Simple Rules for Board Communication

HansonBy: Laurie Hanson

Common to every successful nonprofit organization is a Board of Directors that communicates well with each other and the Executive Director. Achieving this degree of communication requires dedication and hard work by the organization and its Board. However, the payoff can result in an organization that effectively fulfills its mission, exceeds the goals set for itself, and performs well above other organizations of its type.

There are several key elements that are necessary to build a Board that communicates well including, but not limited to, respecting peers, honest communication, focus on the issues, respect of each other’s time, and methods of communication.

Establish Respect

First and foremost, board members need to have respect for each other and the Executive Director. Respect can be built through formal processes, such as board retreats, or through less formal means, such as gathering for dinner or drinks. A large part of earning respect for one another is simply to get to know each other.

Be Honest

In order to have successful board meetings and resulting actions, board members and the Executive Director need to communicate in an honest way, allowing for an open discussion. This is important for raising concerns, asking questions, and discussing subjects where there is disagreement amongst the board members. Honest, open communication helps the organization to avoid legal problems and ethical dilemmas, and promotes constructive dialog about difficult subjects and strategic issues. If this is a challenge, check out resources like the book Difficult Conversations (Stone, Patton, and Heen)  or Shari Harley’s blog, Candid Culture.

Focus on the Issues

It can be difficult to separate an issue from the messenger. However, keep in mind that the messenger, if communicating in an honest manner, is only raising the issue because he feels it’s significant to the organization. Often times, the messenger has expertise in the issue that’s being raised and has experience in dealing with others who’ve not properly dealt with this particular issue. For example, if a board member is an intellectual property lawyer, she may spot a trademark issue with the photos being used on your marketing materials. Focusing on the issue and not the person raising the issue keeps the board on track for good governance and furthering the mission.

Respect Time

Be honest about the expected time commitment when recruiting. If it’s known that the position will require five hours per week, don’t try to sell it as less than that. Recruiting board members through deception of any type will result in board members who are resentful toward the organization. This is not a good way to start a relationship! Also, remember that board members are busy people. In addition to their responsibility of serving the organization, many also have full-time jobs, children and/or parents that require their time, and other volunteer commitments. Be respectful by limiting the amount of communication to only what’s needed and limiting the time of day for contacting board members. Very few people appreciate a midnight call that’s anything short of an emergency.

Agree on (and Stick to) One Communication Method

There are many ways to communicate information with the Board. Emails, text messages, phone calls, and traditional mail are a few of those methods. Depending on the organization’s size, it may make sense to set up a portal through the organization’s website where board-related items can be posted. The board should come to a consensus on what its preferred communication method is, and stick to that method. This will help the Executive Director to develop a format and communication method that is consistent and relied upon by everyone involved. It is unrealistic to expect specific communication methods be used for each board member. Agreement on the method to use will allow for streamlining and reduce confusion.

 

Putting the above into practice will go a long way toward achieving and surpassing the organization’s goals for its mission and growth. It will result in a strong governing board that works toward the same goal and delivers a cohesive message about the organization and the great work that it does.

Nonprofit Board Fundraising Duties

Contributed by: Kyle Fritch, Eide Bailly Tax ManagerKyleFritch

Boards have several responsibilities and duties to help fulfill their organization’s vision and mission. They oversee management and finances, set strategic direction, and ensure compliance with legal and tax requirements, to name a few. However, one of the board’s primary responsibilities is to help secure adequate resources to use in accomplishing the business mission. When it comes to the board’s role in fundraising, there is no single right answer. Nevertheless, nonprofit board members should consider focusing on four fundraising responsibilities:

1. Take a Leadership Role in Fundraising – Board members must take a leadership role in fundraising since they essentially own the organization and are responsible for the well-being of the organization and its successes. In addition, supporters and potential supporters see board members as the people most committed to the organization. If the board will not take a lead role in raising funds, why should anyone else support the organization’s cause? One way to accomplish the leadership role is to be actively involved in the development of the organization’s fundraising plan. A well-thought-out fundraising plan (developed in partnership with the board) identifies the board’s role, the amount each board member is expected to give and/or raise, and provides guidance for the range of ways in which they can support the fundraising efforts. Identifying the fundraising tool that best suits each member for bringing resources and people to the organization will only strengthen the organization’s overall success.

2. Leverage Connections – One of the most significant reasons a person makes a contribution to a nonprofit organization is because the right person asks. Although prospective donors must be interested in the organization, it is the people involved, especially those who ask for the gift, that makes people want to contribute. Therefore, board members should look for opportunities to introduce others to their organization and its mission. Making these introductions is valuable to the fundraising effort and provides opportunities to bring attention to the organization’s good work in the community.

3. Give-Or-Get Policy – What is a give-or-get policy? The name speaks for itself. Your board members agree to either donate a certain amount of money every year, or they agree to raise the equivalent from others. The level of monetary commitment is up to the board members. An important reason to implement this type of policy is that major donors, grant-makers, and individuals want to see the level of commitment from boards of the organizations they support or are thinking of supporting. Implementing and complying with such a policy is an effective way to demonstrate the board’s commitment to the success of the organization. Careful planning should be performed before implementing such a policy to insure it will succeed and not drive board members away. Every board is unique and may have different circumstance to consider. Some board members may lack personal wealth or community influence and others may have no experience fundraising. Taking the time to establish rules and procedures that fit an organization’s particular situation will aid in the policy’s success and in gaining compliance from its participants.

4. Oversee Your Organization’s Fundraising Efforts – As a board member you have the fiduciary duty to maintain financial accountability of your organization. Rather than taking a passive role in the fundraising efforts, board members should monitor the organization’s progress towards its fundraising goals. At times, staff members can become inundated with the day to day operations and may not realize a particular activity is under-producing or lacks the funds to be successful. By exercising oversight at a higher level the board is in a position to evaluate funding priorities and make recommended corrections.

Ultimately, the missions of nonprofits are important, but without funds, the organization cannot effectively function. By taking a leadership role, leveraging connections, and overseeing the organization’s fundraising efforts, board members can meet their fiduciary duties and secure the funding needed to fulfill their organization’s mission.

 

One funding opportunity, for 501(c)(3) organizations located in AZ, CO, MN, and UT: http://www.eidebailly.com/industries/nonprofit/resourcefullness-award-home

 Apply for the Eide Bailly Resourcefullness Award by Wednesday, August 12th.

Advice from a CEO to New Board Members

Contributed by:  Sal Mondelli, President & CEO, 360 CommunitiesSal Mondelli Board Photo

I have been CEO of 360 Communities, a social services not-for-profit agency serving over 17,000 individuals per year in Dakota County, for more than three years. This is my first opportunity running a not-for-profit after serving on not-for-profit boards for 25 years. The work is not any easier than running a for-profit company, but when you see and hear stories about helping people in need, the results are extremely rewarding.

Here are a few suggestions for anyone contemplating joining a not-for-profit board:

Passion about the Work

Be involved in something that you are passionate about and can support wholeheartedly. Don’t be afraid to try something that is outside of your comfort zone. Research the work that the agency does and don’t be afraid to ask about expectations and responsibilities of a board member.

Commit and Make it a Priority

Ensure that you have the time to commit to attending board and committee meetings, as well as events. If the schedule doesn’t work for you right now, consider volunteering on a committee until you do have the time. Don’t be afraid to say “no” upfront if you cannot make the commitment.

Educate Yourself

Get to know the Mission, Values, and Strategy of the agency. Some offer a complex set of services that will take some time to understand. Learn the “elevator pitch” and understand the fundraising expectations.

Understand the Difference between Governance and Operations

As a board member you are responsible for strategic, financial, and compliance issues – different from operational details required at your “day job”. Be a value-added partner to the CEO and ensure that there is a level of transparency that offers easy dialog between all board members.

Enjoy Yourself and Have Fun

This will be work but it shouldn’t be drudgery. Remember the huge difference you are making in a number of people’s lives

 

Should your Nonprofit have an Audit Committee?

By:  Karen Jessnon-profit_many hands-all in

To create a governance structure of accountability, a nonprofit needs board oversight for the audit function. Sometimes the full board is tasked with oversight for the audit.  Other times, managing the audit process becomes cumbersome for a large board and establishing a dedicated committee makes sense.  An effective audit committee assists the governing board in performing their fiduciary and oversight responsibilities for the nonprofit.

Some nonprofits use a standing committee such as an executive committee or finance committee to oversee this process. Depending on the size and complexity of the nonprofit, it may be beneficial to create a separate audit committee.

Guidelines for Establishing Your Audit Committee

Suggestions:

  • The committee should consist of 3-5 people
  • Members should have a good skills mix

Musts:

  • To ensure that the audit process is objective, no member of the audit committee should be employed by the nonprofit (or the audit firm). Having independence empowers the audit committee to make unbiased judgments about internal financial procedures, as well as the performance of the auditors. (Regardless of whether an audit committee is used, all charitable nonprofits should review their practices to ensure that there is independence in the oversight of the auditor(s).)
  • Members need to be knowledgeable about nonprofit financial matters.
  • The board should establish key responsibilities of the committee to ensure that the committee fully understand their roles and can be effective.

The Committee’s Role

An audit committee’s role typically includes:

  • Providing oversight of the financial reporting process, the audit process, the system of internal controls and compliance with laws and regulations.
  • Developing a good understanding of the nonprofits’ internal control over financial reporting.
  • Acquiring sufficient knowledge of the nonprofit’s risk assessment process so they understand how and where things may go wrong.
  • Working closely with the nonprofit’s staff to prepare for the audit.

In some circumstances, the audit committee may also be charged with the selection and oversight of the external auditors.

With the increased scrutiny that nonprofits face, an audit committee adds another set of eyes to assist the board with their governing responsibilities. Having members with the appropriate skillset to oversee the financial reporting process, the audit process, the system of internal controls and compliance with laws and regulations gives a nonprofit an additional level of transparency.  Should your nonprofit have an audit committee?

Additional Resources:

Eide Bailly’s Audit  Committee Checklist

Council of Nonprofit’s “What does an audit committee do?

 

Evolution of Best Practices

By:  Deb NelsonDebNelson

Independent Sector recently updated their 33 Principles for Good Governance and Ethical Practices. As I reviewed the summary, I wondered how nonprofit organizations choose which set of “principles” they adopt. There are many organizations, nationwide and locally, that have disseminated information on what they believe to be principles of best practice or ethical standards for nonprofits. These generally include categories covering financial aspects, governance, fundraising and transparency.

Does your nonprofit follow principles recommended from a local state association? Do you go through a rigorous review by one of the dozen evaluators to obtain a seal of approval? Or have you developed your own guidelines based on a combination of sources?

At the end of the day, the over-riding purpose of principals is to ensure nonprofits are effective, successful, and responsible. As your nonprofit evolves, are you remembering to circle back to your adopted principles for a “check-up” and investigate areas that need tweaking? For example, if you have started a capital campaign have you reviewed those fundraising principles that may not have applied to you in the past? If you’ve moved to cloud-based technology, are you following best practices for data protection?

 

Expert to Board Members: Ask Good Questions!

Kate Barr is a respected member of the nonprofit community in the Minneapolis-St. Paul area.  So, when we saw her recent article published on Nonprofitquarterly.org, we took notice.

In How Board Members Can Learn to Spot Red Flags, Kate points to many examples where Board involvement could have made the difference in the health of the nonprofit they served.  She acknowledges that nonprofit business models can be complex and it is often difficult to spot issues when you are in the role of providing governance rather than management.

Her solution is simple:  Ask good questions!

We could not agree more with this stance (see one of our posts on this issue).

Kate’s article is worth the read and a valuable piece of content to share with any board members you may know.

Executive Perspective on Top Risks for 2014 – Comparison of for-profit concerns with those of tax-exempt organizations

Protiviti reported their survey results from executives in the for-profit sector regarding their Top Ten Risks for 2014:

  • Regulatory changes and scrutiny
  • Economic conditions
  • Uncertainty surrounding political leadership
  • Succession planning for key employees and board
  • Organic growth
  • Cyber threats
  • Organizational resistance to change
  • Privacy and identity security system protection
  • Compliance with healthcare reform legislation
  • Volatility in financial markets

Other concerns include setting appropriate executive compensation and addressing the growing demands of compliance oversight.

Not surprising, the risk concerns stated above are very similar to those experienced by executives in the tax-exempt sector. Why is that? To remain viable within a commercial setting, a for-profit business must remain healthy, relevant and profitable. To compare, a tax-exempt organization must also remain healthy and relevant in order to meet its mission statement into the future.  The similarity is the need for relevance and strong financial health.  The contrast is that the goal of a for-profit enterprise is solely profitability, not the specific product or service it provides. This differs fundamentally from a tax-exempt organization that exists to accomplish its mission. In other words, for the tax-exempt organization, financial health is a means to accomplish its goal, not the goal itself.