Once Again: How Should Nonprofits Conduct Board Evaluations?*
By: Eugene Fram
Process Expectations Including:
• Value of board materials: board book delivery time prior to meetings, material clarity, meeting notices, etc. Are board books delivered a week ahead of meetings?
• Stakeholder Relations: Board interactions with various nonprofit stakeholders, especially staff. To what extent do directors meet with key stakeholders? To asses this expectation, are records noted of these
interactions? Which directors are most adept at building these relationships?
• Willingness to evaluate qualitative outcomes** To what are data developed that go beyond typical records such as accounting statements and membership records? What about the more difficult data to develop, such as brand
image and impact on the community? Hearsay evidence should not be used to assess these important outcomes.
• Composition of the board in regard to diversity including gender, skills, age, board experiences, etc. Does the organization have a diversity policy? Do current board members have sufficient prior board experiences in
order to act as models for new members without prior board experience?
• Action plans including a summary, for the board minutes, which obligates the board professionally to take action and may have liability implications if plans are not executed. The plan should provide evidence of a robust
evaluation. With luck, some nonprofits may be able to relate their field accreditation processes with the action plans.
Following is part of a blog that I strongly suggest that you, your colleagues and friends associated with nonprofit or trustee organizations read carefully. As you read it, pleas keep the following in mind:
I think the situation presented here is more common than most directors/trustees think. As a layperson, I am surprised that the court did not spread the fine among all the directors.
The chairman was clearly trying to support a nonprofit in trouble. Perhaps he was so dedicated to the mission that he was trying to do everything possible to save it?
Not Shown here is the fact that, “[T]he chairman is burdened with proving that they (the IRS) are not correct. … The law does not require the individual to have complete control over the finances, only what the court calls significant control.”
For more insights in how to avoid such situations, review these items on my blog site. Other items also may be of interest http://bit.ly/yfRZpz .
Nonprofit Alert: How Nonprofit Directors Can Acquire Independent Assurances.
According to Dr. Richard Leblanc, York University Law School, “Canada’s bank regulators recommended last week that independent third party reviews of (i) of the institution’s board and committee practices; (ii) the institution’s oversight functions and processes.” He and I feel this can set the tone for non-banks and even for nonprofits (more…)
There isn’t a nonprofit director or trustee who wants to be personally financially liable for his or her association with a nonprofit director led or trustee led organization. Those persons currently holding one or more of these positions, or is considering one, should be able to answer the following questions (more…)
Are Three Standing Nonprofit Board Committee Enough?
By: Eugene Fram
Nonprofit boards are often known for the proliferation of board standing committees. Current thinking is to reduce the number substantially. Following is one model, with only three standing committees which has been used by thousands of nonprofit organizations for over 20 years. Ad hoc committees are used when needed for investigation of policy decisions and other major issues such as changes in pension plans.
Executive Committee – It consists of the CEO, corporate officers and an at-large member elected by the board. The committee acts for the board between meetings, subject to later board ratification; sets the meeting agendas, reviews reports for board discussion; and appoints all standing committees and ad hoc committees.