Role and Responsibilities of
Nonprofit Board Members
in Ohio
Specially revised for the
Center for Nonprofit Resources
February 2014
Goals for Presentation




Cover legal roles and responsibilities of
non-profit board members in Ohio.
Discuss recommendations for solid
nonprofit board governance.
Focus on principles of board engagement/
involvement in governance.
Suggest strategies for increasing board
engagement in governance.
Roles and Responsibilities



Nonprofits governed by Sections 1702
and 1716 Ohio Revised Code
Ohio Attorney General does monthly
webinars: www.ohioattorneygeneral.gov
Ohio Attorney General Publication: Guide
for Charity Board Members.




Available as a free download
Describes the four duties board members have
under law (see following slides)
Important information for every board
orientation program
Excellent material for ongoing board training
Duty of Care




Read and understand mission, vision, and
governing documents.
Attend board and committee meetings.
Be informed and prepared to participate in
decision-making and oversight.
Exercise same care as a prudent person
would in the handling of their own affairs.
Duty of Loyalty




Be prepared to put organizational
objectives above self-interest.
Establish and follow written policies
concerning conflict of interest situations.
Disclose personal financial interests when
needed/excuse yourself from voting.
Avoid entering into business relationships
between board members and the
organization.
Duty of Compliance


Understand and comply with governing
documents, including bylaws and code of
conduct.
Know and comply with state and federal
laws governing non-profit organizations,
including registration and reporting
requirements.
Duty to Manage Accounts




Develop policies that assure the financial
responsibility of the organization.
Keep accurate and complete records of
income, expenses, investments, and
minutes.
Develop budget as a blueprint for
program plans and all organizational
spending.
Develop fundraising goals and assist the
organization in acquiring adequate
resources.
And then there’s the IRS



IRS website – Charities & Nonprofits page
provides a great deal of compliance
information.
Regarding governance, the IRS does not
have official requirements… but they do
have guidelines. Find them in Part VI of
the 990 form.
Individual boards may vary in the type of
governance they adopt
IRS 990 Part VI Guidelines






(Find more at IRS website)
Mission
Organizational Documents
Governing Body
Governance and Management
Practices (next slide)
Financial Statements and Form 990
Transparency and Accountability
IRS Governance and
Management Policies
(The C4NPR online Resource Library has
templates for many of these)
 Executive Compensation
 Conflict of Interest
 Investments
 Fundraising
 Board Minutes and Records
 Document Retention/Destruction
 Ethics and Whistleblower Policy
For More Information:
Web-based Resources
Ohio Attorney General
www.ohioattorneygeneral.gov
Ohio Secretary of State
www.sos.state.oh.us
Internal Revenue Service
www.irs.gov/Charities-&-Non-profits
Governance Best Practices
There are many models of nonprofit
board governance, and standards of
practice evolve over the years. At
Creative Option C, LLC we use and
teach Governance as Leadership:
Reframing the Work of Nonprofit
Boards by Chait, Ryan and Taylor for
BoardSource.
Modern Boards Operate in
Three Modes
Fiduciary
Strategic
Generative
Fiduciary Mode





Best understood, if not always
embraced.
Fiscal “trusteeship” -- ensuring
efficient and effective use of
organizational resources.
Participation is securing resources.
Also included is the guarantee of
quality programming.
Necessary but not sufficient.
Strategic Mode



The art of determining the best way to
get from A to B.
Should be a nonstop pattern of thinking
for boards and board members.
Common pitfalls of traditional strategic
planning:





Plan has no traction
No strategies
No real input
Pace of change is slow
Unforeseen outcomes
Generative Mode



Creative – Act of determining “A” and “B”
Making sense of facts and data, defining
problems before solving them, and
framing the key strategic questions.
Danger is that all information comes from
staff – making board members less
capable of assisting with the creative
work of the organization and less effective
than they could be at performing their
fiduciary or strategic roles.
Strong CEOs WANT Strong Boards




The more people who are involved in
thinking through an issue, the better the
outcome will be – always.
You’ve recruited these people for their
expertise – use it!
Tightly-controlled boards are less
productive and engaged than those who
are invited to contribute their best
thinking – even when it’s messy for a bit.
Caution: strong and capable CEOs can
spoil board members. If it is easier to rely
on someone else - they will.
For more Information:
Web-based Resources
Center for Nonprofit Resources
www.c4npr.org
Board Source
www.boardsource.org
Blue Avocado
www.blueavocado.org
Guidestar
www.Guidestar.org
LinkedIn and Facebook: What groups do you
belong to? Those connections are
awesome!
Board Engagement
Board member disengagement is a
symptom of lack of opportunity to
meaningfully and easily participate in
furthering an organization’s good
works.
Just what should board members be
engaged in?

Governance
Planning – strategic and otherwise
 Policy
 Evaluation



Advocacy
Financial health and sustainability
Budgeting and oversight
 Fundraising

And what should board members
avoid becoming engaged in?

Day to day operations






Individual spending decisions within adopted
budget
Individual personnel decisions taken by CEO in
accordance with adopted policies
Individual program decisions – once the board
decides what is to be accomplished, they
should leave the “how” to staff
Criticizing organization publicly
“Parking Lot” Meetings
Representing organization (unless
specifically authorized)
Planning

Strategic Planning










Mission
Vision
Values
Goals (long-term and short-term)
Action items: who will do what?
Timelines
Budget
Succession Planning
Annual Fund Planning
Program Planning
Policy





Board Governance Policies
(Bylaws/Code of Regulations, etc.)
Financial Management Policies
(internal controls, reporting, audit,
debt tolerance, etc.)
Personnel/Volunteer Policies
Communications Policies
Customer Service Policies
Evaluation

Program Evaluation



CEO Evaluation


Related to Board-Established Goals
Key Indicators/Outcome measures
Related to Board-Established Goals
Board Evaluation

How are we doing as a group?
Financial Sustainability



Participation in annual budget process is
critical.
Fiduciary obligations cannot be escaped –
the existence on a board treasurer or
crackerjack staff person does not remove
“duty to manage accounts” from anyone
on board.
If a board adopts a budget that relies on
fundraising… they have an obligation to
participate in the fundraising.
Getting from
Here to There
Danger! People are always sensitive
about being told their baby is ugly.
Change Management
Increasing board engagement is an exercise
in change management… Here are author
John Kotter’s Eight Principles for Change:








Increase urgency
Build the guiding coalition
Get the vision right
Communicate for buy-in
Empower action
Create short-term wins
Keep at it
Make change stick
Separate Ends and Means



An effectively-operating board is not
an end in and of itself, but rather a
means for achieving some end.
What is the purpose? What could we
achieve with more board
involvement? What is our mission?
See change management principle
#1 (increase urgency.)
Special Considerations




Working board vs. policy board: Are board
members expected to participate in program
activities?
Does the board have committees? Are board
members expected to serve?
A young board may yet have no inherent
governance culture – good time to set high
expectations for board engagement.
More established boards, or those where
founders are still present, have more ingrained culture – harder to change.
Strategy 1:
Find a Board Ally or Partner






Board Chair/CEO relationship is
critical.
Personnel Committee Chair.
Governance Committee Chair.
Any member who surfaces a
concern to you.
Must have a high level of trust.
Follow their lead!
Strategy 2:
Conduct a Board Self-Evaluation

Several tools exist.




Group
Individual Board Member
Provides “speaking” opportunity for
board members who are ordinarily
quiet in meetings.
Allows board members to selfidentify and therefore own or buy-in
to problems.
Strategy 3:
Invest time in Recruitment and
Orientation



Make sure each board prospect knows
what you value about them.
Recruit people who are self-motivated.
Board member position description.


Spell out expectations.
Provide new board members with



Materials (minutes, financials, policies, etc.)
Time to introduce themselves
Space to ask questions
Strategy 4:
Form a Governance Committee





It’s not just about “nominations”
anymore.
Good role for vice president.
Responsible for board development
activities, including orientation, annual
retreat, ongoing training and mentoring.
Conducts assessments, communications
with board members about their board
experiences.
Reports to chair, executive director,
and/or board about emerging issues.
Strategy 5:
Conduct Strategic Planning




Include “institutional” goals related to
board, staffing, space, budget, etc.
Include action plan outlining who is
responsible for what by when.
When identifying champions, try not to
say “board.” That gives each one an
opportunity to wait for others to do it.
Create legitimate opportunity for fullboard participation. Predetermining the
outcome and guiding others to the “right”
conclusion will backfire!
Strategy 6:
End Rubberstamping




Board members who actually have a role in
deciding the priorities for using resources
(i.e. planning and budgeting) are easier to
engage in governance – and in fundraising.
Take time to make sure all board members
are truly comfortable with the financials… if
they don’t understand or like your monthly
statements change the statements!
It’s more important to have a good
discussion than to end the meeting on time
(really)
Include board members between meetings
– take them to lunch, seek their advice,
and listen!
Hire a Consultant!
Cathy Allen
Creative Option C, LLC
cathy@creativeoptionc.com
419-732-1770
www.creativeoptionc.com