Roles and Responsibilities of Boards and Board Members

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Amy Nisenson, CGT Independent Consultant

PCI webinars March 3, 2016

What will we cover…

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•  General facts on Nonprofit Sector •  Three Roles of Nonprofit Board •  Roles and Responsibilities of Individual

Board members •  Fundraising Responsibilities •  Strategies to help Board members raise

money

What is a nonprofit?

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Many terms and labels: Nonprofit Not-for-profit Tax-exempt (501-c-3) Third sector Charity, Charitable sector Voluntary sector, Volunteer organization Non-governmental organization (NGO)

What do you think when you hear the word nonprofit?

The Nonprofit Sector

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Variety of:

• Missions: arts, social services, mental health, public safety, environment, education, recreation, health, etc.

• Geographic scope: international, national, state, regional, local

• Activities: direct service, advocacy, member-serving, faith-based

Two types of nonprofits

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Public-Serving (1,200,000+) 501-c-3 tax status Eligible to receive tax-deductible gifts _______ Service providers Foundations Churches

Mutual Benefit (400,000+) 501-c-4, 6, etc. tax status ________ Social & Fraternal orgs. Bus. & Prof. associations Labor unions Political orgs.

The vital role of Nonprofits

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Nonprofits contribute to our quality of life.

• Service Provision: meeting unmet needs, fostering and testing innovation, immediate response • Guardian of Values: freedom of expression, diversity, power of individual action • Public Voice: under-represented points of view, “safety valve” for change or conflict, social conscience • Community-Building: “social capital” connecting diverse people, developing trust

Nonprofit Governance

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• Nonprofits are governed by a volunteer board of directors.

• A board is a body of people, either elected or appointed, who collectively lead and govern the organization.

• Governance means… ü Set Direction (Mission) ü Steer (Strategic & Fundraising Planning) ü Provide Oversight (Accountability)

Governing Boards…

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Come in a variety of structures, compositions, etc., but are always where the proverbial “buck stops.”

Policy vs. Management

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•  Board’s role often described as “policy-making” while staff’s is “management”

•  However, this is too simplistic: -  A policy is a “guiding principle” -  Staff are critical in shaping and implementing

policies

Overview: Roles and Responsibilities of…

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Individual Board Members

•  Duty of care •  Duty of loyalty •  Duty of obedience •  Ambassadors for

the Organization •  Volunteers for the

Organization

The Board •  Setting Organizational

Direction •  Ensuring Necessary

Resources •  Providing Oversight

Board Role 1: Set Organizational Direction

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•  Developing and maintaining a focus on mission

•  Philosophical and strategic (long-term) planning

•  Not necessarily tactical (annual) planning

Board Role 2: Ensure Resources

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•  Identify resources needed •  Establish policies for how these resources will be

acquired

•  Determine how board members will participate in resource development

Board Role 2: Ensure Human Resources

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•  Selection of Chief Executive

•  Support of Chief Executive

•  Evaluating Chief Executive

Board Role 2: Ensure Adequate Financial

Resources

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•  The full board participates in various ways: -  Contribute financially -  Help develop a fundraising plan -  Support the organization’s solicitation efforts

•  It is always the board’s responsibility to ensure adequate resources for the organization to remain financially viable

Board Role 2: Ensure Resources with a Positive

Public Image

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•  Accurate image and positive reputation will influence organizational resources

•  Success depends on external relationships

•  Board needs to ascertain that stakeholders are kept informed

Board Role 3: Provide Oversight

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•  Program

•  Financial

•  Risk management

•  Legal and moral oversight

•  Evaluation of Chief Executive

Board-Chief Executive Partnership

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Key relationship with inherent tension, even when it’s a positive relationship, since: -  Both parties do governance. -  Intersection of governance and

management. -  Board oversees chief executive’s work.

Ensure CEO & Board Engagement

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CEO → Is Displacing Board

GOVERNANCE AS OBSERVATION

CEO → Is In Constructive

Partnership with Board

GOVERNANCE AS

LEADERSHIP

CEO → Is Going Through the

Motions with Board

GOVERNANCE AS

ATTENDANCE

CEO → Is Displaced by Board

GOVERNANCE AS

MICROMANAGEMENT

Source: Richard Chair, et.al, “Governance as Leadership”

CEO

Eng

agem

ent

Board Engagement

Responsibilities of Individual Board Members

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•  Actively Participate

•  Be Informed

•  Promote the Organization

•  Safeguard Ethics and Values

Three “Hats” Board Members Wear

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•  Legal Hat -  Duty of Care -  Duty of Loyalty -  Duty of Obedience

•  Ambassador Hat •  Volunteer Hat

•  DUTY OF CARE - Using your best judgment - Actively participating, paying attention - Asking pertinent questions

•  DUTY OF LOYALTY - Avoiding conflicts of interest - Putting aside personal and professional interests

•  DUTY OF OBEDIENCE - Staying true to the organization’s mission - Obeying the law, both public and organizational

Board Members’ Legal Obligations

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Board and Staff Roles

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•  Identify the roles of the board and staff and factors that influence their relationships

•  Develop insights on how to support the culture of an effective board-staff partnership

•  Be exposed to key strategies to develop, manage, and survive executive transitions

•  Learn how to create a succession plan

R & R of the Board Chair

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Leadership: •  Maintain a healthy and mutually supportive relationship.

•  Help the board maintain effective board development.

•  Help the board to clarify and maintain policy and oversight.

Meetings and Committees: •  Chair and facilitate board meetings.

Mediation: •  Guide board actions with respect to organization priorities.

Sharing leadership Chair Supports the Chief

Executive

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1.  Communicate openly and fairly with the chief executive.

2.  Liaise between the board and the chief executive.

3.  Lead and encourage board to support and evaluate the chief executive.

4.  Discuss issues confronting the organization with the chief executive.

5.  Review with chief executive any issues of concern to the board.

R & R of the Chief Executive

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1.  Develop capable staff and orchestrate staff functions.

2.  Establish operational plans.

3.  Manage organizational resources.

4.  Represent the organization.

5.  Identify internal and external issues that impact the organization.

6.  Assist the board in its governance functions.

7.  Work closely with the chair to prepare for board meetings

Sharing leadership

Chief Executive Assists in Developing the Board

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1.  Ensure job description for chief executive and board. 2.  Maintain healthy and supportive relationship with the chair. 3.  Ensure board has a board development committee, and work

closely with it. 4.  Provide orientation for new board members. 5.  Help the board clarify and maintain policy and oversight

functions. 6.  Keep board members informed and adhere to the doctrine of “no

surprises.” 7.  Help plan board retreats or special workshops. 8.  Conduct assessments to strengthen the board.

Sharing Leadership

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The board takes the lead when it: •  Articulates the organization’s values through policies

that put the mission into action. •  Hires, supports, and evaluates the chief executive. •  Opens doors to fundraising in the community. •  Monitors fiscal management, approves the budgets,

and ensures there’s an audit. •  Selects, recruits, and orients new board members

Sharing Leadership (Continued)

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The chief executive takes the lead when he/she:

•  Develops and proposes policy questions for the board’s consideration.

•  Hires, supervises, and motivates staff. •  Develops and implements programs.

Sharing Leadership (Continued)

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Board and staff share the lead when they:

•  Develop a strategic plan.

•  Create a fundraising plan and strategies.

•  Initiate and implement evaluations.

•  Prepare for board meetings.

The Role of the Board in Fundraising

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2014 contributions: $358.38 billion by source

(in billions of dollars – all figures are rounded)

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2014 contributions: $358.38 billion by type of recipient organization

(in billions of dollars – all figures are rounded

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The number of 501(c)(3) organizations, 2004-2014

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Where does your money come from?

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Think about where the support for your own organization comes from:

•  Individuals/Bequests •  Corporations •  Foundations •  Government •  Combined Campaigns

Fundraising Generalities

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•  Nonprofits need to earn support-don’t assume you are entitled to it

•  Fundraising is not just raising money-it is raising friends

•  Don’t beg for money! Ask for it! •  Treat prospects and donors as you would

customers in a business

What is your strategy and how is it tied to fundraising?

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•  What is your board composition? •  Do you know what sets your organization apart? •  Is your board engaged? •  Is your case statement compelling?

–  Short, concise yet shouts urgency –  Is factual and identifies needs and your impact

•  Do you have a fundraising plan in place? –  Specific roles and responsibilities for staff and

board

Board Model Continuum

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•  Small organization with Founders doing all the work: Budget <

$100,000 •  Somewhat larger organization with a Working Board and small

staff. Budget $100,000 to $250,000 •  Larger with a staff but still a board that still does some work-a

Management Board. Budget $250,000 to $1,000,000 •  Larger with a Governing Board and strong staff leadership-

strategy and policy. Budget >$1 million •  Advisory Boards or Councils

Does your board have fundraising capability?

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•  Does your board have ties to the community? Well connected or working? Appointed? Percentage of board made up by clients?

•  Does your board give and get major gifts? •  Does your board know the mission of your organization and can

easily articulate it? •  Is your board structured to support fundraising? If you can’t answer yes to any of the above, you need to get your

board and organization to the point of capability…

The Board’s Fundraising

Responsibilities

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•  Define or clarify the mission •  Support organizational stability •  Identify strong leadership •  Approve adequate budgets •  Plan for the future of the organization •  Be familiar with the overall fundraising plan •  Participate in the fundraising process

Cultivation

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The process by which you improve and grow the relationship with the donor. Board can help… •  Identify prospects •  Build relationships with prospects •  Help generate interest and educate prospects

about organization

Solicitation

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The practice of making the final visit or proposal to ask for something (money to in-kind services/product)

Board can help… •  One to one solicitation •  Send direct mail pieces with personal note •  Make phone solicitations

Stewardship

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The “thank you”! The follow-up after the gift has been made. (Should not be one-time event)

Board can help… •  Thank you letters •  Donor recognition opportunities •  Invitations to special events

Size of Organization determines

Fundraising strategy

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Small organization= Board Driven Large organization= Staff Driven •  Board member’s roles change as size of

organization changes… •  Executive Director is usually 1st hire in an

organization. His/her job is to build staff.

XYZ Organization

Board Fundraising Responsibilities

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Examples-- •  Clearly define annual fundraising goals •  Delegate responsibilities to meet these goals •  Create fundraising and donor recognition policies •  Ensure fundraising methods adhere to ethical

standards

Different fundraising roles in an

organization

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Individual Board members •  Give personally •  Participate in fundraising activities •  Identify potential funders •  Accompany Executive Director on ask-visits •  Sign fundraising letters •  Be cheerleader for organization •  Supports staff with appropriate resources

XYZ Individual Board Member’s

Responsibilities

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Examples- •  Make an annual personal contribution, a “stretch”

gift •  Raise at least $5,000 from additional donors •  Attend our special fundraising events •  Be available to assist with other fundraising efforts

Why 100% Board Member

Giving?

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•  Demonstrates personal commitment •  Gives board members confidence to ask others to

give •  Encourages other funders to give •  Creates board member “ownership”

•  ** this is considered a best practice but can vary depending on “membership makeup of board

Different fundraising roles in an organization

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Development Committee (model for entire board) •  Can be committee of Board or non-board members who

work with development staff or combination •  Clarifies mission, stability, budget, plan—context for

fundraising—approves development plan •  Drafts fund development policies •  Actively participates in cultivation, solicitation, stewardship •  Supports staff with appropriate resources

Fundraising

Policies & Procedures

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Should include the following: •  Solicitation and acceptance policies •  Procedure for processing gifts and database accuracy •  Procedure for the following (may vary by organization) gifts

of securities o  gifts of personal property or real estate o  gifts of intellectual property o  restricted gifts o  establishing endowments and planned/deferred gifts o  gifts-in-kind

Fundraising Policies & Procedures

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Also should include the following: •  donor-privacy policy •  donor-recognition policy (unique to individuals and

corporations) •  written procedure for entering and recording gifts •  written procedure for acknowledging gifts •  IRS language on receipts and thank-you notes •  state disclosure statement on letters? •  permission policy for sending email communications to

members/donors •  policy for conducting new special events

Sample Fundraising Committee Job Description

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Examples- •  Lead board’s participation •  Work with staff to develop fundraising plan •  Develop fundraising policies, plans, procedures, and schedules

for board •  Teach board members fundraising skills and techniques •  Solicit contributions from board members •  Lead the board’s effort in identifying, cultivating, and

approaching major donors

Staff roles in fundraising to support the Board

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Chief Executive (Executive Director) •  Works in partnership with development staff and board •  Primary representative of organization Development Staff •  Manages day to day work of development •  Depends on what staff organization is able to hire and what

duties are (i.e. Development Director will have different role if oversee staff such as grant writer, planned giving expert, etc or if they have to do it all)

Staff roles in fundraising to support the Board

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Development Staff or other staff (continued) •  Coordinates fundraising against development plan

–  Manages process with support •  Prospect research •  Database management •  Gift recording •  Accounting •  Special event planning and oversight •  Coordination of fundraising entities within larger

nonprofits •  Donor relations

Typical Fundraising Duties of the Chief Executive

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Examples-- •  Serve as the organization’s representative to potential funders

and the community •  Serve as a contact for donors •  Ensure compliance with funding sources and regulatory

requirements •  Hire and supervise fundraising staff •  Initiate and assist the board in developing fundraising policy •  Help the board set fundraising priorities

Sample Development Director Job Description

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Examples- •  Work with the board and chief executive to develop long-term

fundraising strategy •  Organize and execute fundraising programs •  Develop relationships with funders •  Coordinate visits by staff and board members •  Plan and oversee donor recognition and cultivation •  Work with staff to design promotional materials for fundraising

How can board members help?

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“When the paradigm shifts from asking for community support because an organization HAS needs to asking for support because the organization MEETS needs, the tin cup disappears.”

Kay Sprinkel Grace, The Nonprofit Board’s Role in

Setting and Advancing the Mission

Before your Board

members can help fundraise….

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Know the organization’s basics…. •  Mission •  Vision •  Strategic Plan •  Recite the Elevator speech

“Elevator Speech”

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•  A compelling 30-second description of your organization’s plans, delivered as part of a two-way conversation, that educates and, hopefully, elicits interest from listeners.

•  A critical component of success for an organization’s self-sufficiency and sustainability.

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•  Become trained in fund development strategies and techniques

•  Get comfortable with “the ask” •  Help identify potential donors •  Involve staff at the start—let them know of any

prospects you’re thinking about •  Commit to helping with a fundraising project

How else can board members help?

How else can board members

help?

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•  Understand the importance that each interaction they have with others in the community is part of the development process

•  Understand why they are on the board and what they can bring to the table

•  Understand what the staff’s roles are and how they can assist them

How can the Board members enhance the organization’s public

standing?

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Board should be familiar with organization’s programming to articulate

–  Mission –  Accomplishments –  Goals

Board should help have “ear to the ground” to listen internally and externally

Who on the board is comfortable with any of these roles

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•  Identify and cultivate friends/colleagues who would be interested in supporting organization

•  Host a cultivation or donor recognition event for the organization

•  Take people to lunch •  Invite prospects to be guest at functions, tours,etc •  Help to steward relationships

Who on the board is comfortable with any of these roles

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•  Represent the organization at public functions (as attendee/speaker)

•  Make phone calls/write letters to officials, when asked

•  Work with staff to create and engage in specific strategies to present case to prospects-(self identified or in-connection with staff)

Who on the board is comfortable with any of these roles

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•  Take lead with regard to requests to potential and renewing donors

•  Generate/sign letters asking for appointments/gifts •  Make follow-up calls •  Seek sponsorship for special events

Board roles in Annual Giving

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Annual Giving •  Raise money needed to support the current budget •  Find and retain donors

Board can assist with •  Direct mail letters

-personal notes •  Telephone and email solicitations •  Special and benefit events

Board roles in Major Gifts

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Major Gifts •  Raise money to meet the long-term needs of the

organization

Board can assist with •  Endowment campaigns, capital and special

campaigns •  Major gifts from individuals, corporations, foundations

Board roles in Planned Giving

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Planned Giving •  Encourage individuals to give future assets through

bequests, charitable trusts, or annuities

Board can assist with •  Development of new donors and increased

contributions from current ones

Fundraising Methods…some traditional and some non-traditional

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• Direct mail • Direct mail with phone follow-up

• Special event

• Personal contact by staff and board • Internet fundraising and marketing

Key takeaways you should be asking when you think of the Board’s role in fundraising…

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•  We have the right people around the board table to fulfill fundraising responsibilities and/or a plan to get there

•  All board members are aware of what is expected of them and we are willing to hold them accountable

•  Our case and materials are compelling and ready to share with prospects

•  We have a fundraising plan in place and buy-in from our board

•  Our board members are well-trained and comfortable with their role in fundraising

•  We have the right structure/combination of staff and volunteers in place to be successful

Key Takeways from Training…

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•  What are some of the key learnings from today? •  Did you have any ah hah moments? Share? •  What is one thing you can do immediately to keep

your board more engaged in your organization? •  Other….

Thanks for attending…

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Amy’s contact info--- Amy Nisenson (804) 307-4653

Amy.nisenson@gmail.com