Risk Management through Organizational Governance, Network Citizenship, and Collaboration

1. Risk Management through Organizational Governance,Network Citizenship, andCollaboration

2. Agenda Organizational Governance Good Governance is really about Risk Management What are the duties of board members? UWW Membership Requirement C The Nine Required Elements of Governance Network Citizenship The National Landscape UWW’s Perspective Collaboration Why even talk about Collaboration? The Collaborative Continuum The Top 10 Essentials for Collaboration Something New… The Collaboration Toolkit

3. Good Governance is really about Risk Management • “The minute you think you've got it made, disaster is just around the corner.” – Joe Paterno

4. Risk management is the identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities.  • www.wikipedia.org • Standards of Excellence • 5.4: Risk ManagementUnited Way is intentional and comprehensive in the protection of the organization’s assets (brand, financial, property, and people).

5. Kinds of Risk Management • Asset protection • D&O Liability • General Liability • Worker’s Compensation • Personal Property • Typically consult with professionals (insurance, legal, etc.) for advice on appropriate coverage • Financial • Internal controls • Mission • Brand management • Be/do/say

6. What is the linchpin to risk management? • Sound and effective governance… Boards need to manage risk right and manage the right risks. • What does this mean for United Way governing boards?

7. Good Governance for United Ways • Requirement C: United Ways will have an active, responsible, and voluntary governing body, which ensures effective governance over the policies and financial resources of the organization. • Implementation of Membership Requirement C • Creating and Maintaining Sound Governance • Part 1 - The Nine Required Elements of Good Governance • Part 2 - Recommended Best Practices, Sample Documents & Regulatory Reference Materials

8. What are the duties of board members? • Defined by case law, the duties of board members are the legal standards against which all actions taken (or not taken) are measured • They are collective duties and mandate active participation by all board members • Accountability is demonstrated by exercising the: • Duty of Care • Duty of Loyalty • Duty of Obedience

9. Duty of Care • Requires that directors: • Be reasonably informed about the organization’s activities • Participate in decision-making of the board • Act in good faith and with the care of an ordinarily prudent person in comparable circumstances • In other words, they must pay attention to the organization’s activities and operations

10. Duty of Loyalty • Requires that directors: • Exercise their power in the interest of the organization • Not exercise their power in the interest of another entity, particularly one with which they have a formal relationship • In other words, when acting on behalf of the organization, board members are expected to place the interests of the organization before any other personal or professional interests

11. Duty of Obedience • Requires that directors: • Comply with applicable federal, state, and local laws • Adhere to the organization’s governing documents • Remain guardians of the organization’s mission • In other words, they must make sure that they personally, and the organization they govern, follow the rules.

12. UWW Membership Requirement C

13. What the Requirement C Guidance is . . . It is: intended to be a tool that helps to ensure universal, effective governance to protect the United Way brand. intended that the standards would provide each member with a clear picture of an organization that is well governed. an attempt to strike an appropriate balance between requirements and recommendations to achieve national consistency and local autonomy.

14. . . . and what it is not It is not: • intended to be an operational manual which directs day-to-day management of a local United Way. • intended to confer upon the national organization the authority to remove a member from the United Way system based solely upon a few variations from the standards.

15. Implementation Standards for Membership Requirement C • Nine Required Elements of Good Governance • Complemented by Appendices loaded with samples to accelerate and facilitate implementation • Guidance is specific to United Ways but will ring true for any nonprofit • Effective January 1, 2011, with full implementation over the next 12-24 months

16. Nine Required Elements of Good Governance Defined Responsibilities Board Training Annual Report Conflict of Interest Policy Governance Documents Meeting Procedures Meeting Minutes Compensation, Benefits and Business Expense Policies Review of Audit & IRS Form 990

17. 1. Defined Responsibilities The Bylaws of the organization will establish defined responsibilities in the following areas to be exercised by the Board, a committee, or some subset of the Board: Executive Board Development Ethics Finance Audit Executive Compensation - Because United Ways must protect the shared brand from headline risks, including those related to unreasonable executive compensation levels, all Metro 1 United Ways must annually provide CEO compensation information to the UWW Membership Accountability Committee.

18. 2. Board Training Board training provides knowledge and understanding to board members so they can effectively carry out their roles as members of the organization's board of directors. Selection of the particular training topics and training methods depend on the nature and needs of the organization. Appendices provide a sample training agenda and the table of contents for aBoard training manual

19. 3. Annual Report The annual report is the single most important publication an organization can use to educate the public on how it fulfills its mission. Recommended annual report components based on BBB/Wise Giving Alliance standards Mission statement Board of Directors Program service accomplishments Financial information

20. 4. Conflict of Interest Policy & Procedure Conflicts arise when personal interests of a board member, volunteer or employee are potentially at odds with the best interests of the United Way. The Board shall establish a conflict of interest policy that at a minimum addresses How to resolve real or perceived conflicts Annual and ongoing disclosure practices

21. 4. Conflict of Interest Policy & Procedure (continued) • Additional steps may include: • Limitations on business transactions with board members and employees • Disclosures required (potential, perceived and real conflicts) • Recusal from decisions involving potential conflicts • Procedures to ensure fairness with business activity (e.g., competitive bidding process) Appendix includes sample policies.

22. 5. Review Governance Documents In order to exercise due diligence with regard to organizational governance: Review governance documents at least once every three years Conduct an annual meeting of its members in accordance with the bylaws Distribute a copy of the current United Way bylaws to each director Make available to the public a copy of the corporation’s Articles of Incorporation and Bylaws.

23. 6. Meeting Procedures An active and engaged Board will ensure that: The United Way maintains strong governance practices and embraces accountability At a minimum, United Way Boards must meet once every quarter The Annual Meeting, if required under your bylaws, is not a substitute for a quarterly board meeting Guidance for electronic polling ofboard members

24. 7. Meeting Minutes Written meeting minutes are needed for all meetings that meet the following criteria: Conducted under authority of the organization’s governing board Meetings that obligate the organization or recommend action to the governing board

25. 8. Compensation, Benefits and Expense Policy Create and adhere to a well-designed and fully documented executive compensation program that will attract and retain qualified employees at all levels of responsibility who perform in a manner that permits the organization to achieve its objectives mission and goals. Comply with all governing documents, Local, State, and Federal Laws and regulations. Board members’ responsibility and the “rebuttable presumption of reasonableness.”

26. 9. Review Audit and IRS Form 990 To ensure the highest level of accountability and transparency: Both the annual audited financial statements and the IRS Form 990 provided to the Board Copies of both documents available for public review on the organization’s website

27. Measured by : Lives improved Individuals engaged: giving, advocating, volunteering Investor satisfaction and confidence Long-term, sustained financialgrowth Resources under management Big Ideas : Build impact strategies in education, income, and health that improve lives Frame strategies as investment products Segment and understand your markets Connect investor aspirations with need/opportunity Values : Outward facing, engaged with the community, committed to community success Accountability/ transparency Operational Excellence Customer-centered Inclusiveness Innovation/continuous improvement • United Way Business Model

28. Final Thoughts on Governance Effective boards focus on strategy to accomplish the organization’s mission to advance the common good. Governance is not management. See Governance is Governance: http://www.independentsector.org/PDFs/governance.pdf Nine Required Elements are the minimum for sound governance. Communicate to the community about your organization’s practices and policies.

29. System Citizenship and Collaboration Network Citizenship

30. The National Landscape

31. United Ways by Metro Size – January 2011 Metro size (Campaign in $) Metro 1: 9,000.000+ Metro 5: 750,000-1,000,000 Metro 9: 50,000-100,000 Metro 2: 4,000,000-9,000,000 Metro 6: 500,000-750,000 Metro 10: 50,000-25,000 Metro 3: 2,000,000-4,000,00 Metro 7: 200,000-500,000 Metro 11: $25,000 or less Metro 4: 1,000,000-2,000,000 Metro 8: 100,000-200,000

32. The National Landscape United Ways that have left the Network – State by State WA-2 VT-1 ND-1 MN-1 OR-1 NH-4 NY-5 WI-4 MA-1 SD-1 ID-1 MI-3 CT-7 PA-3 IA-1 NJ-2 OH-9 IN-2 IL-50 UT-1 WV-3 CO-1 VA-3 CA-3 KS-4 MO-2 KY-1 NC-2 TN-1 AR-2 OK-1 AR-4 SC-1 NM-1 GA-2 AL-1 MS-1 TX-7 LA-1

33. The National Landscape

34. Most everyone agrees that… 1,243 separate “back offices” is too many Our network needs some consolidation There is opportunity for greater economy and efficiency Companies and individual donors don’t understand zip code boundaries The general public should see United Way as a cohesive network

35. But unfortunately… No one wants to be the one who gives up their “control” Many think consolidation is code for “hostile takeover” Many think efficiency is code for “someone loosing their job” Companies and individual donors want to work with their “local” United Way The community too often can’t see the “united” in United Way Few want to share their information

36. So how do we establish a new paradigm? VALUE United Way as a Mobilizing Force Driving Revenue and Resources Advancing the Common Good/EIH • Acknowledge that the environment has changed • Be mindful of Mission but focus on the Value Proposition • Build a Business Model that delivers Value

37. Why We Exist and the Value We Add Mission To improve lives by mobilizing the caring power of communities around the world to advance the common good. Value Proposition We galvanize and connect a diverse set of individuals and institutions, and mobilize resources, to create long-term change.

38. Network Citizenship’s Role • If we wish to be successful “galvanizers” and “connectors”, we need to model that behavior • Too often, our focus is on what is good for us when it should be focused on what is good for all • We can’t expect our community partners to explore possibilities if we don’t explore them ourselves.

39. Network Citizenship: Webster’s New World Dictionary Definition • Network: • A system of interlacing lines, tracks, or channels • System: • A set or arrangement of things so related as to form a whole • As set of facts, rules, etc. arranged to show a plan • A method or plan • An established, orderly way of doing something • The body, or a number of bodily organs, functioning as a unit • Citizen: • A member of a state or nation (or group) who owes allegiance to it by birth or naturalization (or membership) and is entitled to full civil rights

40. Network Citizenship, from the legal perspective… • The United Way Worldwide Bylaws establish the concept of Network Citizenship when it states: • “Members shall refrain from taking any actions or conducting activities likely to damage the welfare, interests, or reputations of the United Way system.”

41. Network Citizenship, from the business perspective… • We need to cooperate with one another in order to maintain: • The public trust • The United Way Reputation & Brand value • The growth of resources available to our system

42. Network Citizenship, from the practical perspective… • “Your United Way’s relationships with other United Ways, state associations and USA national UW acknowledge that each member bears responsibilities toward others. The successes and failures of any one member impact the entire network. Your United Way fosters a high level of trust, information exchange and mutual help with others in the network to further our community impact mission, create a consistent brand experience, and support a strong network of United Ways locally, regionally, and nationally.” The USA United Way Standards of Excellence incorporate the concept of Network Citizenship in Standard 4.8 which states:

43. Network Citizenship in action Collaboration with other United Ways on common issues • Create opportunities for regional or statewide collaboration and resource-sharing on issues and initiatives that are relevant to multiple United Ways, including public policy and advocacy Corporate Relationships • In shared territories, consult and work with other United Ways when asking for corporate gifts and involvement National Impact • When compatible with identified local issues, implement initiatives that further United Way’s USA national impact agenda

44. Collaboration

45. “In the long history of mankind, those who learned to collaborate and improvise most effectively have prevailed.” - - Charles Darwin - -

46. Why Even Talk about Collaboration?

47. The Environment Has Changed Social Conditions Economy Marketplace • Global • Information / technology • Increased training / education required • Overreliance on old economy business • More nonprofits • Competition • Increasing diversity • People attached to causes, not institutions • More complex • Current ‘solutions’ not working • Basic building blocks of a good life still absent for many 47

48. Donors and others are asking us to do it… • “I have been a leadership donor for several decades… I’m concerned that inefficiencies in United Way are damaging the reputation” • “The lack of standardization among United Ways is not only costly, but results in avoidable inefficiencies” • “There is no reason to have separately incorporated United Ways in each county… UWW needs to insist that more consolidations occur so that donor dollars are used more effectively” • “Our organization submits funding requests and various reports to 22 United Ways in our 18 county service area… we have a full time person whose sole responsibility is to prepare these reports… even though United Ways fund only 3% or our budget.”

49. Our response to this seems obvious… We need to increase our collective understanding of the United Way network’s existing collaborative efforts We need to stay innovative in our approach to efficient/effective operations in these tough economic times We need to propel the United Way network forward through greater collaboration among its members so that it will become more effective in its execution of a shared mission Our for-profit counterparts are doing this so our donors expect us to consider its benefits too 49

50. Mobilization: Executing on the Business Model What will it take to become a mobilizing United Way? A deeper focus on certain elements of the Standards of Excellence Engage with the community Create & deepen relationships with individuals& institutions Develop strategies and focus actions Align and execute on plans and strategies Mobilize resources Measure, evaluate & communicate results If we wish to be effective, we will need to: Operate as an integrated and aligned organization Have the right skills, competencies & leadership