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Board Manual:
Don’t Convene Without It
Many organizations do not have a board of directors manual,
primarily because they do not believe it is necessary. Most boards give their
members a folder with a few items corresponding to the meeting at hand. This
may contain the minutes of the previous meeting, a simple fiscal report and the
agenda. What more should a board packet contain?
Well, let’s start with the bylaws or a list of the board
members and their affiliation or employment. What about the bylaws or
incorporation papers? These define the mission of the organization. I would
hate to sit on a board of directors whose mission is not consistent with my
values or beliefs. Many older organizations need to update their mission
statement and geographic area of operation or service area. In most states,
this is required to obtain corporate standing. But rarely does the state and/or
federal government have the resources to review these documents—that is,
until something goes wrong or there is bitter dissent on the board and someone
goes public.
Boards of directors have an obligation to review these documents
regularly and make appropriate changes. Hence, that is one reason for having a
board manual. But what about bylaws, Robert’s Rules of Order, and
significant board policies adopted in the past, such as term limits or removal
of board members?
The public puts a lot of trust in not-for-profit organizations,
but scandals do happen. Take the New York Stock Exchange. You did not know it
was a not-for-profit? Well it is, and when it gave its former chairman, Richard
Grasso, a huge pay package, the attorney general of New York state, then Eliot
Spitzer, stepped in and sued to stop it, deeming it excessive.
“You can’t pay the head of a not-for-profit that much
money,” Spitzer, now governor, said at an afternoon news conference.
“The amount paid, close to $200 million, was simply not reasonable.”
(http://money.cnn.com/2004/05/24/markets/spitzer_grasso/ ).
So, what is reasonable?
In New York state, not-for-profits have to file fiscal reports
detailing how they use their funds, and “reasonable” is a word used
regarding appropriate compensation for managers. How much is your CEO’s
salary? Is it consistent with prevailing salaries?
What is important is what executive directors or CEOs should
report to their boards. Remember: The more your board knows about the operation
of the organization, the more it will feel a sense of ownership. This sense of
ownership is transformed into action: a board that works harder to make the
organization more fiscally sound and mission-driven, contrary to common belief.
Here is a simple list of what a board manual should contain:
- A copy of the bylaws;
- A copy of the articles of incorporation;
- An organizational chart of key staff positions;
- A section for board meeting minutes for the last six months;
- An organizational chart of board committees;
- For the benefit of individuals with special needs, a diagram
of a table surrounded by boxes representing the number of board members. Names
should be added to the boxes when the meeting starts;
- The organization’s annual calendar, denoting annual
events such as fundraising dinners, staff picnics, board meetings and
completion dates for certain activities, such as reports to the funding
sources;
- A copy of board-adopted policies (such as absences from
board meetings, term limits, personnel-grievance procedures, and when to
exercise executive session);
- A roster of all board members (addresses and telephone
numbers, positions on the board, etc.);
- .A copy of all current organizational policies (such as
personnel policies, affirmative action, conflict of interest, etc.);
- A copy of the current operating budget;
- A fiscal report for the period since the last board meeting.
This report should have columns as follows: 12-month budget, the annual budget
divided by 12 or a typical month’s expenses, expenditures by month; a
year-to-date column and a variance column;
- The last quarterly filing of Internal Revenue Service Form
941;
- The most recent audited financial statement;
- A history of the organization;
- Copies of all brochures and promotional literature;
- A list of the different funding sources of the organization;
and,
- An analysis of the organization’s strengths, weaknesses
and current problems.
As you read the list you will soon realize where some of your
board’s problems originate. Conflict-of-interest policies are notorious
hot-button items. But you should have one, along with policies on discussions
between board and staff on organizational matters.
For CILs, these may all need to be in alternative formats, such
as Braille or recorded tape or computer disk. All this information may result
in a heavy and unwieldy notebook binder, but think of all the problems you will
avoid. One item alone, the organization’s calendar for the year, is well
worth it. Instead of a huge binder, you can use a password-protected area on
your web sitefor many of the items. Members can even store the information in a
hand-held computer such as a personal digital assistant (Palm, for example.)
Of course, there is no need for a board meeting without an
agenda. The agenda is a “road map,” a combination of items for which
the executive director needs immediate board action (such as to review a
contract, discuss a personnel issue, etc.), and those the board left
unaddressed at a previous meeting. It is put together by the president and the
executive director. The pressing items are new business; the rest is old
business.
One big failure I have seen of board meetings is that the
executive director is not required to provide a verbal “director’s
report.” It behooves the director to use his or her time wisely by
detailing what the board needs to act on during the meeting. If the director
frequently fails to anticipate his/her needs between board meetings and has to
seek “executive committee action,” board members should express their
concerns and have them put on the record. The board is the governing body of
the organization, not the executive committee.
******************************
Patricio Figueroa, Jr., is an author, artist, and first
generation ILC director. He lives in New York State.
___________________________________
More on boards of directors, executive directors, and
management issues in future issues of Independence Today
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