1. Dennis R. Burt, CPA, CVA MFA Board Chairman dburt@burtcpa.com

2. Governance means to steer; set direction

3.  Nonprofit organizations are governed by a volunteer Board of Directors, who are the Legal Guardians of the Organization.  They are granted the AUTHORITY to make decision on behalf of the organization, and must be ACCOUNTABLE for organization performance.

4. 1. Authorities Governing Boards of Directors 2. Your Duties and Obligations as Board Members – Standard of Care 3. Liability as Directors 4. Conflicts of Interest 5. Other Statutes of Interest 6. Best Practices

5.  Hierarchy of Laws  United States Constitution  Federal Laws and Regulations (Supremacy Clause)  New Mexico Constitution  New Mexico Laws  MFA-Specific Provisions  Rules & Regulations (adopted by Board)  By-laws (adopted by Board)  Policies & Procedures (adopted by Board)  Board Resolutions  Board Actions

6.  Limitations on Liability  Statutory Limitations ▪ Liability Insurance for actions taken in the performance of duties ▪ Nonprofit Corporations Act  Indemnification ▪ Bylaws

7.  Duty of Care: “Ordinary Prudent Person”  Business Judgment Rule  But, if you have knowledge, act on it  Can rely on: ▪ Competent officers and employees ▪ Competent professionals (accountants, lawyers, financial advisors) ▪ Other Board Members & Committees  Fiduciary Duty: No “self-dealing”

8.  Ethical Principles of Public Service  NM Governmental Conduct Act  Fiduciary Duties  Bylaws  Code of Conduct (Policies & Procedures)

9. 1. NM Open Meetings Act 2. NM Inspection of Public Records Act 3. Human Resources 4. Consumer Privacy Laws 5. Mortgage Laws 6. Securities Laws

11. Board authority is collective. Individual members have no authority. The President/Board Chair is the elected spokesperson for the Board.

12. Determine and articulate the Mission and Purpose Set organizational direction (Strategic Planning) Provide oversight (Finances and Executive Director) Ensure adequate resources (Financial and Human) Enhance agency’s public standing

13. Define the organization in both the present (what we do) and future (what results we want to achieve). Approve or affirm the mission. Approve or affirm the key goals that will result in mission accomplishment or vision actualization. Ensure that operating plans and strategies lead to attainment of these goals. All other responsibilities flow from and depend on the fulfillment of the mission.

14. Select and support the individual empowered to lead the organization. Boards must reach consensus on the chief executive's job description and undertake a careful search process to find the most qualified individual for the position. Support the executive and review his or her performance. The board should ensure that the chief executive has the moral and professional support he or she needs to further the goals of the organization. It is the responsibility of the executive to transform the mission from concept to action and measurable outcomes.

15. Formulate policies regarding financial reporting and controls, control and reporting of contributions and donations, and financial auditing. Select independent auditor, review, and approve audit report. Approve financial investments and financing choices. Monitor and appraise revenues, expenditures, and cash position. Ensure compliance with board financial policies.

16. One of the board's foremost responsibilities is to provide adequate resources for the organization to fulfill its mission. The board should work in partnership with the chief executive to assure the financial stability of the organization.

17. The board, in order to remain accountable to its donors, the public, and to safeguard its status, must assist in developing the annual budget and ensuring that proper financial controls are in place.

18.  Two Aspects of Sarbanes-Oxley are especially applicable to nonprofits: 1.Strengthened whistleblower protection 2. Retention of documents related to lawsuits

19. Approve policies regarding personnel, facilities, maintenance, safety, financial controls, and other legal requirements. Approve all policies formulated by manage- ment that involve legal, regulatory, or external, issues. Appraise and audit operations to ensure compliance with board operating policies.

20. : Formulate policies regarding board member selection and expectations, board member orientation, board development, board committee assignments, board planning and performance evaluation. Develop a board information system to provide the information needed to carry out the board's oversight role. Appraise board performance.

21. Directors and Officers Insurance Financial Audit Legal Audit Process for Determining Reasonable, Yet Competitive Compensation for the CEO/ Executive Director Policies Conflict of Interest Policy and Annual Disclosure Whistleblower Policy Document Retention Policy Protecting the Organization

22. Mission:  Can each member quote the mission?  Do you have an “elevator” speech?  Is it reviewed annually? Meetings:  Are board meetings productive?  Agenda and reports distributed prior to the meeting in order to allow for full review?  Board attendance policy in place and followed?  Bulk of meeting spent on important issues?  Board members actively engaged in the meeting?  Is a standardized committee report form used?  Board decorum

23. (continued) Board Development:  Board member and committee job descriptions?  Board responsibility (governance) vs. management responsibility clearly understood?  Matrix of strengths and needs for board recruitment?  New board member orientation? Management Oversight:  CEO/ED evaluated annually?  Annual compensation analysis?  Succession plan?  Policies reviewed and approved?  Difference between management oversight (governance) vs. management responsibility clearly understood? Strategic Planning:  Does the plan exist?  Is the plan relevant/current; support the mission?

24. 1.Establish committees when issues are too complex and/or numerous to be handled by the entire board. 2.For ongoing, major activities, establish standing committees; for short-term activities, establish ad hoc committees that cease when the activities are completed. Standing committees should be included in the by-laws. 3.Committees recommend policy for approval by the entire board.

25. (continued) 4.Committees make full use of board members' expertise, time and commitment, and ensure diversity of opinions on the board. 5.They do not supplant responsibility of each board member; they operate at the board level and not the staff level. 6.Committees may meet monthly (this is typical to new organizations, with working boards), every two months, or every three months; if meetings are not held monthly, attempt to have committees meet during the months between full board meetings. 7.Minutes should be recorded for all board meetings and for Executive Committee meetings if the Bylaws indicate the Executive Committee can make decisions in place of the board when needed.

26. The larger the organization is, the easier it is to define the boundaries between the board and staff. Governance determines the “WHAT”, creates the Vision Management determines the “HOW”

27. Resources Allison, Josh, Sheehan & Sheehan, P.A. Act Council of Social Service, Inc., www.actcoss.org.auwww.actcoss.org.au Board Source, Building Effective Nonprofit Boards, www.boardsource.org www.boardsource.org Cullinane Law Group, www.cullinanelaw.comwww.cullinanelaw.com Governance Matters for Effective Nonprofits, www.governancematters.org www.governancematters.org Great Boards for Small Groups, by Andy Robinson Kentucky Nonprofit Network (for examples/sample forms and policies), www.knn.orgwww.knn.org New:Helping Nonprofits Make a Diffference, http://new.orghttp://new.org