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^Business

Thrive in ’25: Best Practices in Board Governance

Follow Up Q&A

^{Presented By: Strategy Solutions, Inc.}

^{Debra Thompson, President & CEO}

^E:^debbie^{@getstrategy.com}

^{W: www.getstrategy.com}

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^WELCOME

^{Our goal today:}

^{to answer questions and help participants get started with implementing best practices}

^{Thrive in ’25: Best Practices in Board Governance}

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^{Expert Consultant}

^{Debra Thompson}

^{President & CEO}

^{25+ years’ experience in strategic organizational development including}^governance,^{leadership and employee development planning as well as culture change}

^{Licensed consultant, trainer and peer reviewer for the PA and National}^{Standards for Excellence:}^®^{An Ethics and Accountability Code for the Nonprofit Sector}

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^{What is the Standards for Excellence?}

^{6 Guiding Principles, 27 areas of focus and 67 Benchmarks:}

^Preamble
^{Mission, Strategy and Evaluation}
^{Leadership: Board, Staff and Volunteers}
^{Legal Compliance and Ethics}
^{Finance and Operations}
^{Resource Development}
^{Public Awareness, Engagement and Advocacy}

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^{How do we get started?}

^{If we aren’t doing any of the best practices, where do we start?}
^{Are there certain items that should be highlighted /priority for library board responsibilities?}

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^{Basic Responsibilities of a Board}

^{Determine the organization’s mission & purpose}
^{Select the chief executive}
^{Support the chief executive and assess his or her performance}
^{Ensure effective organizational planning}
^{Ensure adequate resources}
^{Exercise fiduciary responsibility & oversight}
^{Determine, monitor and strengthen the organization’s programs & services}
^{Enhance the organization’s public standing}
^{Ensure legal and ethical integrity and maintain accountability}
^{Orient new board members & assess board performance}

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^{According to BoardSource,}

^{Truly effective partnerships require a clear definition of the distinctive roles of the partners and the boundaries between them.}

^{In the board/staff partnership, a proper division of labor is essential.}

^{The violation of the boundaries will, over time, erode the trust, mutual support and good communications that are essential for any partnership to succeed.}

^{The Governance-Management Model}

Adapted from Creating Strong Board-Staff Partnerships by Karen Simmons and Gary J. Stern. Published by BoardSource

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Adapted from Creating Strong Board-Staff Partnerships by Karen Simmons and Gary J. Stern.

Published by BoardSource, formerly the National Center for Nonprofit Boards

^{Board Role: Management Service Volunteer}

Collective role: Determine policies about board assistance in operational activities, especially those relating to conflicts of interest

Individual role: work with staff on specifically defined management issues and activities; reporting to staff as designated staff members as individuals who just happen to be board members (note and caution: this is something that you need to be asked by management to do and is usually related to specific areas of expertise; usually done in small organizations only)

Adapted from Creating Strong Board-Staff Partnerships by Karen Simmons and Gary J. Stern. Published by BoardSource, formerly the National Center for Nonprofit Boards

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^{Role Clarification: Board/Director}

^{BEST PRACTICE IN BOARD GOVERNANCE}

^|

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The Board:

Governs
Decides what
Makes policy
Sets goals
Reviews plans
Monitors progress

The Director:

Decides How
Carries out policy
Develop Plans
Implement Plans

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^Governance^Committee

^{Job Description}

^{Help create board roles and responsibilities}
^{Pay attention to board composition}
^{Encourage board development}
^{Assess board effectiveness}
^{Prepare board leadership�}
^{Review and periodically update and revise bylaws (at least once every three years)}

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^{Conduct a Board Evaluation}

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^{How do we shift mindset?}

^“^{We’ve always done it this way”}^{is code for either:}

^{I’m comfortable and don’t want to change OR}
^{I don’t have a clue how to change}

“Fundraising is the director’s job”

“I don’t have to go to every board meeting”

“I give my time I don’t have to give my money”

“Somebody else will do it”

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^{Shifting Mindsets}

^{We must challenge our assumptions about what we believe we think we know.�}
^{In order to get past any “stuck place,” you must uncover and understand the underlying “assumptions” first, challenge false assumptions and then “practice” acting under a new set of assumptions}^�
^{Differentiate true rules, no longer true rules & urban legends}

^{Getting Past “Immunity to Change”}

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^{How do we stop micromanagement especially during a director vacancy?}

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^{Understand Why Boards Micromanage}

^{Sometimes lines are blurred}
^{Less mature or thinly staffed organizations require board members to perform hand on tasks}
^{If there are problems, as a board’s confidence in the}^ED^wanes,^{the board}^{gets involved in operations}
^{In periods of crisis, they have to intervene}
^{Management creates an immediate sense of accomplishment}
^{Some board members think that it is their “job”}

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^{Other Tips to Prevent Micromanagement}

^{Be very clear about board roles versus staff roles �}
^{See something say something!�}
^{Appoint an Acting or Interim Director (and let them do their job)�}
^{Spend time talking about expectations, and the information that the board needs to have in order to know that the library operations are solid �}
^{Get training}^{and coaching on how to do it right!}

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^{Who has the “loudest voice” in terms of developing the library’s strategic plan}

But in reality, it should be the “voice of the community”

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Essentially, the process answers

5 basic questions

Strategic Planning Overview

Where are we now?

Where do we want to be?

How are we going to get there?

Who will do that?

How are we doing?

Progress on “past plans”
Community needs
Organization needs
Stakeholder engagement

Vision and Mission
Goals

Objectives

Action plan
Board agenda of work
Budget
Timeframes

Quarterly reports
Evaluation

The role of the Director is to create the structure for the process so that “all voices are heard” and to do “completed staff work” to articulate an “institutional strategy” for review and input from the board.

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^{The role of the board in planning}

Understand fiduciary responsibility: sustaining the mission�
Set vision, overall strategy and direction �
React to the ways the Executive Director/CEO plans to achieve those aims�
Monitor whether the organization is making sufficient progress toward goals

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^{What are appropriate lines of communication between staff and the board (particularly if there is a problem not being addressed by the director)?}

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^{Leadership and Governance}

^{Annual or semi-annual staff surveys (ideally, conducted by an outside entity)}
^{Confidential “Whistleblower”}^{line to a board member with an appropriate investigatory process}
^{Encourage staff to use the “chain of command” then talk with the director about concerns and hold them accountable to address them (note: board chair should keep track of what board members hear to identify trends and discuss during performance evaluations)}

^{Establish vehicles for staff input without direct board involvement}

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^{What is the appropriate level of board involvement in staff hiring, interviewing and compensation setting?}

Short answer: whatever and only the assistance the Director asks for

Longer answer: it is a bit more complicated than that

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^{Board Involvement in Staff Management}

R

^{The board should ensure that a “compensation system” exists in the library that defines pay grades and salary ranges (it is the Director’s responsibility to establish the system) and that comparative salary information is compiled and reviewed at least every three years.}
^{The board approves the budget (and determines the salary budget through the budgeting process (the Director determines the actual salary for each position and what to offer individual employees, within budget)}
^{The Director is responsible for recruitment, interviewing, hiring, supervising and evaluating all staff. If they want “management service volunteer assistance” from board members during th}^{e hiring process, it is their decision whether and how any board members are involved in hiring decisions.}

Regardless of the size of the library,

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^{What should directors do if:}

^{they fear that bringing up an issue/complaint to the board will result in retaliation or firing?}
^{the board and director are at odds and/or having constant disagreements?}

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^{Short answer: bring in an outside consultant}

^{The long answer is a little more complicated}

^{The board would benefit from education on board/staff relationship and supporting the director}
^{The board/director would benefit from a facilitated discussion about performance expectations and role clarification}
^{The board would benefit from establishing a Governance/oversight process so that bullying behavior can be addressed}

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^{What is the role of the board versus the director’s role in coordinating fundraising?}

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^{Board’s Role in}^Fundraising

Determine, authorize, and/or oversee the need for funds
Determine the purpose for and justification of funds to be raised
Decide on policies, procedures and practices based on legal and ethical considerations
Open doors: Work to identify, cultivate and solicit donors (when asked)
Approve and accept gifts based on donor intent and alignment with the mission

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^{Board’s Secondary Role in Fundraising}

^{Secondarily, but no less important:}

100% PARTICIPATION

Board members and volunteer solicitors must first commit their gifts

One of the first questions potential donors ask is if the board has made gifts.

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^{Director’s Role in Fundraising}

Establish the process and infrastructure to effectively engage the board in fundraising
Identify fundraising goals based on library needs
Organize fundraising calendars and identify needs for management and direct service volunteers to support fundraising efforts

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^{What should a board prioritize if they have $0 funds in savings and investments?}

?

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^{Seriously, the top priority is a Case for Support}

A publication that helps prospective donors understand how the agency aligns with their philanthropic goals and why they should give money to the organization.

Focus on the philanthropist’s interests.

What are the funder’s/donors’ interests in your library?

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^{Build Philanthropy Infrastructure}

^{A robust philanthropy program ultimately includes all these approaches, built over time}

Start to shift your thinking from “small” fundraisers to building a “culture of philanthropy”

Set goal(s) for endowment and creating an operating reserve of at least 3-6 months of operating costs.

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^{How do we manage conflicts of interest and breaches of “duty of loyalty”?}

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Conflicts of Interest:�

Board approved policy.
Statement completed by board, staff and volunteers with decision making authority.

Identify types of conduct that may constitute a conflict.
Establish procedures for disclosing conflicts.
Provide review by uninvolved board members.

Again, the standards are listed for the instructor’s reference only. You can use this to pull out key points for the discussion of essential elements of the conflict of interest policy and procedures.

D. CONFLICTS OF INTEREST

Nonprofits should have a written conflict of interest policy and statement. These should be applicable to board members and staff, as well as volunteers who have significant, independent decision-making authority regarding the resources of the organization. The policy and statement should be executed by covered individuals, both at the time of the individual’s initial affiliation with the organization and at least annually thereafter. The conflict of interest policy should identify the types of conduct or transactions that raise conflict of interest concerns, should set forth procedures for disclosure of actual or potential conflicts, and should provide for review of individual transactions by the uninvolved members of the board of directors.

(2)The conflict of interest statement should provide space for the board member, employee or volunteer to disclose any known interests that the individual, or a member of the individual’s immediate family, or any related business or other entity that has transactions with the organization.

Conflicts of interest concerns surface in nonprofits in many different ways.

This section of the Standards for Excellence outlines avoiding and eliminating practices that allow individuals to receive private benefit or inurement and addresses general concerns with adopting a conflict of interest policy.

- Private inurement --Is the conflict worth risking your tax exemption status?

- Board member’s primary loyalty should be to the organization, not his/her pocketbook or business interests.

- Not all conflicts involve money, may involve conflicts over access to confidential board business and relations with competitors.

Emphasize the Gray Zone related to conflict of interest. Institutionalizing a conflict of interest policy is critical because the issues are rarely clear cut.

Conflicts policy should be approved by the board

Covers board, staff, and volunteers with significant independent decision making authority with respect to the organization

Identifies types of conduct that would constitute a conflict

For instance:

We do business with our board members. They give the nonprofit much free advice, help. Why shouldn’t we send some of our business their way?

Our board members feel like they are the ‘good guys/gals’, above this sort of thing

Our board members give us a good deal

Perceptions -- How would it look on the front page of the local paper?

Sets up procedures for disclosing conflicts

Provides for review of potential conflict transactions by uninvolved board members

Conflicts policy should be approved by the board

Covers board, staff, and volunteers with significant independent decision making authority with respect to the organization

Identifies types of conduct that would constitute a conflict

For instance:

We do business with our board members. They give the nonprofit much free advice, help. Why shouldn’t we send some of our business their way?

Our board members feel like they are the ‘good guys/gals’, above this sort of thing

Our board members give us a good deal

Perceptions -- How would it look on the front page of the local paper?

Sets up procedures for disclosing conflicts

Provides for review of potential conflict transactions by uninvolved board members

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^{What is the difference between a governing board and an advisory board?}

^{And what if the only “board” is advisory (because the elected officials have fiduciary responsibility)}

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^{Fiduciary Responsibility}

^{Duty of Loyalty}

^{Show undivided allegiance to organization’s welfare}

^{Act in Accordance with Legal Standards – ensure that the mission continues as long as the need exists}

^{Duty of Care}

^{Stay informed and ask questions}

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^{Governing vers}^{us Advisory Board}

Municipal with Advisory Board

Board assumes all oversight responsibilities including fundraising
Ultimate resource responsibility lies with the elected officials but still must abide by duty of care and duty of loyalty and all other board duties and responsibilities
Craft an ongoing relationship with elected officials to ensure successful stewardship

Governing Board

Assumes all oversight including all fiduciary responsibilities. fundraising and stewardship

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^{Corporate Office}

^{8425 Peach Street}

^{Erie, PA 16509}

^{(814) 480-8000}

^debbie^@^{getstrategy.com}

^{jacqui@getstrategy.com}

^{Any Other Questions and Discussion?}

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^{To Ensure an Effective Board}

^{Understand and fulfill roles (board & Staff).}
^{Structure the board to enable good communications and strong relationships and ensure that all of the committee functions are implemented.}
^{Prepare in advance.}
^{Structure meetings to focus on policy and strategy-using consent agendas to save time; provide quarterly strategic plan progress reports.}
^{Communicate effectively between meetings.}
^{And finally: see something (not working), say something.}

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^{Corporate Office}

^{8425 Peach Street}

^{Erie, PA 16509}

^{(814) 480-8000}

^debbie^@^{getstrategy.com}

^{jacqui@getstrategy.com}

^{Thank you for your time and your commitment to ensuring sustainable libraries in our communities.}