Field Guide to Developing, Operating and Restoring Your Nonprofit Board

Transcription

1 Field Guide to Developing, Operating and Restoring Your Nonprofit Board Third Edition By Carter McNamara, MBA, PhD Authenticity Consulting, LLC Minneapolis, MN USA

2 Copyright 2008 Authenticity Consulting, LLC, Minneapolis, Minnesota. All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means now known or to be invented, electronic or mechanical, including photocopying, recording, or by an information storage or retrieval system without written permission from the author or publisher, except for brief inclusion or quotations for review. For reprint permission, more information on Authenticity Consulting, LLC, or to order additional copies of this or any of our other publications, please contact: Authenticity Consulting, LLC 4008 Lake Drive Avenue North Minneapolis, MN USA toll-free direct Trademarks Authenticity Circles, Free Management Library, Free Nonprofit Micro-eMBA and Free Micro-eMBA are service marks of Authenticity Consulting, LLC, Minneapolis, Minnesota. Leveraging the Power of Peers is a registered mark of Authenticity Consulting, LLC, Minneapolis, Minnesota. Policy Governance is a registered trademark of Carver Governance Design, Inc. Credits Cover design and illustrations by Erin Scott/Wylde Hare Creative, Woodbury, Minnesota. Photographs 2005 JupiterImages Corporation/Photos.com, primary cover photo; Teri McNamara/Impressions & Expressions and Erin Scott/Wylde Hare Creative, secondary cover photos. Clip art by Nova Development Corporation Art Explosion 750,000 Images. Printed by Graphic & Printing Services, Big Lake, Minnesota. Manufactured in the United States of America First Edition April 2002 Second Edition June 2003 Third Edition July 2008 Waivers of Responsibility 1. Various Web addresses are referenced in this book. The author and publisher have no legal responsibility or liability for the currency or accuracy of these Web addresses or their content. 2. Information in this book is not to be considered as legal, tax and/or financial advice as if from an expert specifically in those areas. In-depth and technical advice needed in those areas should be obtained from professionals in those areas. Publisher s Cataloging in Publication Data McNamara, Carter, Field Guide to Developing, Operating and Restoring Your Nonprofit Board / by Carter McNamara Includes bibliographical references and index. ISBN (paperback) ISBN (paperback) 1. Board of Directors. 2. Nonprofits. 3. Governance. 4. Leadership I. Author II. Title

3 Table of Contents Table of Contents...i Table of Tables...vi Introduction...vii Audiences New, Established and Struggling Nonprofits...vii Guide Recognizes Diversity of Board Models...vii Step-by-Step, Easy-to-Reference Content...viii How to Use This Guide...xi Frequently Used Terms in Guidebook...xiii Frequent References to Free, Useful Resources...xiv Sample Board Policies for Use by Owner of This Book...xiv About the Author...xv About Authenticity Consulting, LLC...xv PART I: STARTING A NONPROFIT AND BOARD...1 To Govern Nonprofits, First Understand Them...3 How Nonprofits Differ From For-Profits and How They Are the Same...3 Different Types of Public Needs Met by Nonprofits...4 There Is More Than One Type of Nonprofit Organization...4 Three Most Important Levels Within Nonprofits...6 Most Important Roles People Play in Nonprofits...7 Nonprofit Programs What They Are, What They Are Not...8 Different Designs of Nonprofits...9 What A Small Nonprofit Typically Feels Like...13 How to Start a Nonprofit...16 What is the Purpose, or Mission, of the Nonprofit?...16 Consider Fiscal Sponsorship to Jump Start Nonprofit?...17 What Help Might You Need?...18 What Should You Name the Nonprofit?...19 Recruit Your Initial Board Members ( First Board )...19 Hire Chief Executive Officer (Executive Director) Yet?...20 Draft Your Articles of Incorporation and Initial By Laws...20 Conduct Basic Strategic Planning for Now...21 Conduct Your Initial Board Meeting to Do Approvals...22 Do All Necessary Filings...22 PART II: BOARD ROLES AND RESPONSIBILITIES...25 Variety of Board Models for You...27 What is a Board of Directors?...27 How Much Should Your Board Be Involved in Management?...28 i

4 What Does a Healthy Board Look Like? Variety of Board Models to Consider for Your Board Some New Board Models to Also Think About Typical Phases of Developing Your Board Other Types of Boards for You to Be Aware Of Your Board s Most Important Documents Board Roles and Responsibilities Fiduciary Duties (Legal Responsibilities) of Your Board How to Minimize Liabilities of Your Board Members How to Ensure Ethical Behavior of Your Board Members What Board Committees Typically Do (If You Use Them) Roles of Your Board Members and Officers Leadership Role of Your Board Chair Leadership Role of Your Executive Committee Board and Staff How Do Their Roles Compare? Organization Chart of Board/Staff Relationships PART III: HOW BOARDS DO THEIR WORK Your Board Calendar (Your Board s Annual Important Tasks) Strategic Planning: Direction for Nonprofit and Your Board All Else Flows From Your Strategic Planning Strategic Planning What, Who and When Sample Planning Process for Short-Term Strategic Plan Developing Your Initial Strategic Plan for Now How to Staff and Fully Equip Your Board Different Approaches You Can Use to Staff Your Board Adopt Comprehensive, Yet Practical, Board Staffing Policy How to Identify the Best Potential Board Members How Potential Members Apply to Your Board How to Orient New Members About the Nonprofit How to Train Board Members About Their Roles How to Keep Your Board Members Fully Informed How to Thank and Reward Your Board Members How to Retire Board Members How to Remove a Board Member Some Frequently Asked Questions About Board Staffing How to Organize Committees (If You Use Them) Advantages and Potential Disadvantages of Committees How to Organize Your Committees (or Your Task Forces) What Each Committee Typically Does How to Successfully Start Each Committee (or Task Force) Work Plan Each Committee s To do List Board Decision Making Typical Types of Decisions Your Board Should Make How to Ensure Your Board Makes Useful Decisions ii

5 How Your Board Members Can Come to Consensus...93 How to Be Sure Board Members Participate in Decisions...94 How to Govern the Nonprofit...97 How to Make Sure Stakeholders Are Always Heard...98 How to Ensure Relevant and Realistic Strategic Planning...99 How to Make Sure Board Operations Are High-Quality How to Verify Programs Meet Needs of the Community How to Ensure Fair Management and Productive People How to Take the Lead in Fundraising All Kinds How to Effectively Get the Word Out About the Nonprofit How to Ensure Sound Management of Finances and Taxes How to Advocate for Public Needs and Lobby Legally How to Track Performance of Nonprofit, Board and People How to Identify and Avoid Risks to the Nonprofit How to Ensure Sustainability of Nonprofit, Programs, People and Money How to Regularly Measure Overall Health of the Nonprofit How to Ensure Transparency and Accountability How to Have Productive Board Meetings How to Design Successful Board Meetings Questions Your Board Members Should Always Ask Avoid Sidebar Meetings Roberts Rules of Order The 20% Used 80% of the Time What to Document In Your Board Meeting Minutes When to Have an Executive Session (in camera) When to Have Open Board Meetings How to Measure the Quality of Each Board Meeting How to Ensure a High-Quality Board One Set of Best Practices for Your Board How to Conduct Board Retreats For Planning and Renewal How to Help Board Members Diagnose Nonprofit s Problems Rather than Focus on Symptoms How to Match Board s Priorities to Life Cycle of Nonprofit How Board Members Can Evaluate Their Board How to Ensure Full Participation of Board Members PART IV: BOARD AND CHIEF EXECUTIVE How to Hire Your Chief Executive Officer Role of Typical Nonprofit Chief Executive Officer Wrong Reasons to Hire Chief Executive Right Reasons to Hire Chief Executive How to Determine Compensation for Your Chief Executive Use an Employment Contract With Your Chief Executive? How to Recruit and Select Your Chief Executive How to Orient Your New Chief Executive iii

6 How to Work With Your Chief Executive Your Board and CEO Are Really In Strategic Partnership How to Ensure Effective Board and CEO Relations How to Ensure Strong Relationship Between Board Chair and Chief Executive How to Evaluate Your Chief Executive Officer How to Quickly Replace Your CEO (CEO Succession Management) PART V: RESTORING STRUGGLING BOARDS Context for Successfully Restoring Your Board Issues to Always Watch For On Your Board Common Types of Broken Boards General Principles for Restoring Your Board Why Board Training or Team Building Alone Seldom Restores Boards Specific Principles for Restoring Your Board Procedures to Restore Your Board One Set of Proven Steps to Restore Your Board How to Manage Interpersonal Conflicts How to Manage Board Conflict and Come to Decisions How to Get Your Board Members Unstuck Recovering From Founder s Syndrome What is Founder s Syndrome? Leadership and Founder s Syndrome the Good and Bad Actions Your Board Members Must Take Actions Your Founder Must Take Actions Your Staff Members Might Take APPENDICES: Appendix A: Glossary Appendix B: Resources for Nonprofits Free Management Library SM Free Nonprofit Micro-eMBA SM Organization Development Program Organizations Assisting Nonprofits Free, On-Line Newsletters and Forums Board-Specific Resources Some Mega-Websites About Boards Appendix C: Guidelines to Form Your Advisory Board Overall Benefit of an Advisory Board What is an Advisory Board? How to Organize Your Advisory Board iv

7 Appendix D: Guidelines to Working With Consultants Reasons You Might Need Consultants Major Types of Consultants to Nonprofits Where to Get Consultants How You Can Make Consultancies Productive as Possible Be Sure You Have "Independent Contractor Relationship Appendix E: Tools to Measure Health of Nonprofits How to Select the Best Assessment Tool One Example of a Very Good Assessment Tool Appendix F: Goals and Objectives for Board Development Committee Appendix G: Typical Contents of Board Manual Appendix H: Sample Board Policies Sample Board Job Descriptions Sample Executive Director Job Description Sample Annual Calendar of Board Activities Sample Comparison of Board and Staff Roles Sample Board Committee Charter Sample Board Staffing Checklist (Board Renewal Cycle) Sample Board Member Recruitment Grid Sample Board Member Application Form Sample Board Conflict-of-Interest Policy Sample Board Member Contract Sample Board Ethics Policy Sample Board Decision-Making Policy Sample Executive Director Evaluation Form Sample Board Member Self-Evaluation Form Sample Board Self-Evaluation Form Sample Board Attendance Policy Sample Board Media Relations Policy Sample Whistleblower Policy Sample Document Retention/Destruction Policy Bibliography Index v

8 Table of Tables Table I:1 Comparison between For-profit and Nonprofit Corporations... 3 Table I:2 Organization Chart of Typical Start-Up Nonprofit Table I:3 Organization Chart of Typical Small Nonprofit Table I:4 Organization Chart for a Typical Medium-Sized Nonprofit Table I:5 Checklist for Starting a New Nonprofit Table II:1 Comparison of Common Board Models (Based on Structure) Table II:2 Typical Contents for By Laws Table II:3 Potential Standing Committees Table II:4 Potential Ad Hoc Committees Table II:5 Board / Staff Relationships Table III:1 Sample Agenda for Board Orientation Session Table III:2 Staffing of Board Committees Table III:3 Sample Board Meeting Agenda Table III:4 Strategic Questions for Board Meetings Table III:5 Cycle of Important Functions in Nonprofits Table III:6 One Perspective On Nonprofit Organizational Life Cycles vi