How To Build A Great Board

Unless your nonprofit's board has no term limits, chances are you will see many board members come and go. If there is one thing that is invaluable for boards, it's consistency, and it's up to the governance committee to take the lead in identifying the skills the board needs to continue to effectively do its job.

There are thankfully many resources available to help ensure that new members have the same skills and expertise as their predecessors. In “Nonprofit Management 101,” Vernetta Walker and Emily Heard of BoardSource list six of these resources:

• Personal networks of business and community leaders;
• Media articles;
• Volunteers and non-board member committee members;
• Participants in leadership programs;
• Current MBA students; or,
• Online sites that specialize in board matching or that list board opportunities.

Walker and Heard wrote that, once you have a group of candidates to choose from, it's time to make sure they are truly right for the job. You can do this by making sure applicants are:

• Passionate about and committed to supporting the mission of the organization;
• Clear about their potential role and the time commitment required -- share the board job description and board member agreement and answer questions about the work of the board; and,
• Able to fulfill the expectations you have of them.

12 Reasons For A Board Retreat

Board members don't usually react with excitement over the idea of a retreat; they tend to retreat from those plans as quick as they can. While they may not be thrilled about the idea of a board retreat, these trips often have tangible benefits and are worth pursuing.

Dennis Miller, founder of Miller & Associates in Denville, N.J., an expert on nonprofit board governance, leadership development and strategic planning, and frequent contributor to The NonProfit Times,  maintained that retreats are an excellent opportunity to envision the future, establish new goals and develop desired standards of performance.

This is all in practice, of course, and preparation is key to ensuring retreats have their desired effect. Specifically, that means managers should:

• Solicit input from as many key internal and external stakeholders as possible.
• In conjunction with the CEO, board chair and/or retreat committee, develop an agenda with two to three specific goals.
• Consider requiring "homework" to be completed before the retreat.
• Set approximate timelines for each topic to be covered and stick with them as often as possible.
• Involve as many members from the senior executive team as practical.
• Make sure everyone is called on to participate.
• Select a comfortable place, preferably away from the site where the daily workings of the organization take place.
• Allow ample breaks between key topics.
• Build consensus on all key issues discussed and create key action steps.
• Consider engaging an experienced facilitator or consultant.
• Provide a retreat summary for all participants on key issues discussed, what consensus was developed and required action steps.
• Perform a retreat customer satisfaction survey prior to leaving the room.

Recognizing Your Board Members

Nonprofits often honor their volunteers and for good reason. There is good reason for this -- after all, they play an important role in the successes of an organization. Yet too often, the hard work of board members is left unrecognized.

The fact of the matter is that board members are volunteers as well and, as such, deserve to have their accomplishments honored. In his book “The Complete Idiot’s Guide to Recruiting and Managing Volunteers,” John L. Lipp listed 10 unique ways you can recognize the hard work your board members do for your organization:

• Write a short feature story about individual board members in your eNewsletters.
• Provide board members with nametags they can wear to special events that indicate their role on the board.
• At board meetings, take the time to recognize individual members who have a birthday that month or are celebrating other personal milestones.
• At special events, take the time to publicly introduce any board members who are in attendance.
• Consider giving out an annual Outstanding Board Member award.
• Nominate outstanding board members for leadership awards.
• Start each board meeting by going around the room and acknowledging one special thing that each member has done that month to support your cause.
• Put framed pictures of your board members in the lobby of your organization or in the board room.
• Publish brief bios of your board members on the “About Us” page of your web site.
• Serve snacks at board meetings.

Mass. AG Asks Nonprofit For Overdue Reports

A Dorcester, Mass., nonprofit faces civil penalties if it does not file a series of overdue annual reports in the next few weeks with state regulators.

According to a report in The Dorcester Reporter, Massachusetts Attorney General Martha Coakley's office sent a letter to the New Vietnamese American Community of Massachusetts, Inc., on Dec. 20, requesting missing annual reports from 2008 to 2011. Nonprofits and public charities in the state are required by law to submit their annual accounting reports with the AG.

"As a result of the organization’s failure to file as required, the Division is authorized to bring an action to restrain the organization from transacting business in the Commonwealth,” wrote Amy Bryson, the compliance officer, in the Dec. 20 letter. "Furthermore, the Division will not issue a certificate of solicitation while your organization is not compliant with the filing requirements."

New Vietnamese's alleged lack of action regarding its annual reports has sparked concern among Vietnamese-Americans in Dorcester, according to the newspaper. Members of that community met at the offices of VietAID, a local development organization, to discuss whether they need to create a new organization to represent Vietnamese residents. The Reporter spoke with one resident, who said that others in the community had alleged the organization has not been transparent with them.

Diane Huynh, Boston Mayor Thomas Menino's liaison to the Vietnamese community, acknowledged to the paper that New Vietnamese does not always share information with the city.

You can read the full story in The Dorcester Reporter.

8 Things That Make Nonprofits Vulnerable To Fraud

Nonprofit boards and executives never want to believe that fraud can happen to their organization. It's one of those things that happen to the unprepared, they think, surely it can never happen to us.

Unfortunately, that is far from the truth. Fraud can happen to all nonprofits because, according Marci Thomas, CPA, MHA and Kim Strom-Gottfried, Ph.D. In their book "The Best of Boards," the two authors wrote that nonprofits are especially vulnerable to financial crimes because they rely on the trust of their donors, funders, and employees. If that trust is broken, organizations will have a hard time finding success.

Thomas and Strom-Gottfried wrote that organizations must have strong internal controls to make sure these factors don’t lead to fraud:

• Control by a chief executive; employees believe that there is no one to whom they can report unusual actions or requests;
• Existence of transactions, such as contributions, which are very easy to steal;
• Environment of trust, especially in financial personnel;
• Focus on the mission to the exclusion of administrative systems of controls and risk management;
• Failure to devote sufficient resources to financial management;
• Failure to include people with financial oversight expertise on the board;
• Failure of the board to challenge the chief executive for fear of losing the person; and,
• Fear that the cost of implementing controls will outweigh the benefit and spending money that, in their view, would be better spent on programs.

Six Questions To Ask About Management Reports

A lot of nonprofits think they have the best and most ambitious plan for the future. That's certainly possible, but it's important to remember a plan is just that. Plans have an annoying habit of going astray, and it's up to management and the board to ensure things stay on track.

Part of this process is creating reports on how the nonprofit is doing. These are called "performance reports" and, according to Howard Berman in "Making a Difference," they are just a subset of a larger management reporting performance assessment and evaluation function.

Before your management team starts pumping out these reports, there are six questions you must ask. Berman wrote that they must be answered if you are to create the most comprehensive report.

• Is the enterprise doing what it said it was going to do? Is it executing its operating plan, producing the anticipated outputs, on time and on budget?
• Is the enterprise doing what it said it was going to do efficiently? Is cost divided by output at least continually improving -- if not, at an absolute best practice?
• Are the outputs that the enterprise is producing achieving the expected outcomes? Is it achieving the expected results -- or benefits for the involved stakeholders?
• Are the realized outcomes being achieved in an efficient manner? This is a combination of questions 2 and 3.
• Are the outcomes producing a significant impact? Are they producing a result that would not have otherwise been achieved?
• Is the effort sustainable? Can it be continued or will it fail of its own weight, due to either financial and/or operational imbalance?

Nonprofit Board Member Term Limits Spark Debate

Nonprofit boards often spark debate among people.  There are some who believe that board members should be paid, while others think that is exactly the wrong thing to do.  Board term limits are also a hot button topic in the nonprofit sector.  These limits are discussed at great length in the latest issue of The NonProfit Times, using two opposing viewpoints on the role of nonprofit governance.

The first of these views comes from Richard Buery, president and CEO of Children's Aid Society.  His organization has instituted four, three-year terms for board members this year.  The vote for this change was unanimously approved by the board.  Buery believed this was the right change to be made because it helped limit the size of the board.  He thought that in order to have critical conversations about the future, you "can't have 50 people in the room."  This point was backed up by research that showed that when there are more than seven people in a room, the conversation will start to lose focus.

Children's Aid Society is not alone when it comes to imposing term limits on boards: 70 percent of nonprofit boards have them, according to the BoardSource Nonprofit Governance Index of 2010.  That doesn't mean everyone thinks they are a good idea.  Bruce Hopkins, a partner in the Kansas City, Kan., law firm of Polsinelli Shalton Flanigan Suelthaus, believes that nonprofits should be able to manage themselves without forcing people out:

"Limits can force new blood on a board, which can be a good thing but sometimes organizations lose people who are competent, who can serve and want to serve, but can’t."

What do you think?  Are term limits for boards a good idea, or are they unnecessary?  Feel free to chime in below.