Pangea Governance & Leadership

Board of Directors

STEPHEN R. BLOCK

p

eople vested with the legal responsibility to govern and control the affairs of orga- nizations. Accountability for any non-

profit organization ultimately rests with its board of directors (sometimes called board of trustees). Although the board may delegate man- agement authority to a paid staff person, known as the executive director, the board can never be relieved of its legal and fiduciary responsibilities. Governing board members are stewards of the public interest and have a burden of responsibil- ity to use and preserve the organization's assets for advancing a beneficial mission.

Board membership is an admirable act of citi- zenship for those who are willing to accept a sig- nificant amount of volunteering. These special people are generally not compensated for their board service, and they must balance their board obligations with personal demands of work, family responsibilities, and other community activities. This commitment to community ser- vice is tied to a long history of voluntary action, with roots that precede the founding of the United States. The innate desire to help is said to be a unique quality in America, a democratic at- tribute that influences the modern nonprofit board of directors.

Because of the board's legal responsibilities, personal limitations on directors' time, and the

daily involvement of the executive director, there is often confusion between the board and staff over roles, responsibilities, turf, and expecta- tions for performance. The board and executive director must clearly understand their mutual expectations if they are to develop a healthy gov- erning body.

Why Have a Board?

Of the many reasons for having a board of direc- tors, legal necessity is primary. In some states, only one board member is required for incorpo- rating an organization, but most states require at least three or more individuals to serve as direc- tors of a governing board. The Internal Revenue Service also requires nonprofit organizations seeking or maintaining recognition for tax- exempt purposes to have governing hoards of directors. Members of governing boards are ex- pected to engage willingly in board activities, without receiving any benefit of the organiza- tion's assets or earnings.

Aside from the legal necessities, the most practical reasons for having a board of directors are to ensure that the organization is effectively managed and is working toward the achieve- ment of a mission that has a public purpose. Few

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nonprofit organizations have the resources to employ the personnel with the expertise that is necessary to accomplish their organizational ac- tivities. The collective wisdom of the board of directors can serve as a bank of skilled and knowledgeable resources to provide support, ad- vice, and counsel. It has been widely proposed that board members should comprise the three Ws; individuals who are willing to "work," some with "wisdom," and others with "wealth."

Why Would Someone Want to Serve on a Board?

Each person has his or her own reason for vol- untary board service; however, one of the most often-stated is to serve one's community. Volun- teering as a board member is an honor and a fundamental privilege of a free people.

There are many reasons for joining or for staying on a board. For example, board partici- pation may be an expectation of one's employer. It may provide an opportunity for gaining or maintaining social status in the community, sat- isfy socializing needs, lead to new knowledge and skills, and enhance one's résumé. For some people, voluntary board service satisfies reli- gious convictions based on a belief in the orga- nization's cause or mission; or is based on per- sonal experience of a problem (such as a disease or tragedy) that is addressed by the work and mission of the organization.

The Board's Relationship with Its Executive Director

Various authors have described their ideas about the ideal working relationship between the board and executive director. Two governance models prevail. One model builds on the traditional view that the executive director is employed as a sub- ordinate to the board. The working relationship is characterized by distinct and separate roles for the board and executive director, with the board directing, supervising, and limiting the director's activities as the board sees fit.

The other governance model builds on ideas of partnership and collegiality between the exec-

utive director and board of directors. This model acknowledges that the board of directors has clearly defined legal responsibilities. However, the model differs from traditional approaches in a fundamental way: The executive director takes an active role in assisting with or coordinating the participation of board members in fulfilling their governance commitment. This form of board management makes full use of the execu- tive director's distinctive management and lead- ership skills. Consequently, the quality of the board's performance is a direct result of the exec- utive director's ability to steer and promote pro- ductive interaction among board members. The executive director can call upon board managers to intervene when necessary in either the internal or external environment of the organization.

Who Is in Charge of Making Policy?

Prescriptions for effective board practice often state that the board is legally responsible for making policy and the staff is responsible for carrying it out. Though this division of labor is technically correct, it is inaccurate in its practice. The staffs of nonprofit organizations have a sig- nificant level of influence on the creation of pol- icy. Since they are closest to the operations and programs of the agency, they may know when a new policy would provide the guidance needed to get the job done. Thus, staff input is almost always required to create new policies. In addi- tion, the staff often shapes the policy by drafting proposed policy statements.

In effective nonprofit organizations, the staff's point of view on matters of policy development is considered an integral part of governance. Of- ten, effective organizations are those in which the board adopts policy with input of the staff, and the staff implement policy with the advice, counsel, and support of the board.

What Are the Major Areas of Board Responsibility?

There are at least nine major areas of board re- sponsibility; namely, to

Stephen R. Block

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Board of Directors 17

determine the organization's mission; set policies and adopt plans for the organiza- tion's operations; approve the budget, establish fiscal policies and financial controls, and monitor financial posi- tion of the organization; provide adequate resources for the organiza- tion through establishment of resource-devel- opment goals and commitment to fund-raising through giving and soliciting; develop organizational visibility through net- working and linkage to the community; ensure that the organization's corporate and governance documents are updated and se- cured, and all reports are filed as required; recruit and select new board members and provide them with an orientation to the board's business; recruit, hire, evaluate, reward, or terminate, if necessary, the executive director of the organi- zation; and

9. protect and preserve the organization's non- profit tax-exempt status.

work of the board and evaluating the board's performance. The chair presides at and calls spe- cial meetings of the board and sets the direction for organizational goal setting. This volunteer position requires a great deal of time commit- ment and responsibility.

Vice-President In the absence of the volunteer president, the vice-president usually assumes the duties of president and the responsibility for chairing board meetings. Often, the role of vice-president entails chairing a major committee of the board. In some Organizations, the vice-president auto- matically becomes president-elect, a succession plan that may not be effective in all organiza- tions.

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The Role of Board Officers

The officers of the board of directors have a re- sponsibility to set the tone for organizational leadership. The duties of the president (chair- person), vice-president, treasurer, and secretary are described in the organization's bylaws.

ions, the staff's y development overnance. Of- hose in which ut of the staff, rith the advice, I.

Secretary The board secretary has the obligation to protect the organization's corporate documents, such as the bylaws, the articles of incorporation, board and committee minutes, and important corre- spondence.

Many individuals try to avoid election to the office of secretary because of the myth that the board secretary must take the minutes of the board and executive committee meetings. The board secretary does not have to write the min- utes, but he or she is responsible for ensuring that the minutes are taken and accurately reflect the business meetings of the board and executive committee. Upon becoming official annals of the organization, the board minutes should be signed and dated by the board secretary. In orga- nizations that rely on parliamentary rules and procedures (such as Robert's Rules of Order, Newly Revised), the board secretary is required to become familiar with the meeting procedures and may have to make procedural rulings.

Treasurer as of

is of board re-

President In most nonprofit organizations the title and position of president refers to the highest level volunteer who also serves as chairperson of the organization. However, in some nonprofit orga- nizations a corporate model of governance is followed, therefore, the title of "president" re- places the more commonly used title of "execu- tive director." If the president is also the paid chief executive, the position usually allows for participation as a board member. In this in- stance, the role of chairperson is handled by the chief volunteer.

The volunteer president or chairperson is re- sponsible for the activities of the board and for assigning board committee chairs, unless assign- ments are automatically spelled out in the by- laws. The chair is responsible for monitoring the

The treasurer should not be expected to do the bookkeeping and accounting for the organiza- tion. Instead, the treasurer is responsible for making sure that the organization's finances are properly accounted for and excess revenues are

1 8 2 / Stephen R. Block

wisely invested. If a finance committee exists, the treasurer often serves as its chairperson. On be- half of the board, the treasurer ensures that fi- nancial controls are in place and tested on a pe- riodic basis. The treasurer also participates in the selection and recommendation of an audit- ing firm. The treasurer reports on the financial statements at board meetings, executive com- mittee meetings, and, if applicable, at annual meetings of the organization.

The Board's Role in Fund-Raising

The board must play a fundamental role in rais- ing money and resources. Board members also have the personal responsibility of making fi- nancial contributions in addition to giving their voluntary time to the organization. Instituting a policy that requires board members to con- tribute is sometimes employed.

Unanimous giving among the board sets the right tone for fund-raising. It enhances the cred- ibility of the organization when it seeks contri- butions from others. Unanimous-board-giving practices have even become an expectation among many funders.

Giving is only one part of the board member's obligation; the other part is to assist in planning and solicitation activities. Collectively, the board can identify a pool of potential contributors. Friends, business associates, relatives, and ven- dors are among likely prospects. Some board members shy away from verbally asking for money, but they may be able to write letters or at least sign letters that have been drafted for them by staff.

Board Composition

Determining the composition of a board of di- rectors is claimed by some to be a blend of sci- ence and art.

Board composition should not be the result of opening the door to just anyone who is willing to serve but should result from purposeful re- cruitment strategies. Prospective board mem-

hers, for example, should be familiarized with the organization's purpose, mission, vision, goals, and objectives, as well as board duties, re- sponsibilities, and the organization's expecta- tions.

The task of filling vacancies on the board should be approached carefully and should result in a board composition that is able to advance the organization's mission. There are two prepara- tory steps to actively recruiting the right person. The initial step is to acknowledge that organiza- tions go through different stages of development similar to the various life cycles experienced by individuals. Various maturational stages lead to differing organizational issues and needs. Assess- ing which phase an organization is in is useful not only to prepare the organization for change but also to determine the leadership qualities re- quired of potential board members. Matching an organization's life cycle to the requisite skills of a board member could lead to more effective and purposeful organizational outcomes.

A second step is to conduct a thorough demo- graphic inventory of board composition, which will reveal the board's weakest representational areas. Inventory results will show a composi- tional balance or imbalance in such variables as gender, age range, ethnicity, socioeconomic sta- tus, political party affiliation, educational level, professional or vocational interests, knowledge of consumer issues, and location of primary res- idence. Information of this type can be valuable to organizations especially seeking to create a di- verse board.

As suggested, the composition of a board can contribute to the level of ease or difficulty with which an organization is governed and man- aged. A board composed of individuals with similar socioeconomic backgrounds or other fa- miliar traits may reach consensus more often, but it is less likely to formulate challenging ideas or seek out policy reforms. Compared to homo- geneous hoards, those that reflect diversity among their members are likely to experience greater participatory challenges. Even though di- versity is an enriching quality in a board, its members must contend with differing values, mores, and interpretations of community infor- mation and beliefs.

Board of Directors 19

The Executive Director as Board Member

Some nonprofit organizations use a corporate model of governance structure in which the po- sition of executive director is transformed from staff to member of the board as its president- chief executive officer (CEO).

The model of corporate governance may not be an appropriate structure for all nonprofit or- ganizations. It is used by larger and more com- plex institutions that rely on a strong CEO. Re- gardless of size, the CEO as staff and board member must be wary of conflicts of interest and must avoid participating in discussions or decisionmaking that will lead to personal bene- fits. Critics of nonprofit organizations using cor- porate models suggest that the CEOs have no choice but to use the knowledge they have ac- quired in managing the day-to-day operations. This knowledge is often used to influence the di- rection of the board and organization.

There is a dearth of comparative research on the benefits and disadvantages of corporate models as compared to traditional models in use by non- profit organizations. Consequently, it is impossible to suggest that any one model will lead to success.

Board Recruitment and Orientation

Preconditions of board recruitment include identifying the governance needs of organiza- tions in (life cycle) transition and discovering the characteristics and qualities to be found in new board members. There are many variables to consider in sizing up a board prospect, including:

I. an individual's ability to create a vision, prob- lem-solve, and facilitate conflict resolution; an individual's commitment of time to partici- pate fully; enthusiasm for the organization's mission, vi- sion, goals, and values; a person's skills and experience in such areas as public policy analysis and fund-raising, or ex- pertise in program service delivery; and diversity factors.

Once a profile is developed that describes the ideal board member, the recruitment task can formally begin. On the basis of expediency, many nonprofit organizations make the mistake of ig- noring the profile and recruiting the friends of board members. Sometimes, individuals are in- vited to become prospective board members for the simple reason that they are alive and seem agreeable to serving! Serious problems may occur when attempts have not been made to match the needs of the organization with the ideal board member. Locating someone who matches the profile and agrees to serve, however, is not a guar- antee of board success. In fact, most governance problems seem to stem from the recruitment process. Though using a profile can increase the likelihood of finding the right person, a perfect match does not guarantee that problems will not arise, such as., nonattendance at board meetings, lack of participation in board committees, an un- willingness to contribute financially, or interfer- ing or trying to micromanage the day-to-day op- erations of the organization.

Finding a board prospect who fits the profile is, indeed, a critical part of the assignment, as is fully informing the prospect about specific board duties. The lack of knowledge about the expectations for board member role and gover- nance responsibilities will directly contribute to organizational confusion, ineffectiveness, and a breach in a board member's commitment. Since each organization's board of directors has a dif- ferent mission and focus for its work, even the seasoned board member who joins a new board should receive a briefing on the organization, its expectations of board members, and board re- sponsibilities. It is imperative to sqek an agree- ment to serve only after the board prospect un- derstands the parameters of Iloard service.

Organizations sometimes give prospects a board-prospecting packet, which may contain some or all of the following: a history of the or- ganization; board job-descriptions; a copy of the articles of incorporation and bylaws; a copy of the organization's purpose or mission statement; an organizational chart; and a description of program services, with a list of committees and duties of each. This packet may also include a roster of the current board, with work affilia-

/ Stephen R. Block

miliarized with nssion, vision, loard duties, re- ttion's expecta-

on the board ad should result e to advance the e two prepara- te right person. ; that organiza- if development experienced by I stages lead to needs. Assess- is in is useful

ion for change ip qualities re- s. Matching an isite skills of a e effective and :s. irough demo- )sition, which nesentational v a composi- h variables as ;conomic sta- :ational level, s, knowledge 'primary res- n be valuable :o create a di-

a board can ifficulty with d and man- riduals with or other fa-

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20 2 / Stephen R. Block

tions, addresses, and phone numbers; dates of future meetings and special events; an annual re- port and organization brochures, newsletters, or related materials; and a copy of a recent audi- tor's financial report, annual budget, and finan- cial statements.

It may also be helpful for the organization's board to assign a veteran member to assist the prospect in "learning the ropes." The availability of a support person may encourage the board prospect to join a concerned board of directors. The veteran could serve as a resource person during the recruitment phase and then as a mentor or helper during the transition period following induction.

How Many Board Members?

There is no formula for determining the appro- priate size of an organization's board of direc- tors. The size of the board must be tailored to suit the needs of the organization.

One helpful way to determine board size is an organizational life-cycle analysis, referred to pre- viously as a pre-requisite to board recruitment. Organizations and their boards experience vari- ous developmental stages, all of which can influ- ence the number and type of skilled board members that are needed.

Large- and small-sized boards have both ad- vantages and disadvantages. The number of people on a board can be a factor that influences how board members comport themselves. Large boards are generally unwieldy because it is diffi- cult to pay attention to so many people. Because the larger group will find it more difficult to be- come cohesive and familiar with the cohort, it may tend to be more formal in its board conduct and meetings. Organizations that are just start- ing out, or those in need of a boost in financial resources, may be better served by a larger board of 20 to 25 individuals. In this case, the larger the number of board members the greater the chances of reaching out to potential donors.

On one hand, smaller boards are limited in accomplishing supportive activities such as fund-raising. On the other hand, a smaller group may have to rely on its creativity, such as

developing a fund-raising plan for implementa- tion by a committee of staff, board members, and other community volunteers. Organizations that do not rely heavily on the board alone for fund-raising or other supportive activities might be better served by a board of no more than ten members. The smaller group would have more of an opportunity to become cohesive; learn ex- perientially how to mesh effectively their collec- tive wisdom, advice, and counsel; reach deci- sions through consensus; and it would have no need to use controlling, parliamentary proce- dures for conducting board meetings.

Board Liability

Though nonprofit boards of directors are infre- quently sued, the risk of liability is nevertheless a legitimate concern for volunteer board mem- bers. Financial losses associated with a lawsuit can be devastating to an organization and its board members. The quality and manner in which boards make decisions or fail to make de- cisions can result in a legal challenge that tests whether they have met or failed in their respon- sibilities as stewards of public interest.

Board members and prospective members are often comforted by the knowledge that the non- profit organization has purchased a director's and officers' (D&O) liability insurance policy. Concerns about lawsuits have caused a rising de- mand for this type of insurance, and conse- quently, premium costs vary widely.

A factor that affects the cost of D&O insur- ance is the nature of the organization's work, whether it is, for example, a direct service health care agency or an organization that promotes the arts. Features and exclusions may also differ greatly from one policy to another and affect the price and value of the policy.

Indemnification refers to the organization en- suring that it will pay the reasonable costs asso- ciated with liability suits, such as judgments and settlements against its board members. This practice is sometimes compelled by state law. In other situations it may be an optional practice of the board. In either event, the organization's by- laws outline the extent of indemnification. In-

2 / Stephen R. Block

For implementa- mard members, s. Organizations board alone for activities might

o more than ten ould have more hesive; learn ex- rely their collec- sel; reach deci- would have no nentary pro ce- ings.

.ctors are infre- s nevertheless a r board mem- with a lawsuit ization and its rid manner in all to make de- enge that tests ri their respon- hest.

members are II that the non- ; d a director's ,t rance policy. ''

a rising de- , and conse- . D&O insur- tion's work„' ervice health at promotes sy also differ Ind affect the

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Board of Directors 21

demnification cannot, however, be exercised when the organization brings a suit against its own board members. In practice, indemnifica- tion is a form of self-insurance and assumes that the organization has the funds to pay legal costs. Given the resources of some nonprofit organiza- tions, this assumption may not be valid.

In addition to indemnification and D&O lia- bility insurance coverage, a board of directors can purchase various liability insurance policies, including, but not limited to, the following spe- cialty policies: general liability, employees' liabil- ity, malpractice, automobile, and fiduciary.

To encourage board and other voluntary ser- vice in community organizations, all 50 states have passed volunteer protection laws. The ex- tent of protection varies among the states, and this form of legislation has largely been untested in the courts.

Volunteer protection laws and the varieties of liability insurance premiums are not the only ways boards can protect themselves. The most effective form of protection is limiting risk by adhering to effective governance practices. There are three standards of conduct that should guide the board member, as follows:

Duty of care: imposes an obligation that all board members discharge their duties with the care that an ordinarily prudent person would exercise under similar circumstances. This includes being diligent, attending meetings, and becoming ac- quainted with issues before reaching a decision. Duty of loyalty: requires that each board mem- ber act primarily in the best interest of the or- ganization and not in his or her own personal best interest or in the interest of individuals at the expense of the organization. Duty of obedience: imposes an obligation that board members will act in conformity with all laws in addition to acting in accordance with the organization's mission.

For the voluntary members of hoards of di- rectors, acting prudently, lawfully, and in the best interests of the organization can, in part, be achieved by adhering to the following six re- sponsible board practices:

1. Becoming an active board member. Board mem- bers who are familiar with the organization's

mission and purpose are generally able to make better decisions for the organization. Members may wish to review the mission annually to serve as a reminder that the board uses the mis- sion statement as its guide in decisionmaking. Attending all meetings. Being absent from meetings will not necessarily excuse a board member from responsibilities for decisions reached by those in attendance. In fact, a mem- ber's absence from meetings increases potential risks for the entire board because it is making decisions without the benefit of the views of all of its members. Insisting on having sound financial management tools and control systems. Board members need to learn how to read and use financial state- ments and audit reports to understand and monitor the organization's fiscal health. They also need to understand that their decisions have a financial impact on the organization. Speaking up. Members should not remain silent when they disagree with a decision or an opinion expressed by others. Additionally, board members should ask questions when the organization's goals and objectives are not be- ing met. Identifying conflicts of interest. Board members need to avoid participating in discussions or decisionmaking when they have conflicts of in- terest. Even the perception of a conflict of in- terest must be avoided, if possible. If they are faced with an actual conflict or even the per- ception of one, board members must inform the other directors of the situation and excuse themselves from participation in related areas of decisionmaking or transactions.

6. Staffing. In addition to its having personnel policy guidelines for the executive director, the hoard must be certain that these personnel policies are adequate and updated to reflect all applicable mandates of law.

In summary, minimizing the risk of hoard lia- bility requires an active and involved board of directors.

Dismissal of Board Members

Terminating a member from the board of direc- tors for nonattendance at board meetings or lack of follow through on assignments that are

22 2 / Stephen R. Block

required for the board's decisionmaking pur- poses, for example, is a delicate procedure. Un- fortunately, there are times when it becomes necessary to discharge board members because their actions create liability risks.

The chairperson of the board has the respon- sibility to request resignations from board mem- bers. The executive director plays a supportive role to the board chair and board member in what for all can be emotionally trying and em- barrassing.

Confidence and sensitivity should be used when approaching the board member with the idea of resignation. A board member should be given every consideration to effect a smooth de- parture. Ultimately, the member's "saving face" is important for maintaining relationships at this level of community involvement.

To prevent the need for board dismissals or to support the actions of the board chair when a dismissal is called for, the board should adopt a principle stating that its work and organiza- tional mission are too important to allow for unnecessary liability risks associated with un- committed hoard members. The board can do some prevention work by adopting a bylaw pas- sage and job description that reflect standards for board member conduct and participation. Of course, some organizations have rules of this type but choose not to enforce them. For a member to violate or ignore such bylaw provi- sions suggests poor judgment and raises the lia- bility risks of the board.

How Often Should the Board Meet?

A board is generally required to meet at least once a year. In practice, some hold meetings once a month, every other month, or once each calendar quarter. Frequency of board meetings and the duration of each meeting should reflect the culture of the organization and the type of strategic issues requiring board attention. Deal- ing with planning and policy issues, threats of litigation or bad publicity, and concerns of fi- nancial obligations are reasons for a board to meet more frequently. Organizations that are

new in their development, or in process of man- aging significant changes, as compared with an organization in a steady state, would also benefit from meeting more frequently.

Effective meetings are focused, to the point, and stick to the agenda. Meetings can be effec- tive when board members come prepared, hav- ing studied the agenda and the issues prior to the meeting. The agenda should be mailed out at least a week to ten days in advance. Agenda items should be allocated realistic time frames for dis- cussion and taking action, in addition to time designated for the routine review of minutes, fi- nancial reports, and progress reports on the im- plementation of the organization's strategic plans.

Newly identified obstacles are not always solved during board meetings. Instead of react- ing to unfinished issues and business with more board meetings, attempts should first be made to streamline the review of issues by assigning the task to an appropriate standing or ad hoc committee. In this way, the committees can try to remedy issues or bring their findings and rec- ommendations back to the board or executive committee without monopolizing the board's time and agenda.

How Long Should a Board Member Serve?

The solution to a member's length of service that is practiced by many organizations is to stagger the expiring terms of office. Rotations of three-year terms, for example, would mean that each member serves for three years, but, at the end of each year, obligations would end for one- third of the members. This system gives the board ample time to evaluate the performance of board members, to determine whether they should be invited back for another term. Addi- tionally, the experience base accumulated by outgoing board members is information these members use to decide whether they would like to be reelected for another three-year term.

Sonic organizations also place a limit on the number of consecutive terms a person may serve. After reaching the maximum number of

Board of Directors 23

consecutive terms of service, the board member would automatically leave the board. A board member who rotated off could be elected again after a year or more, when consecutive service would not be an issue. After reaching the allow- able service limit, an individual could also con- tinue to support the organization's cause in some other capacity, such as on a committee or advisory board.

It is important that all board member terms do not expire at the same time. Without some overlapping representation from members of the board, the organization would lose its im- portant history and continuity of policy devel- opment and strategic direction. Veteran board members bring a maturity and depth of under- standing about the issues the organization faces, and when the board adds a group of newer members it brings enthusiasm and fresh ideas to the board's governing role.

How Are Governing Boards, Advisory Boards, and Honorary Boards Different?

When one is referring to the term "board of di- rectors"ectors" or "board of trustees," the reference is to a governing board, a grouping of individuals who have assumed a legal responsibility for an orga-

,. .nization's existence. These people make policy and are responsible for how money is generated and spent, toward the accomplishment of a mis- sion that can be beneficial to the general public or to a segment of the population.

Advisory boards, however, do not bear the legal burdens of governing boards. An advisory board exists to assist the governing board or the execu-

' tive director in examining issues and recommen- ' dations. Recommendations that result from the work of an advisory board do not have to be ac- cepted or followed by the governing board.

Honorary boards are usually composed of in- dividuals who are well-known because of some measure of celebrity or prominence in the com- munity. Honorary boards do not necessarily meet. In fact, some individuals agree to serve as honorary members because they do not have the time or inclination to attend meetings. Individu-

als serving in this honorary capacity lend credi- bility to an organization by allowing the use of their prominent names in brochures and on letterheads.

Sometimes, members of honorary boards and advisory boards are enlisted to assist in organi- zational fund-raising activities. The visibility and credibility of the honorary or advisory member sends a signal to the community that the organization is worthy of financial support.

Types of Committees

Committees are categorized as either standing committees or ad hoc committees. Ad hoc (or special) committees, on one hand, have a life- span equal to the completion of the committee's assignment. Standing committees, on the other hand, are part of the permanent governance structure of an organization with duties and re- sponsibilities described in bylaws. Standing committees may include executive, finance, by- laws, fund-raising, public relations, nominating, personnel, planning, and policy committees, or any other committee that the organization be- lieves should exist indefinitely to aid in gover- nance. Seven of the most common standing committees are described as follows:

The executive committee functions in place of the full board and handles routine and crisis matters between full board meetings. Empow- ered to make decisions for the organization, the executive committee is usually composed of the organization's officers, Depending on the size of the organization's board of direc- tors, composition of the executive committee could include committee chairs or other se- lected leaders among the board. The executive committee is usually chaired by the board's volunteer president or chairperson. The finance committee is responsible for moni- toring the organizations finances and financial controls and attending to audit requirements. Typical functions for the finance committee are to oversee organizational investments and to work with the executive director to develop an annual budget.

' Stephen R. Block

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:h of service rations is to Rotations of Id mean that s, but, at the end for one- m gives the )erforman ce rhether they term. Addi- mulated by Cation these y would like r term. Limit on the Jerson may number of

24 2 / Stephen R. Block

The nominations committee is responsible for identifying and recruiting appropriate candi- dates for board positions and bringing forward its recommendations to the full board. This committee sometimes has the responsibility for planning board development activities and board retreats. The personnel committee is usually responsible for recommending policies to guide the supervision of staff. In some organizations, this committee may have the responsibility for overseeing the search for an executive director and then for her or his performance evaluation. Members of this committee may need to acquaint themselves with personnel laws and regulations that regulate labor prac- tices. The program committee is responsible for mon- itoring the organization's service delivery sys- tem and may assist in evaluating client services. This committee is often responsible for keep- ing track of community trends that might af- fect the organization's short-term and long- term objectives. In complex organizations with multiple services, there may be subcommittees that are responsible for monitoring each of the organization's program services. The resource development committee is respon- sible for examining alternate methods of fund- raising and for establishing annual fund-rais- ing goals. This committee often is active in the solicitation of gifts or participation in special events. In addition to raising money, it may so- licit in-kind contributions. The public relations or comnfitnity relations committee has the responsibility for developing good relations with the larger community and with important community groups. The corn- mittee examines opportunities to participate in community events that will bring visibility to the organization. It may oversee the writing of press releases and may develop relationships with media professionals.

Participants appointed to standing or ad hoc committees do not need to be members of the board of directors. Committee members may in- clude staff, volunteers, representatives from community agencies, and consumers of service. Committee chairs are usually appointed by the board's chairperson.

References

Block, Stephen R., and Jeffrey W. Pryor, 1991. Im- proving Nonprofit Management Practice: A Hand- book for Community-Based Organizations. Rockville, MD: OSAP/Public Health Service, U.S. Dept. of Health and Human Services.

Carver, John, 1990. Boards That Make a Difference. San Franciscodossey-Bass.

Chad, Richard P., and Barbara E. Taylor, 1989. "Charting the Territory of Nonprofit Boards." Harvard Business Review (Jan.—Feb.): 44-54.

Conrad, William, and William E. Glenn, 1976. The Effective Voluntary Board of Directors. Chicago: Swallow Press.

Drucker, Peter F., 1989. "What Business Can Learn from Nonprofits." Harvard Business Review (Sept.—Oct.): 88-93. , 1999. "Lessons for Successful Nonprofit

Governance." Nonprofit Management and Leader- ship, vol. I, no. 1 (Fall): 7-14.

Hadden, Elaine M., and Blaine A. French, 1987. Non- profit Organizations: Rights and Liabilities for Members, Directors and Officers. Wilmette, IL: Callaghan & Co.

Herman, Robert Dean, and Stephen R. Block, 1990. "The Board's Crucial Role in Fund Raising": 222-241. In Jon Van Til, et al., Critical Issues in American Philanthropy. San Francisco: fossey-Bass.

Herman, Robert Dean, and Richard O. Heimovics, 1991. Executive Leadership in Nonprofit Organiza- tions. San Francisco: Jossey-Bass.

Herman, Robert Dean, and Jon Van Til, eds., 1989. Nonprofit Boards of Directors: Analyses and Applica- tions, New Brunswick, NJ: Transaction Publishers.

Kurtz, Daniel L., 1988. Board Liability New York: Moyer Bell.

Middleton, Melissa, 1987. "Nonprofit Boards or Di- rectors: Beyond the Governance Function":141— 153. In Walter W. Powell, ed., The Nonprofit Sector: A Research Handbook, New Haven: Yale University Press.

O'Connell, Brian, 1985. The Board Members Book. New York: The Foundation Center.

O'Houle, Cyril, 1989. Governing Boards. San Fran- cisco: fossey-Bass.

Saidel, Judith R., 1993. "The Board Role in Relation to Government: Alternative Models": 32-51. In Dennis R. Young, Robert M. Hollister, and Vir- ginia A. Hodgkinson, eds., Governing, Leading, and Managing Nonprofit Organizations. San Fran- cisco: Jossey-Bass.