Advisory Board Development
C|N|D|C 4130 Tejon Street, Suite A | Denver, CO 80211 | ph. 720.855.0501 | fax. 720.855.8273
The Role of the Advisory Board under CNDC
Colorado Nonprofit Development Center’s fiscal sponsorship provides projects with the legal framework to operate without having to form their own 501(c)(3) organization. CNDC, a Colorado 501 (c)(3) tax-exempt organization, accepts projects into its corporate and legal structure and by doing so accepts legal and fiduciary responsibility for projects’ finances and activities. CNDC projects are not separate legal entities. They are part of CNDC’s corporate structure and project activities are direct activities of CNDC and its own Board of Directors. Nevertheless, CNDC expects all projects to have an active Advisory Board in place when they become a project. Exceptions may be granted on a case-by-case basis.
“According to BoardSource’s Nonprofit Governance Index 2007, 87 percent of nonprofit chief executives rate their board of directors as effective but say boards could do a better job of fundraising, community relations, and board recruitment.” BoardSource.org
Legally, CNDC’s Board of Directors is the governing board for CNDC, including all projects. Ultimate financial and legal responsibility for all project operations lies with CNDC’s Board of Directors. However, CNDC’s board does not involve itself in the development of each project. The CNDC board delegates oversight and management responsibility to CNDC staff. The CNDC President delegates project implementation to the Project Director. While Project Advisory Boards have no legal or governing authority, they provide an important mechanism of accountability and support for projects.
Advisory Boards provide assistance to projects in areas not covered by CNDC, including fundraising and organizational development. They also monitor and evaluate the performance of the Project Director. They may provide CNDC with advice and recommendations regarding personnel, financial and administrative matters. The Advisory Board should meet on a regular basis.
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The Role of a Nonprofit Advisory Board Adapted from National Center for Nonprofit Boards and Support Center for Nonprofit Management’s “All Hands on Board” by Jan Masoka
Board members of an all-volunteer organization know the important, but often unrecognized role that the Advisory Board plays. While CNDC’s Board of Directors assumes all legal and financial responsibility, the Project Advisory Board shoulders the responsibility of providing guidance to the project and executive director. Good governance of exceptional boards adds significant value and efficacy to projects, making qualitative impacts and differences in not only the development of the organization itself, but of its capability to fulfill its mission. Yet, like most all-volunteer organizations, the board can be so involved with getting the work done that it seldom finds the time to examine how the board itself is working. Unlike for-profit businesses and corporations, nonprofit organizations are not “owned” by anyone. Instead, they are “owned” by the community – chartered by CNDC, who is chartered by the government, to serve a local purpose. Therefore, the Advisory Board is a group of people that must represent the interest of the “owners,” – the community. The board, acting as governors or trustees of a project, is charged to protect that public purpose and ensure that funds are used responsibly and as effectively as possible. In a project with paid staff, an important function of the Advisory Board is to hold staff accountable to that community purpose – to be sure that the organization is complying with tax and legal requirements, and using funds efficiently for the organization’s priorities. Yet oftentimes there are no paid managers, just executive directors, resulting in the critical and difficult situation of discerning between what are the responsibilities and expectations of the Board and that of the ED.
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A Board’s relationship with the Executive Director The most important job of an Advisory Board is hiring the Executive Director and then evaluating his or her performance to ensure that excellence is maintained in the implementation of the organization’s mission, goals, and objectives. This process is not limited to just the Board president, but rather should reflect and be driven by the entire board so as to maintain a diverse and well rounded direction and outcome. Here at CNDC we have noticed that there have been a substantial number of cases when either an ED or board member steps down due to disagreeable relations between the two entities. It can be that the Board, or one of its members, tries to operate the project entirely, thereby dismissing the need and presence of an ED, or, vice versa, that the ED maintains little if any contact with the board, resulting in a motion of disengagement and poor governance. This may be a result of the way in which an individual, or group behaves that discourages people from thinking they are truly part of the leadership. Occasionally, longtime leaders and project participants come to view the project as “their baby” and are sharply critical and undermining of anyone whose approach is different. This is called the Founder’s Syndrome. Founder’s Syndrome
Founder’s Syndrome occurs when a single individual or small group has either been heavily invested with a project for an extensive period of time and/or successfully bring a project through a difficult stage, be it its initialization or a financial crisis. The strong, driven, and passionate person(s) required to do such a task oftentimes acquire a sense of ownership and primary responsibility over the project. Subsequently, this syndrome occurs when, rather than working collaboratively towards its overall mission, the project operates primarily according to the personality(ies) of the “founder” while plans and ideas not formulated by this individual don’t go very far. While the process of selecting an excellent Executive Director is tiresome and time consuming, the start date of an ED does not reflect the end date of a Board’s C|N|D|C
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involvement with the organization nor the ED. Instead, it is the Board’s responsibility to collaboratively identify yearly goals and objectives which should be reviewed annually as part of the ED’s and organization’s annual performance evaluation. Limitations of a Board Member(s)’s involvement The role of a board member, be it the Chair or anyone else, is to plan the general direction in which you want the organization to go but in no means be at the helm. The responsibility of applying the Board’s oversight and opinions lies in the hands of the ED who should take the strategic goals of the board and implement them accordingly on a day-to-day basis. It is reflective on the Board’s thorough and diligent preparation and ability to identify and hire an excellent candidate as to how much independence the ED has. That is to say, the board should not, in any means, be directly involved in the ED’s job as it not only creates unnecessary work and involvement for the board, but also undermines the ED’s authority and creates a ripple effect of inefficiency and conflict. The Board Chair’s Responsibility A board chair, not the project director, leads the board by presiding over meetings, setting the agenda in the presence of the ED, holding board members accountable, and understanding the project’s strategic priorities and needs. Any board member is free to voice questions and concerns to the ED, and only the ED. Further involvement with the staff of an organization may cause confusion in terms of professional development and the organization’s structure. In fact, while the board is responsible for the monitoring and evaluation of the ED, it should cautiously exercise its involvement with staff issues and limit it where possible. Of course, if the ED requests extra participation on a project or with certain staff, then increased board involvement is permissible.
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Board Member Position Descriptions Adapted largely from Kenneth N. Dayton's Governance is Governance, © Independent Sector
Chair of the Board
Assure that the Advisory Board fulfills its governing responsibilities during and in between meetings. Assist the ED in helping him/her achieve the project mission Optimize the relationship between the board and the ED Responsibilities Chair board meetings so that they function effectively, cover all necessary grounds, and optimize the interaction with the ED. Work with the ED to develop agendas and recommend composition of the Board. Present to the board an evaluation of pace, direction, and organizational strength of the project. Prepare a review of the ED and recommend salary for consideration by the appropriate members Annually focus the Board’s attention on matters of institutional governance that relate to its own structure, role, and relationship to the ED and project. Be assured that the board has satisfied all of its responsibilities. Fulfill such other assignments as the Chair and the ED agree are appropriate and desirable for the Chair to perform.
Member of the Advisory Board Provide governance to the project, represent it to the community, and accept legal responsibility for it. Be involved if not responsible for the hiring of employees and the determination of their salary. C|N|D|C
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Approve the Project’s philosophy and review the ED’s performance in achieving it. Annually review and approve the project’s budget and plan for funding its strategy. Elect, monitor, appraise, advise, support, reward, and, when necessary, change the ED. Be assured that the status of the organization strength and manpower planning is equal to the requirements of the long range goals. Annual perform and approve a performance review of the ED and establish his/her compensation based on recommendations by the board. Annually review the performance of the board and take steps to improve. Operations Review the results achieved by the Executive Director as compared with the project’s philosophy and annual and long range goals. Be certain that the project’s financial structure is adequate for its current needs and long-range strategy. Provide candid and constructive criticism, advice, and comments. Approve major actions of the project, such as capital expenditures and major program/service changes.
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A Code of Ethics for Board Members Adapted from Cain Consulting Group of Howarden, Iowa
A member of the board should: Be an active participant willing to become involved. Carefully listen to and respect fellow board members and the served constituents. Respect and support the majority decisions of the board. Recognize that ultimate authority is vested in the board as an entity, and not a sole individual when it meets in legal session. Keep well-informed of developments that are relevant to issues important to the board. Vote to hire the best possible person to manage the agency; oftentimes this means looking at candidates that are outside of one’s family/friend circle. Declare any conflicts of interest between one’s personal life and his/her position on the agency board and to avoid voting on issues that may be a conflict of interest. Always work to learn more about one’s role as a board member and how to do the job better. Recognize that the board member’s job is to ensure that the agency is well managed, not to manage the agency. A member of the board will not: Be critical, publicly or privately, of fellow board members and/or their opinions Use the agency in any manner for personal advantage or for the advantage of family and friends. Interfere with the duties of the administrator or undermine the administrator’s authority.
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Planning a Board Meeting from an Executive Director’s Point of View Before you meet Consider what you want to accomplish and what the board expects from the meeting. Plan the agenda before hand to optimize the use of minutes and compile necessary handouts At least one week prior to the meeting, distribute the agenda and relevant information, such as the latest financial statement, to board members. The Agenda The ED and board Chair should work together to formulate the design of the agenda; it is designed to facilitate and focus the meeting on essential topics. Keep the agenda focused on board-related issues, such as strategic decisions, financial and legal issues, and resource development. Do not let the board lull on or get side tracked on issues that fall under the ED’s jurisdiction. The Meeting Aim to stimulate, rather than inducing tedium with unnecessary long reports or irrelevant topics. Also, maintain a comfortable open forum where any board member feels relaxed and comfortable to talk. Consider incorporating discussion of your long-term strategic plan into each meeting: this will help board members and staff see the “big picture” Set aside time to educate the board about news, research, or other environmental factors in the field that impact the project. By doing so, the board will stay forward-thinking and be prepared to make changes rather than remaining stagnant.
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Mix it up; break into small group discussions; use various forms of exposition such as slideshows, posters or chats; and bring in outside experts or affected parties to show the board members the impact of a project from an external point of view. Consider evaluating your meeting format and efficacy periodically. The length and quality of discussion is a good indicator of how successful your meeting is. The Chair should keep board members to the agenda, moderate the debate, and remain relatively neutral during debates. Minutes The minutes – a permanent, legal recording of the meeting – should be taken by an attendee. Minutes may be used a records of the meeting for reference, legal review, or during board member orientation. Since minutes may be used in a legal context, they should include records of who voted and for which side, and conflict of interest should be noted. A copy of Minutes should be distributed to board members immediately after the meeting, and also in preparation for the following board meeting; this will allow the Board to refresh items at hand and prepare accordingly. After the Meeting Occasionally have the board evaluate the meeting’s success and efficiency so as to always be improving the rare and critical moments that the ED and board have together. Bring absent board members up to date on what happened at the meeting. Keep board members abreast of publicity and developments regarding the project, perhaps via the means of a monthly memo that summarizes current activities, accomplishments, and needs.
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