Policies and Governance? Fiduciary responsibility

• Board may spend on average 1.5 hours per month looking at financials at other information at Board meetings.

• Yet they still retain the ultimate fiduciary responsibility for oversight and governance.

“Committee – a group that keeps minutes and wastes hours”

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Governance concepts Club organizational structures

• Developer owned• Corporate owned/operated• Individual ownership• Member owned

Member owned – often not-for-profit organized under state Nonprofit corporations laws – Board/committee driven

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Governance concepts Board/management structures General manager model

• GM oversees all department heads• GM reports to Board and related committees

Committee/department head model• Board member is assigned as chair of each club

committee (house, finance, greens, golf, etc.)• Each related department head reports directly to

committee chair GOAL – effectively govern and maintain

productive and positive working relationship with management

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Characteristics of volunteers Why do members get involved in

Boards/committees “Types” of members who seek out

Board/committee positions:• Actively involved in community and possibly other

not-for-profit Boards• Business owner (“hey this can’t be any different

than selling furniture right?”)• Accountant/lawyer/banker (“so explain to me this

15% nonmember revenue thing one more time”)• The future new food/coffee/insurance (fill in the

blank) vendor

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Characteristics of volunteers Many Board members do not fully

appreciate the fiduciary responsibility they are about to assume

Fiduciary responsibilities to members• Quality service• Efficiently delivered• Maintaining social environment of club

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Characteristics of volunteers Fiduciary responsibility to regulatory

bodies (IRS, state authorities)• Duty of care – be informed and prudent• Duty of loyalty – acting in best interest of club

and membership While members may join a Board with the

intention of “doing the right thing” – do they know what the right thing is.

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Structures and practices of effective Boards/committees How many committees Documented in Club by-laws Size of committee/how often to meet? Contested election? Nominating committee? Independent members/Matching skill set Staggered terms/Term limits Communication to members Advisory or authoritative?

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Structures and practices of effective Boards/committees Formal written “charter”

• Document “charge” or goals and objectives of committee

• Specific tasks• Composition• Budget potentials and/or constraints

Advanced notice and agenda of meetings – avoid “runaway” meetings

Document and maintain minutes

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Structures and practices of effective Boards/committees Provides clear evidence of governance Outcome - provides clear evidence of

execution of fiduciary responsibility Outcome – serves as communication

tool as to importance of governance role (“setting the tone at the top”)

Transparency

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Enhancing leadership skills

Board orientation Surveys

• Membership• Boards evaluating themselves, their

meetings, their committees.

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Establishing boundariesbetween governance andmanagement That “imaginary line” where the hand off from

the Board/committees to management to execute the policies

Management needs to take an active role to minimize the threat of “Board micro-management”

Factors Trust level Experience of management Preparedness of management

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Establishing boundariesbetween governance andmanagement GM/management preparedness:

• Involvement in committees• Flash reporting• Communication in between meetings• Reliability of representations• Understanding financial information• Avoiding surprises• Providing full facts, not filtered perspective

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Thank You!

How to Add Organizational Strength and Value to Clubs through Effective

Boards and Committees.

Ned McCrory, CPAGeorge Zoglio, CPA, MBA

401-621-6200nmccrory@bfmmcpa.com

Batchelor, Frechette, McCrory, Michael & Co. CPAProvidence, RI