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Board Development and Governance Responsibilities

Board Development and Governance Responsibilities. Julia Classen Aurora Consulting, Inc. What Makes Nonprofit Board Unique?. “Ownership” Accountability Boundary spanner Compensation. What is Governance?. The act, process or power of governing

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Board Development and Governance Responsibilities

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  1. Board Development and Governance Responsibilities Julia Classen Aurora Consulting, Inc.

  2. What Makes Nonprofit Board Unique? • “Ownership” • Accountability • Boundary spanner • Compensation

  3. What is Governance? • The act, process or power of governing • Decision-making processes in the administration of an organization • A structure that, at least in theory, works for the benefit of everyone • A structure of relationships and processes to direct and control the enterprise in order to achieve the enterprise's goals

  4. Definition of a Board • An organized group of people with the authority collectively to control and foster an institution that is usually administered by a qualified executive and staff. Cyril Houle, Governing Boards:Their Nature and Nurture, Jossey-Bass, 1997, p.6

  5. Fundamental Duties of Boards Duty of Care • The duty of care describes the level of competence that is expected of a board member, and is commonly expressed as the duty of "care that an ordinarily prudent person would exercise in a like position and under similar circumstances." This means that a board member owes the duty to exercise reasonable care when he or she makes a decision as a steward of the organization.

  6. Duty of Loyalty The duty of loyalty is a standard of faithfulness; a board member must give undivided allegiance when making decisions affecting the organization. This means that a board member can never use information obtained as a member for personal gain, but must act in the best interests of the organization.

  7. Duty of Obedience The duty of obedience requires board members to be faithful to the organization's mission. They are not permitted to act in a way that is inconsistent with the central goals of the organization. A basis for this rule lies in the public's trust that the organization will manage donated funds to fulfill the organization's mission.

  8. Houle’s Tripartite System • The work to be done • The administration of that work • The establishment of policies to guide it

  9. What Makes for an Effective Board? • Understands institutional context- mission, tradition, and history • Builds capacity for learning- education and self-evaluation • Nurtures the development of the board as a group- informal group formation- relationships • (Taylor, Chait and Holland)

  10. Taylor, Chait and Holland (continued) • Recognizes complexities and nuances- diverse constituencies and stakeholders, ramifications of actions • Respects and guards integrity of the governance process- constructive relationships, equal distribution of power • Envisions and shapes institutional direction- future oriented and strategic magnitude

  11. Why People Serve on a Board? • Professional development- resume building • Social- Honor or status • Ideological- loyalty or love for organization/mission

  12. Organizational Cycles- Stevens • Idea • Start-up • Growth • Established • Decline • Turnaround/Termination

  13. Role of the Board Chair • Most critical relationship- with the Executive Director • Board manager • Organization spokesperson • Leader • Have a vision • Bring people along- linking and motivating • Willing to invest time

  14. The Unique Role of the Executive Director • A Paradox • The Executive Director as supervisee of the board • The Executive Director as organizational leader and the board in a supportive role

  15. Board Models • What is a governance model? • Framework for relationships • Between Board and Staff • Between Board and Community • Between Board members • Provides boundaries and focus for scope of work of board and staff • Provides a process for board and staff to address organizational issues

  16. Models and Models • What are the common models used for Board Governance? • Policy • Policy Governance- Carver • Governance as Leadership • Representational/ constituent • Network

  17. Resources for Boards • Board Source • Management Assistance Project (MAP for Nonprofits) • Independent Sector • Center for Public Service- Brookings Institute • Nonprofit Sector and Philanthropy Program- Aspen Institute • Alliance of Nonprofit Management • National Council of Nonprofit Associations • MN Council of Nonprofits • Charities Review Council of Minnesota

  18. The Research • Francie Ostrower • Center on Nonprofits and Philanthropy, The Urban Institute • Nonprofit Governance in the United States: Findings on Performance and Accountability from the First National Representative Study • Published in 2007, More than 5,100 surveyed

  19. Board Recruitment • Willingness to give time • Having business or financial skills • Recruiting strangers and acquaintances • Fundraising

  20. Board Composition- Best Practices • CEO/ Executive and Nonvoting Member • Gender Diversity • Having one or more members involved in multiple roles (fundraising, planning, community relations, financial oversight, monitoring programs, setting policy, etc.) • Arts boards more actively engaged in fundraising

  21. Board Composition- Best Practices- Continued • Size of board increases activity in fundraising, educating public about the organization and mission and public policy • Ethnic and racial diversity and corporate board members has a positive relationship to adoption of many Sarbanes-Oxley practices (Having an external audit, independent audit committee, audit firms rotated every five years, written conflict of interest policy, whistleblower policy, document destruction and retention policy)

  22. Racial and Ethnic Diversity • 86% of board members are white, non-Hispanic • 7% are African-American or black • 3.5% are Latino/Hispanic • 51% of boards are solely white, non-Hispanic members • 45% of boards in metropolitan areas are entirely composed of white, non-Hispanic members

  23. Gender • 94% of boards include women • On average boards are composed of 46% women • Organizations with assets under $100,000, 50% of the board are women • Organizations with assets over $40 million, 29% of the board are women • Cultural and education nonprofits have higher percentages of women on their boards

  24. Age • 41% between the ages of 50 and 65 • Boomers • 37% between ages of 36 and 50 • Boomers and Gen X • 22.5% between 40 and 49 (Milwaukee) • 16% older than 65 • 7% under 36 years old • 1.6% under 30 (Milwaukee)

  25. Other Dimensions • 75% of board members are employed • 55% work for a business, 18% are self-employed, 12% wok for another nonprofit, 11% work for government

  26. Questions??? • For further information: Julia Classen Aurora Consulting julia@auroraconsult.com 612.386.8449

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