Roles Responsibilities of the Board

1. Roles & Responsibilities of the Board Welcome Attendees ? Review Learning Objectives Completion of this module will give participants a basic understanding of: A non-profit association (U.S. and Canada) An association, definition, purpose, profit vs. non-profit Ten basic board responsibilities Legal & fiduciary responsibilities (duties) of board members Duties of knowledge, diligence, care, & loyalty Welcome Attendees ? Review Learning Objectives Completion of this module will give participants a basic understanding of: A non-profit association (U.S. and Canada) An association, definition, purpose, profit vs. non-profit Ten basic board responsibilities Legal & fiduciary responsibilities (duties) of board members Duties of knowledge, diligence, care, & loyalty

2. 501(c)(3) Non-Profit Association Charitable or educational. These organizations are defined as being organized & operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes. ? The American Water Works Association is a 501(c)(3) organization as defined by the Internal Revenue Service code. Organizations, which are exempt under section 501(c)(3), are usually defined as �charitable� or �educational.� These organizations are defined as being organized and operated exclusively for religious, charitable, scientific, testing for the public safety, literary, or educational purposes. American sections of AWWA are also 501(c)(3) organizations.? The American Water Works Association is a 501(c)(3) organization as defined by the Internal Revenue Service code. Organizations, which are exempt under section 501(c)(3), are usually defined as �charitable� or �educational.� These organizations are defined as being organized and operated exclusively for religious, charitable, scientific, testing for the public safety, literary, or educational purposes. American sections of AWWA are also 501(c)(3) organizations.

3. Canada - Non-Profit Organization An NPO, as described in the Income Tax Act, is a club, society, or association that is organized and operated solely for: Social welfare Civic improvement Pleasure or recreation Any other purpose except profit ? In Canada, AWWA�s Canadian sections are described as a Non-Profit Organization (NPO) as defined in paragraph 149(1)(1) of the Canadian Income Tax Act. In that Act, an NPO is described as a club, society, or association that is organized and operated solely for: social welfare, civic improvement, pleasure or recreation, or any other purpose except profit. ? In Canada, AWWA�s Canadian sections are described as a Non-Profit Organization (NPO) as defined in paragraph 149(1)(1) of the Canadian Income Tax Act. In that Act, an NPO is described as a club, society, or association that is organized and operated solely for: social welfare, civic improvement, pleasure or recreation, or any other purpose except profit.

4. What is an Association? An Association is a collective group of people or organization that has a strong central purpose other than profit-making. ?ASK - What is an association? ? An association is a collective group of people or organization that has a strong central purpose other than profit making. We all know that the purpose of business is to make profits and increase the value of shareholders� investments. ?ASK - What is the purpose of an association? ?ASK - What is an association? ? An association is a collective group of people or organization that has a strong central purpose other than profit making. We all know that the purpose of business is to make profits and increase the value of shareholders� investments. ?ASK - What is the purpose of an association?

5. Association Purpose Advocacy: Representing members to other parties, usually the government or the public. Services to Members: Tangible benefits as education, information, assistance, etc. In general terms there are two: ? Advocacy (Representation) � Representing members to other parties, usually the government or to the public. ? Services to Members and Others � Tangible benefits, such as education, information, assistance, etc. So while our respective governments use different terminology to classify us, our purpose remains clear � to protect the health of the public and serve our membership.In general terms there are two: ? Advocacy (Representation) � Representing members to other parties, usually the government or to the public. ? Services to Members and Others � Tangible benefits, such as education, information, assistance, etc. So while our respective governments use different terminology to classify us, our purpose remains clear � to protect the health of the public and serve our membership.

6. Profit vs. Non-Profit For-Profit Organization = Shareholders Non-Profit Organization = Re-investment ? Because an entity is a non-profit organization does not mean that it is not permitted to operate at a profit. The main difference between a for-profit organization and a non-profit organization is that in a for-profit organization, the profit benefits the shareholders, whereas in a non-profit organization, the profit is reinvested in the organization. Now that you have some background information on the basics of a non-profit organization, I want to continue our discussion with the two components of our session. They are: basic responsibilities of non-profit boards and legal and fiduciary responsibilities of board members. ? Because an entity is a non-profit organization does not mean that it is not permitted to operate at a profit. The main difference between a for-profit organization and a non-profit organization is that in a for-profit organization, the profit benefits the shareholders, whereas in a non-profit organization, the profit is reinvested in the organization. Now that you have some background information on the basics of a non-profit organization, I want to continue our discussion with the two components of our session. They are: basic responsibilities of non-profit boards and legal and fiduciary responsibilities of board members.

7. Basic Responsibilities for Non-Profit Boards ? First, let�s examine the basic responsibilities for non-profit boards. ?If you had to build a list of basic board responsibilities, how may items would make up that list? 5, 10, 15, 20? More than 20? Any ideas? ?Can someone give me an example of what one of the basic responsibilities might be? Those were all good examples of board responsibilities. Well, to get back to my first question, how many items would make up our list of basic responsibilities? I�ve assembled ten items for which the board is responsible. Though I�m speaking of the board as a collective unit, it is important to remember that each board member is also individually accountable for these responsibilities. Here�s the top ten list, and no, David Letterman didn�t have anything to do with putting this list together. ? First, let�s examine the basic responsibilities for non-profit boards. ?If you had to build a list of basic board responsibilities, how may items would make up that list? 5, 10, 15, 20? More than 20? Any ideas? ?Can someone give me an example of what one of the basic responsibilities might be? Those were all good examples of board responsibilities. Well, to get back to my first question, how many items would make up our list of basic responsibilities? I�ve assembled ten items for which the board is responsible. Though I�m speaking of the board as a collective unit, it is important to remember that each board member is also individually accountable for these responsibilities. Here�s the top ten list, and no, David Letterman didn�t have anything to do with putting this list together.

8. Basic Responsibilities Determine the organization�s mission and purpose Select the �Executive� Support the executive and assess his/her performance ? The board is fundamentally responsible for defining the organization�s mission and what it strives to accomplish. In addition to ensuring that the organization has an up-to-date mission statement of what it is, represents, and does, the board should periodically review its mission statement for accuracy and validity. The mission sets the stage for developing the strategic plan, which we will see in a few moments, is one of the board�s responsibilities. (Does your section have a vision & mission statement? A current strategic plan?) The next two responsibilities go hand in hand. ? Select the �Executive� � (Note: This does not imply that the section is required to have paid staff. For sections without paid staff, the responsibilities of the executive director would be assumed by a volunteer, i.e., Section Secretary-Treasurer, Chair, etc.) The responsibility of choosing the executive director undoubtedly has the greatest impact on the organization�s development and effectiveness. Hopefully, this isn�t a frequent event that the board has to undertake. Not only is the board responsible for hiring the executive director, they are also responsible for developing an effective working relationship with the director and section staff. For the board this means� ? Support the Executive � Support the executive and assess his/her performance. Keep in mind that this is a team effort � volunteer and section staff working together for the good of the section and association. Let�s look at the next area of responsibility. ? The board is fundamentally responsible for defining the organization�s mission and what it strives to accomplish. In addition to ensuring that the organization has an up-to-date mission statement of what it is, represents, and does, the board should periodically review its mission statement for accuracy and validity. The mission sets the stage for developing the strategic plan, which we will see in a few moments, is one of the board�s responsibilities. (Does your section have a vision & mission statement? A current strategic plan?) The next two responsibilities go hand in hand. ? Select the �Executive� � (Note: This does not imply that the section is required to have paid staff. For sections without paid staff, the responsibilities of the executive director would be assumed by a volunteer, i.e., Section Secretary-Treasurer, Chair, etc.) The responsibility of choosing the executive director undoubtedly has the greatest impact on the organization�s development and effectiveness. Hopefully, this isn�t a frequent event that the board has to undertake. Not only is the board responsible for hiring the executive director, they are also responsible for developing an effective working relationship with the director and section staff. For the board this means� ? Support the Executive � Support the executive and assess his/her performance. Keep in mind that this is a team effort � volunteer and section staff working together for the good of the section and association. Let�s look at the next area of responsibility.

9. Basic Responsibilities Ensure effective organizational planning Ensure adequate resources Manage resources effectively Determine, monitor, and strengthen the organization�s programs and services ? ? Ensure Effective Organizational Planning � The planning process enables the board and staff to translate the mission of the organization into objectives and goals that can be measured and accomplished. A critical activity of the board is strategic planning, as well as ensuring that the annual operational plan is effective. The board ensures that the planning process is in place, future-focused, and integrated. It must be confident that the day-to-day operations reflect the intent of the plan. Along similar lines, the board is responsible for establishing operational policy and in our case, approving positions of issues of interest to the membership. Can anyone give me an example of an operational policy that the board might set (i.e., the board policy requires that all committees submit an annual report outlining committee goals and accomplishments)? ? Our next two responsibilities are also tied together � Ensure Adequate Resources and Manage Resources Effectively. By resources, I�m referring to both financial and human resources. An organization can only be effective if it has resources to meet its purposes. Providing adequate resources is first and foremost a board responsibility. The board must ensure that the organization's current revenues are stable and encourage the cultivation of sources of revenue that are sustainable for the long term. Other financial activities of the board include the allocation of funds and the development and monitoring of an operating budget. The board should ensure that all cash management controls are in place, and the board should insist on an annual audit by an independent auditor. The board is also responsible for ensuring adequate human resources, both volunteer and section staff, as necessary to carry out the mission of the organization. ? Determine, Monitor, and Strengthen the Organization�s Programs and Services � The board�s fundamental role begins with the question of whether current and proposed programs and services are consistent with the organization�s stated mission and purposes. A key component here is �monitors and strengthens.� Programs, services, and member satisfaction need to be monitored on a periodic basis. Perhaps some programs or services are no longer relevant, while others need to be strengthened or expanded. ? The next responsibility is: ? ? Ensure Effective Organizational Planning � The planning process enables the board and staff to translate the mission of the organization into objectives and goals that can be measured and accomplished. A critical activity of the board is strategic planning, as well as ensuring that the annual operational plan is effective. The board ensures that the planning process is in place, future-focused, and integrated. It must be confident that the day-to-day operations reflect the intent of the plan. Along similar lines, the board is responsible for establishing operational policy and in our case, approving positions of issues of interest to the membership. Can anyone give me an example of an operational policy that the board might set (i.e., the board policy requires that all committees submit an annual report outlining committee goals and accomplishments)? ? Our next two responsibilities are also tied together � Ensure Adequate Resources and Manage Resources Effectively. By resources, I�m referring to both financial and human resources. An organization can only be effective if it has resources to meet its purposes. Providing adequate resources is first and foremost a board responsibility. The board must ensure that the organization's current revenues are stable and encourage the cultivation of sources of revenue that are sustainable for the long term. Other financial activities of the board include the allocation of funds and the development and monitoring of an operating budget. The board should ensure that all cash management controls are in place, and the board should insist on an annual audit by an independent auditor. The board is also responsible for ensuring adequate human resources, both volunteer and section staff, as necessary to carry out the mission of the organization. ? Determine, Monitor, and Strengthen the Organization�s Programs and Services � The board�s fundamental role begins with the question of whether current and proposed programs and services are consistent with the organization�s stated mission and purposes. A key component here is �monitors and strengthens.� Programs, services, and member satisfaction need to be monitored on a periodic basis. Perhaps some programs or services are no longer relevant, while others need to be strengthened or expanded. ? The next responsibility is:

10. Basic Responsibilities Enhance the organization�s public standing Ensure legal & ethical integrity and maintain accountability Recruit and orient new board members and assess board performance ? Enhance the Organization's Public Standing � Board members serve not only as a link between the organization's staff, volunteers, and its members, but also as the organization�s ambassadors, advocates, and community representatives. An effective public relation program will ensure a healthy and accurate public image for the organization. Written annual reports, timely and informative press releases, and consistent communication initiative with community and government leaders are all important elements of a comprehensive public awareness strategy. It is each board member�s responsibility to promote the organization to the community, and to educate members and stakeholders and enlist their support. Do you tell your section�s story? Let me challenge you to tell five new people weekly about the section and your volunteer involvement. However, no board member should represent himself/herself as speaking for the board or organization unless specifically authorized to do so. ? Ensure Legal & Ethical Integrity � Non-profit organizations have come under increased scrutiny in recent years, caused in part by a few organizations that have failed to maintain appropriate oversight and therefore fell victim to fraud, embezzlement, or some other breach of public trust. The board is ultimately responsible for ensuring adherence to legal standards and ethical norms. By being diligent in its responsibilities, the board can protect the organization from legal action, promote a safe and ethical working environment, and safeguard the organization's integrity in pursuit of its mission. ? Recruit & Orient New Board Members and Assist Board Performance � The board has the responsibility for its own healthy perpetuation. Each board member should participate in identifying and recruiting capable members for the organization. And the board should orient those new members to their responsibilities, as well as evaluate its overall performance on an annual basis. That brings us to number ten, just in case you�ve been counting. ? Enhance the Organization's Public Standing � Board members serve not only as a link between the organization's staff, volunteers, and its members, but also as the organization�s ambassadors, advocates, and community representatives. An effective public relation program will ensure a healthy and accurate public image for the organization. Written annual reports, timely and informative press releases, and consistent communication initiative with community and government leaders are all important elements of a comprehensive public awareness strategy. It is each board member�s responsibility to promote the organization to the community, and to educate members and stakeholders and enlist their support. Do you tell your section�s story? Let me challenge you to tell five new people weekly about the section and your volunteer involvement. However, no board member should represent himself/herself as speaking for the board or organization unless specifically authorized to do so. ? Ensure Legal & Ethical Integrity � Non-profit organizations have come under increased scrutiny in recent years, caused in part by a few organizations that have failed to maintain appropriate oversight and therefore fell victim to fraud, embezzlement, or some other breach of public trust. The board is ultimately responsible for ensuring adherence to legal standards and ethical norms. By being diligent in its responsibilities, the board can protect the organization from legal action, promote a safe and ethical working environment, and safeguard the organization's integrity in pursuit of its mission. ? Recruit & Orient New Board Members and Assist Board Performance � The board has the responsibility for its own healthy perpetuation. Each board member should participate in identifying and recruiting capable members for the organization. And the board should orient those new members to their responsibilities, as well as evaluate its overall performance on an annual basis. That brings us to number ten, just in case you�ve been counting.

11. Legal & Fiduciary Responsibilities of Board Members ? Let�s turn our attention to legal and fiduciary responsibilities of board members. Can anyone define a fiduciary? A fiduciary is any person who maintains a position of trust. The public is placing their trust in you as a board member to ensure that the section operates on behalf of the public good. A board member must act with utmost good faith and loyalty on behalf of, and for the benefit of, the organization. Fiduciary responsibilities include several important components or duties.? Let�s turn our attention to legal and fiduciary responsibilities of board members. Can anyone define a fiduciary? A fiduciary is any person who maintains a position of trust. The public is placing their trust in you as a board member to ensure that the section operates on behalf of the public good. A board member must act with utmost good faith and loyalty on behalf of, and for the benefit of, the organization. Fiduciary responsibilities include several important components or duties.

12. Duties Duty of Knowledge Duty of Diligence Duty of Care Duty of Loyalty These duties are: ? The Duty of Knowledge ? The Duty of Diligence ? The Duty of Care ? Duty of Loyalty Let�s look first at the Duties of Knowledge and Diligence.These duties are: ? The Duty of Knowledge ? The Duty of Diligence ? The Duty of Care ? Duty of Loyalty Let�s look first at the Duties of Knowledge and Diligence.

13. Duties of Knowledge & Diligence The board member must be thoroughly acquainted with the organization�s purpose and policies, and have an awareness of the operations of the organization. ? The board member must be thoroughly acquainted with the organization's purpose and policies and have an awareness of the operations of the organization.? The board member must be thoroughly acquainted with the organization's purpose and policies and have an awareness of the operations of the organization.

14. Duties of Knowledge & Diligence Know AWWA�s/section�s bylaws & governing documents Attend board & committee meetings Keep informed of program activities ? That would include being knowledgeable of AWWA�s and the section's bylaws, AWWA governing documents, and the Association�s and section�s Vision and Mission Statements. To assist the board member, the organization should provide a new member orientation, one of the board responsibilities we noted earlier. ? The duty of diligence also requires that a board member: attend board and committee meetings to which you are assigned, review the board agenda and support material, be prepared for discussion, and vote. (Of course, there will be occasions when you will not be able to attend a meeting. We�re referring to a board member who misses more meetings than he/she attends, doesn�t come prepared, etc.) ? And, of course, keeping informed of the section�s programs and activities is a requirement, too.? That would include being knowledgeable of AWWA�s and the section's bylaws, AWWA governing documents, and the Association�s and section�s Vision and Mission Statements. To assist the board member, the organization should provide a new member orientation, one of the board responsibilities we noted earlier. ? The duty of diligence also requires that a board member: attend board and committee meetings to which you are assigned, review the board agenda and support material, be prepared for discussion, and vote. (Of course, there will be occasions when you will not be able to attend a meeting. We�re referring to a board member who misses more meetings than he/she attends, doesn�t come prepared, etc.) ? And, of course, keeping informed of the section�s programs and activities is a requirement, too.

15. Duty of Care Requires a board member to act responsibly, in good faith, and in reliance upon reasonably developed information and facts ? The next duty is the Duty of Care. ? Duty of Care � A board has considerable discretion to delegate its authority to staff, outside agents, committees, volunteers, directors, and officers. Nevertheless, that discretion does not excuse board members of their duty to act responsibly in delegating tasks. The board must provide sufficient leadership, resources, attention, and analysis to ensure the board�s decisions are made in good faith when based upon the recommendations of committees, staff, or others. This means board members must select competent staff and committee members, remain aware of organizational developments, properly consider significant development in the organization�s operations, investigate matters when experience or intuition suggest something is amiss, and take reasonable actions based on their knowledge. ? The next duty is the Duty of Care. ? Duty of Care � A board has considerable discretion to delegate its authority to staff, outside agents, committees, volunteers, directors, and officers. Nevertheless, that discretion does not excuse board members of their duty to act responsibly in delegating tasks. The board must provide sufficient leadership, resources, attention, and analysis to ensure the board�s decisions are made in good faith when based upon the recommendations of committees, staff, or others. This means board members must select competent staff and committee members, remain aware of organizational developments, properly consider significant development in the organization�s operations, investigate matters when experience or intuition suggest something is amiss, and take reasonable actions based on their knowledge.

16. Duty of Care Ensure statutory/technical requirements are met (reports, taxes) Voice opposition, as appropriate Assure that the section keeps records that reflect good faith efforts ? Here are some items that fall under this duty: ? Ensure statutory/technical requirements are met, i.e., reports, taxes ?Voice opposition, as appropriate ?Assure that the section keeps records that reflect good faith efforts? Here are some items that fall under this duty: ? Ensure statutory/technical requirements are met, i.e., reports, taxes ?Voice opposition, as appropriate ?Assure that the section keeps records that reflect good faith efforts

17. Duty of Loyalty Includes a commitment to act solely for the benefit of the organization, by setting aside individual interests and avoiding personal advantage at the expense of the organization ? The next duty is the Duty of Loyalty. ? The Duty of Loyalty includes a commitment to act solely for the benefit of the organization, by setting aside individual interests and by avoiding personal advantage at the expense of the organization. ? The next duty is the Duty of Loyalty. ? The Duty of Loyalty includes a commitment to act solely for the benefit of the organization, by setting aside individual interests and by avoiding personal advantage at the expense of the organization.

18. Duty of Loyalty It also requires the disclosure of information known to the board member which may affect the non-profit�s business or operations. ? It also requires the disclosure of information known to the board member, which may affect the non-profit�s business or operations. Former President Clinton, in a four-minute address to the American public, made the following statement: �In my deposition I was asked questions about my relationship with Monica Lewinsky. While my answers were legally accurate, I did not volunteer information.� Unfortunately, while Former President Clinton might be able to get away with not disclosing information as the President of the United States, board members do not have that luxury. Let�s look at a couple of other items.? It also requires the disclosure of information known to the board member, which may affect the non-profit�s business or operations. Former President Clinton, in a four-minute address to the American public, made the following statement: �In my deposition I was asked questions about my relationship with Monica Lewinsky. While my answers were legally accurate, I did not volunteer information.� Unfortunately, while Former President Clinton might be able to get away with not disclosing information as the President of the United States, board members do not have that luxury. Let�s look at a couple of other items.

19. Duty of Loyalty Avoid gross negligence or �self-dealing� Discourage transactions between the section and board members Make no monetary profit ? Avoid gross negligence� ? Discourage transactions between� ? Make no monetary profit Situations that may be a direct or indirect benefit to the board member, his relatives, friends, or business associates should be avoided. ? Self-dealing: the act of providing of oneself, making a decision that benefits you personally.? Avoid gross negligence� ? Discourage transactions between� ? Make no monetary profit Situations that may be a direct or indirect benefit to the board member, his relatives, friends, or business associates should be avoided. ? Self-dealing: the act of providing of oneself, making a decision that benefits you personally.

20. Legal & Fiduciary Responsibilities �If board members make good-faith decisions based on reasonable investigation and analysis, they are protected from liability under the doctrine known as the �business judgement rule.� ? ? If board members make good-faith decisions based on reasonable investigation and analysis, they are protected from liability under the doctrine known as the �business judgement rule,� applicable in the US and Canada. In most situations, common sense and sound business practices will generally protect both the organization and its board members. However, a board member may still face exposure to liability for any of their own activities that are inconsistent with their board responsibilities. This concludes this Leadership Series module. ? ? If board members make good-faith decisions based on reasonable investigation and analysis, they are protected from liability under the doctrine known as the �business judgement rule,� applicable in the US and Canada. In most situations, common sense and sound business practices will generally protect both the organization and its board members. However, a board member may still face exposure to liability for any of their own activities that are inconsistent with their board responsibilities. This concludes this Leadership Series module.