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Strengthening Nonprofits. Strengthening Kentucky.
Welcome!
Strengthening Nonprofits. Strengthening Kentucky.
Webinar Housekeeping
Telephone
• All lines will be muted during the webinar
• ReadyTalk Technical Support : 1.800.843.9166
Web Conferencing
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Strengthening Nonprofits. Strengthening Kentucky.
Strengthening Kentucky Communities
•Funded by the U.S. Department of Health and Human
Services, Administration for Children and Families
•American Recovery and Reinvestment Act of 2009
Strengthening Communities Fund
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Strengthening Nonprofits. Strengthening Kentucky.
Strengthening Kentucky Communities
•Strengthening Communities Fund Focus: Build the capacity of
nonprofits to address the broad economic recovery issues
present in their communities , including helping low-income
individuals:
osecure and retain employment,
oearn higher wages,
oobtain better-quality jobs,
ogain greater access to state and Federal benefits and tax
credits, including Recovery Act benefits.
Strengthening Nonprofits. Strengthening Kentucky.
What Is the KY Nonprofit Leadership Initiative?
• Mission: Serve, Strengthen and Support Kentucky Nonprofits o Education & Workshops
o Networking Opportunities
o Technical Assistance & Consulting
o Information & Resource Sharing
• Outreach program of the UK College of Agriculture, Department of Community & Leadership Development, founded in 2002
Strengthening Nonprofits. Strengthening Kentucky.
Board Governance Basics
Tuesday, August 24, 2010
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Strengthening Nonprofits. Strengthening Kentucky.Strengthening Nonprofits. Strengthening Kentucky.Strengthening Nonprofits. Strengthening Kentucky.
Danielle Clore, MPADirector
Kentucky Nonprofit Leadership Initiative
Strengthening Nonprofits. Strengthening Kentucky.
Objectives
1. Overview of Nonprofit Board Service
2. The Board’s Legal Responsibilities
3. The Board’s Role
4. Board and Staff Partnership
5. Committees and their Purpose
6. Recruiting Board Members
7. Final Tips
Strengthening Nonprofits. Strengthening Kentucky.
Overview of Nonprofit
Board Service
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Strengthening Nonprofits. Strengthening Kentucky.
What is governance?
• Nonprofit organizations are governed by a
volunteer board of directors
• Governance means to steer, set direction
Strengthening Nonprofits. Strengthening Kentucky.
Why Do People Join Boards?
Strengthening Nonprofits. Strengthening Kentucky.
The Board’s Legal
Responsibilities
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Strengthening Nonprofits. Strengthening Kentucky.
Board Roles and Responsibilities
• Boards = Legal Guardians of the Organization
• Granted the AUTHORITY to make decisions on behalf
of the organization
• Must be ACCOUNTABLE for organizational
performance
Strengthening Nonprofits. Strengthening Kentucky.
According to Nonprofit Corporate Law
• Duty of Care: using your best judgment
• How?
– Ask questions
– Attend meetings
– Read materials as requested
– Keep up to date on organization’s activities
Strengthening Nonprofits. Strengthening Kentucky.
According to Nonprofit Corporate Law
• Duty of Loyalty: putting personal/professional interests aside
• How?
– Approve board conflict of interest policy
– Require that board members sign a conflict of interest disclosure statement annually
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Strengthening Nonprofits. Strengthening Kentucky.
According to Nonprofit Corporate Law
• Duty of Obedience: being true to the organization’s mission
• How?
– Ensure that funds are used for what donors intend
– Ensure that the organization is following the law and complying with regulations
Strengthening Nonprofits. Strengthening Kentucky.
According to Nonprofit Corporate Law
• Duty of Transparency: being open and making certain information available to the public
• How?
- Annual Reports- IRS Form 990
- Annual Audit
ReReadyTalk Technical Support: 800.843.9166
Strengthening Nonprofits. Strengthening Kentucky.
Board Roles and Responsibilities
• Kentucky Statutory Standards of Conduct for
Officers and Directors
� in good faith
� on an informed basis
� in the best interests of the organization
� "ordinary prudent person" standard
� reliance on committees and experts
� what happens if the standards are not met?(KRS 273.215 and 273.229)
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Strengthening Nonprofits. Strengthening Kentucky.
Nonprofits and Sarbanes-Oxley
• Legislation passed in 2002 in response to a large number of for-profit scandals involving Enron, Arthur
Anderson, and others. Extreme fraud, conflicts of interest on boards, unethical executive compensation practices, and improper auditing led
to the failure of these companies.
• In response, Sarbanes-Oxley set in place a number of required processes for publicly held corporations.
Strengthening Nonprofits. Strengthening Kentucky.
Nonprofits and Sarbanes-Oxley
• Only two aspects of Sarbanes-Oxley are applicable to nonprofits:
� Strengthened whistleblower protection
� Retention of documents related to lawsuits
The new Form 990 also asks whether you have policies related
to these two areas, making it more important to get them
adopted.
Strengthening Nonprofits. Strengthening Kentucky.
Board Roles and Responsibilities
• Protecting Your Organization
• Directors and Officers Insurance
• Financial Audit
• Conflict of Interest Policy
& Annual Disclosure
• Legal Audit
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Strengthening Nonprofits. Strengthening Kentucky.
The Board’s Role
Strengthening Nonprofits. Strengthening Kentucky.
What Do Nonprofit Boards Do?Flickr photo: *Thierry*
Strengthening Nonprofits. Strengthening Kentucky.
Board Roles and Responsibilities
Key Roles of the Board
1.Articulate the Mission & Set Organizational Direction
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Strengthening Nonprofits. Strengthening Kentucky.
Board Roles and Responsibilities
Key Roles of the Board
2.Provide Oversight
Strengthening Nonprofits. Strengthening Kentucky.
Board Roles and Responsibilities
Key Roles of the Board
3.Ensure Necessary Resources
Strengthening Nonprofits. Strengthening Kentucky.
Board Roles and Responsibilities
Individual Board Member Responsibilities: Participate in Fundraising Activities
Why?
• Links to funders
• Those closest to the organization should give first
• Collectively, the board can cast a wide net to find new
donorsFlickr photo: kwilliams
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Strengthening Nonprofits. Strengthening Kentucky.
Board Roles and Responsibilities
Board Participation in Fundraising Activities
• Make a personal, meaningful financial contribution
• Provide names of potential funders
• Visit potential funders
• Write thank-you notes
• Attend fundraising events
Strengthening Nonprofits. Strengthening Kentucky.
Best Practices for Board Giving
• All members of the board make an annual contribution to the organization that is meaningful for them
• The organization is one of their giving priorities
• Develop a policy that spells out the expectations and share this requirement up-front in all recruiting efforts.
Strengthening Nonprofits. Strengthening Kentucky.
Individual Board Member Responsibilities
• Attend board and committee meetings and functions
• Be informed about the organization’s mission, services,
policies & programs
• Review agenda, financial statements and other materials
before board and committee meetings
• Serve on committees and take on special assignments
when needed
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Strengthening Nonprofits. Strengthening Kentucky.
Individual Board Member Responsibilities
• Make a personal annual financial contribution to the organization
• Inform others about the organization
• Suggest possible nominees to the board who can make contributions to the work of the board and the organization
• Follow confidentiality and conflict of interest policies
• Allow staff to do their jobs – support, but don’t micromanage
Strengthening Nonprofits. Strengthening Kentucky.
12 Questions a Board Should Ask & Understand
• Where do our revenues come from?
• What is our cash flow?
Strengthening Nonprofits. Strengthening Kentucky.
12 Questions a Board Should Ask & Understand
• What could really hurt – or kill – our
organization in the next few years?
• How are we doing relative to other
organizations similar to ours?
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Strengthening Nonprofits. Strengthening Kentucky.
12 Questions a Board Should Ask & Understand
• If our chief executive were hit by a bus or
won the lottery tomorrow, who could run the organization?
• How are we going to improve, grow and
move forward?Flickr photo: Maddestmouse
Strengthening Nonprofits. Strengthening Kentucky.
12 Questions a Board Should Ask & Understand
• Are we living within our means?
• How much does our staff (and others) get paid?
Strengthening Nonprofits. Strengthening Kentucky.
12 Questions a Board Should Ask & Understand
• How does bad news get to the top?
• What are our internal controls?Flickr photo: Tampen
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Strengthening Nonprofits. Strengthening Kentucky.
12 Questions a Board Should Ask & Understand
• Do we understand what our auditors are
telling us?
• Do I really understand the answers to
questions 1-11?
ReReadyTalk Technical Support: 800.843.9166
Strengthening Nonprofits. Strengthening Kentucky.
The Board and Staff
Partnership
Strengthening Nonprofits. Strengthening Kentucky.
The Effective Board/Staff Partnership
• Requirements for Effectiveness:
� Clarity of roles
� Appropriate division of responsibilities
� Attention to the working relationships
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Strengthening Nonprofits. Strengthening Kentucky.
The Effective Board/Staff Partnership
• Organizational health depends
on the effectiveness of this
partnership
Strengthening Nonprofits. Strengthening Kentucky.
The Effective Board/Staff Partnership
� Requires regular and open communication
� Benefits from regular and systematic feedback and assessment
� May need redefinition as organization continues to grow and change
Flickr photo: flowercat
Strengthening Nonprofits. Strengthening Kentucky.
The Board/Staff Partnership Clarified
The Board is authorized by the state of
Kentucky and the organization’s donors to govern the life of the organization
� Establish mission, ensure necessary resources and develop guiding principles
� Retain ultimate responsibility and power
� Is accountable to the public trust and the organization’s constituents
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Strengthening Nonprofits. Strengthening Kentucky.
The Board/Staff Partnership Clarified
The Executive is authorized by the board
of directors to manage the daily affairs of the organization
� Supports the board with strategic information, ideas and connections
� Manages the affairs of the organization through appropriate planning and implements programs as outlined by the mission
� Retains operational responsibility and power
Strengthening Nonprofits. Strengthening Kentucky.
Example: Board Takes the Lead
• Articulates the guiding values through policies that put the mission into action
• Hires, supports & evaluates the chief executive
• Monitors fiscal management, approves budget & hires annual auditor
• Selects, recruits & orients new board members• Opens doors for fundraising
Strengthening Nonprofits. Strengthening Kentucky.
Example: Chief Executive Takes the Lead
� Develops and proposes policy questions
for the board’s consideration
� Hires, supervises and motivates staff
� Develops and implements programs
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Strengthening Nonprofits. Strengthening Kentucky.
Example: Shared Lead
• Develop a strategic plan
• Create a fundraising plan and strategies
• Initiate and implement periodic organizational evaluations
• Prepare for board meetings
Strengthening Nonprofits. Strengthening Kentucky.
Committees and their
Purpose
Strengthening Nonprofits. Strengthening Kentucky.
Why have board committees?
•Board committees, when used effectively,
distribute and expedite the work of the board.
•Effective committees free the board agenda from
routine tasks and discussion to allow focus on major
policies, issues and programs.
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Strengthening Nonprofits. Strengthening Kentucky.
•Regularly assess the need and value of standing
committees and disband ad hoc committees when
their objectives have been achieved.
Strengthening Nonprofits. Strengthening Kentucky.
•Inviting non-board
members to serve on
committees can be a great
way to expand the expertise
on a committee and “test”
out potential board
members.
Flickr photo: Shannon Taylor
Strengthening Nonprofits. Strengthening Kentucky.
•Advisory groups can also be established to
provide technical expertise or assist with
fundraising. Typically, are not board members.
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Strengthening Nonprofits. Strengthening Kentucky.
Recruiting Board Members
Strengthening Nonprofits. Strengthening Kentucky.
Remember: Why Do People Join Boards?
Strengthening Nonprofits. Strengthening Kentucky.
• What Do We Need?
• Skills
• Expertise
• Diversity
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Strengthening Nonprofits. Strengthening Kentucky.
The Board Building Cycle
Strengthening Nonprofits. Strengthening Kentucky.
Materials to Share with Prospective Board Members
� Organization’s info (brochures, etc.)
� Board and committee rosters
� Brief written history of the organization
� Calendar of upcoming board and
committee meetings
� Organization’s expectations of board
members (job description, board member
agreement, etc.)
Strengthening Nonprofits. Strengthening Kentucky.
Orienting the BoardOrient to the Organization:
� Program Information
� Financial Information
� History of the Organization
� Strategic Direction
� Organizational Structure
Orient to Board Service:
� Roles and Responsibilities
� Board Operations
� Board Members
Assess Skills Needed
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Strengthening Nonprofits. Strengthening Kentucky.
Final Tips
ReReadyTalk Technical Support: 800.843.9166
Strengthening Nonprofits. Strengthening Kentucky.
Caution:
Reasons That Boards Do Not Engage
Strengthening Nonprofits. Strengthening Kentucky.
→The board is too large – not enough work
for members to do
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Strengthening Nonprofits. Strengthening Kentucky.
→The board is too small – members feel
overwhelmed or suffer from limited
perspectives
Strengthening Nonprofits. Strengthening Kentucky.
→The executive committee is too active –
meets too often and the rest of the board
feels useless
Strengthening Nonprofits. Strengthening Kentucky.
→Members receive insufficient or
ineffective orientation
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Strengthening Nonprofits. Strengthening Kentucky.
→Agendas are weak – lack substance
and relevant discussion
Strengthening Nonprofits. Strengthening Kentucky.
→Members do not feel their skills are
being used
Strengthening Nonprofits. Strengthening Kentucky.
→There is little or no opportunity for
discussion at meetings – members are bored or frustrated
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Strengthening Nonprofits. Strengthening Kentucky.
→The board lacks social glue – members
have little in common except board
service
Strengthening Nonprofits. Strengthening Kentucky.
Keep the Board Fresh
• Use staggered term limits
� Refreshes the board
� Encourages diversity
� Rotates off those members who are ineffective, burnt out or troublesome
Strengthening Nonprofits. Strengthening Kentucky.
Keep the Board Fresh
• Evaluate
� Board meetings
� Board effectiveness
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Strengthening Nonprofits. Strengthening Kentucky.
Shake Things Up
Strengthening Nonprofits. Strengthening Kentucky.
• Use nameplates and change where board members sit
• Restructure the agenda
• Meet in a different location
• Give everyone an index card at the end of the meeting and ask “How could this meeting have been better?”
• Have lunch before a board meeting to build social glue
Strengthening Nonprofits. Strengthening Kentucky.
Additional Resources
• BoardSourcewww.boardsource.org
• Independent Sectorwww.independentsector.org
• Nonprofit Risk Management Centerwww.nonprofitrisk.org
• Crit Luallen’s Recommendations for Public and Nonprofit Boardswww.auditor.ky.gov
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Strengthening Nonprofits. Strengthening Kentucky.
How? Your Action Items:• Appoint a board governance committee focused on building a strong board
• Be strategic in recruiting new board members – avoid warm body recruiting
• Be up front with potential board members about membership expectations
• Create an annual board orientation program for all new members & invite all
members to join you for a refresher
• Build in board member education to each & every meeting agenda
• Staff & Board Presidents: treat board members well – they are volunteers,
recognize success and good work
• Board members: Hold one another accountable
• Board members: If you have questions, ASK
• Staff: Welcome questions & respect the board’s right to discuss issues
without you
• Join the NLI’s Nonprofit Network and other organizations
Strengthening Nonprofits. Strengthening Kentucky.
Strengthening Nonprofits. Strengthening Kentucky.
What Else is Available through the Strengthening Kentucky
Communities Program?
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Strengthening Nonprofits. Strengthening Kentucky.
•Collaboration: Working Together for Greater
Impact
Wednesday, September 8, 10 a.m. - 12 p.m.
•Nonprofit Risk Management Basics
Wednesday, September 22, 10 a.m. - 12 p.m.
•Generating & Diversifying Revenue
Wednesday, October 27, 10 a.m. - 12 p.m.
•Human Resources Management
Thursday, November 4, 10 a.m. - 12 p.m.
•Basic Bookkeeping
Thursday, November 18, 10 a.m. - 12 p.m.
•Successful Marketing & Public Relations
Strategies
Thursday, December 16, 10 a.m. - 12 p.m.
• The 3 R’s of Volunteer Management
Friday, January 14, 10 a.m. - 12 p.m.
• Program Evaluation Basics
Wednesday, January 26, 1:30 - 3:30 p.m.
• Technology & Data Management
Wednesday, February 16, 10 a.m. - 12 p.m.
Register online: www.kynonprofits.org
Strengthening Nonprofits. Strengthening Kentucky.
• Customized, technical assistance to select nonprofit organizations focusing on economic recovery activities
• Capacity building clinics will be held for approximately 20 nonprofit organizations
• 1 ½ day meetings held in spring & summer 2011
• Application process
• Participation includes involvement of staff and board and will include a pre and post organizational assessment
Technical Assistance
Strengthening Nonprofits. Strengthening Kentucky.
Are There Other NLI Resources to Assist Our Nonprofit?
Kentucky Nonprofit Network
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Strengthening Nonprofits. Strengthening Kentucky.
Why Join the Nonprofit Network?
• Save time and money
owith discounts on services and products designed
to make running your organization easier
o job postings with the NLI Career Center
o e-communications services
oNLI annual Forum
o regular schedule of educational events
Strengthening Nonprofits. Strengthening Kentucky.
Why Join the Nonprofit Network?
• Save time and money
o FREE board training
o 15% discount on NLI events, including the Annual
Forum
Strengthening Nonprofits. Strengthening Kentucky.
Why Join the Nonprofit Network?
• Save time and money
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Strengthening Nonprofits. Strengthening Kentucky.
Why Join the Nonprofit Network?
• Strengthen your organization
o Training and education
• board
• staff
• other volunteers
oConsulting services
oYour membership provides you access to
the answers you need!
Strengthening Nonprofits. Strengthening Kentucky.
• Better Boards through Assessment
Thursday, September 2, 2010
• Nonprofits & Lobbying: Yes You Can! Sponsored by Strategic Funding Group
Thursday, September 23, 2010
• How to Captivate and Engage Your Constituents with Your Website WEBINAR
Wednesday, November 3, 2010
• Getting to Yes – Increasing Sponsorship Revenue for Any-Sized Nonprofit
WEBINAR
DATE
Upcoming NLI Events
Strengthening Nonprofits. Strengthening Kentucky.
• 2010 Kentucky Nonprofit Leadership Forum
o Wednesday, October 13 – Thursday, October 14
o Lexington Convention Center
o 8:00 a.m – 4:30 p.m.
o SAVE! Early registration deadline – September 20
www.kynonprofits.org
Upcoming NLI Events
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Strengthening Nonprofits. Strengthening Kentucky.
Why Join the Nonprofit Network?
• Connect
oother nonprofit leaders
• for networking and collaboration
ovendors who want to make achieving your
mission easier
ReReadyTalk Technical Support: 800.843.9166
Strengthening Nonprofits. Strengthening Kentucky.
Why Join the Nonprofit Network?
• Advocate
o For your nonprofit
o For a stronger, more unified nonprofit voice in
Kentucky
o Annual Kentucky Nonprofit Day at The Capitol
ReReadyTalk Technical Support: 800.843.9166
Strengthening Nonprofits. Strengthening Kentucky.
Why Join the Nonprofit Network?
• Membership is on a sliding fee scale
• www.kynonprofits.org
ReReadyTalk Technical Support: 800.843.9166
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Strengthening Nonprofits. Strengthening Kentucky.
Connect
Strengthening Nonprofits. Strengthening Kentucky.
A Small, but Important Favor:
Please Evaluate Today’s Webinar
• Only 7 Questions
• Less than 5 minutes
• Required by our funder
• Is one of the reasons nonprofits THRIVE –
helps us better address future training and
consulting needs
Strengthening Nonprofits. Strengthening Kentucky.
Contact Us
• For information
• To join the Nonprofit Network
• For links and codes for Member Discounts
Kentucky Nonprofit Leadership Initiative
300 Garrigus Building
Lexington, KY 40546
859.257.2542
www.kynonprofits.org
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