board governance 101 - ccrw...things have to be tailored to the organization. so challenge 1, if i...

Board Governance 101

This presentation is courtesy of Graham Boyce of The Coordination Group, a for-profit management consultancy. It is made, on behalf of Management Advisory Service (MAS), on a pro-bono basis as a part of that organization’s mission to build capacity in the not-for-profit sector. MAS recruits individuals to provide their expertise, as volunteers, to not-for-profit and charitable organizations throughout the GTA. The material, opinions expressed and overall content are those of the presenter, who retains all rights, and do not represent an official MAS viewpoint. MAS is grateful to the many volunteers that choose to share their professional expertise in furtherance of MAS’s mission.


Welcome!

Good morning!


Context

Proposed & Allowed

CCRW=?

“Letters patent”

By-laws

Before we begin, some context.

One of my first challenges was to understand what CCRW is about. Typically one might start by looking at the organization’s legal documents that describe the objects or purposes for which it was incorporated and at its by-laws, which set out how the organization governs itself. (You might be surprised by how many organizations have difficulty locating these documents!) Note that just because something is included as an object or purpose in the letters patent does not require the corporation to do it - but it cannot do anything that is not included!

That said, when it came to CCRW…


Context

Proposed & Allowed

Done in practice

VISION 2015Strategic Plan – Version 2.1

Looking to do

Claimto do

CCRW=?

Turns out there are potentially four different answers! So as we go through today, when I am going to be talking more about item A (what is proposed and allowed), one of the things to do is to consider how we might want to change that in the light of the other three (even while we recognize that what you are looking to do may have already changed and possibly will significantly change going forward). After all, these four really should show some degree of alignment!


Context

Today=?

Changing environmentPolitical, business & funding agendas

Public social agendas

Legal frameworks evolving

Current initiativesFocus on planning

New organizational management

Task Force

…

…

Refocus on purpose

Improve business operations

Reduce the risks

Second thing I had to do was to understand the environment. CCRW is clearly faced with changing political agendas, funding challenges etc. but at a time when the social agenda is changing - we discuss mental health more openly, the public is more accepting of (and, perhaps as they age, more demanding of) physical accommodations, etc. And as you are all aware, the legal environment is changing. New legislation is designed to bring new transparency and accountability to not-for-profits and charities and ensure a new, more corporate, approach to how they are managed.

CCRW’s board has obviously taken a series of initiatives in response to this over the last while. You have a focus on planning (perhaps not the most successful in retrospect but if you don’t try you will never succeed), you have engaged a new Executive Director, you have undertaken this By-laws Task Force initiative. No one has been standing around! Today marks therefore a continuation, building on what has gone before.

In discussions with Maureen, three major points of focus have emerged (this is my wording):1. refocus on purpose: what is CCRW about? Is it a charitable organization focused on helping a disadvantaged sector of the population or is downloaded government agency acting to deliver essential programs in a manner which reduces official government headcount and pension commitments?2. obviously, make the organization (staff and board) as effective and efficient as possible in this financially and time-crunched world in which we operate;3. reduce the risks to the organization (such as your vulnerability to government funding), to staff and clients (through policies and codes of conduct, for example) and to yourselves as individual directors by helping you better understand what might be expected of you from a legal / governance perspective.

So I am really going to be focusing on the last item (Board governance) and touching on some elements of Board operations (just ideas you may have already implemented or, if not, things you might want to consider).

So that is where I am coming from today and how I see today: as another step forward to help you with governance and, importantly, to move you closer to the “application for continuance” that you need to file next year.


The morning’s agenda:

Understanding not-for-profits and charities

Governance - the rationale for & responsibilities of the Board

The Board in action

Governance and the current By-laws

So, to this morning’s agenda. First up I want to draw your attention to certain differences between the corporate world and that of the not-for-profit and charity communities. Very easy to bring commercial disciplines and thinking into this often strange world and it is often very beneficial to do so BUT when you are dealing with volunteers or lack of resources…so by way of preamble want to draw your attention to some salient features. Not only are there important differences between the for-profit and the not-for-profit world but between types of not-for-profit themselves. By now, as existing Board members, you may well be aware of these but it never hurts to point them out…

Source: Canada Revenue Agency

Charity:“An organization established & operated for charitable purposes that devotes its resources to charitable activities. Its purposes must fall within one or more of the following categories:• the relief of poverty;• the advancement of education;• the advancement of religion;• certain other purposes that benefit the community in a way the courts have said is charitable.It must be resident in Canada and cannot use its income to benefit its members.”



Charities are a sub-set of Not-for-ProfitsNot-for-profit:“An organization organized and operated exclusively for social welfare, civic improvement, pleasure, sport, recreation, or any other purpose except profit (e.g. a club, society, or association). The organization will generally be exempt from tax if no part of its income is payable to, or available for, the personal benefit of a proprietor, member or shareholder.”

Let’s start with some definitions. Charitable status is given by the CRA. You incorporate by applying to Industry Canada and then make further application to the CRA for charitable status. Note the four heads a charity must fall under. So when it comes to objects (or purposes as they are now called) the purposes have to fit within these heads. Note the rather vague last one!

That said, consider again not what CCRW has as its objects but what it does…



Big Question #1:

Is CCRW in conformance with its charitable objects (as registered)??

Just what does CCRW do presently? How do its present activities fit within its objects? “Which objects?” is itself a question! I think this is a problem you have to confront - not so much to determine how you got to where you are but to decide what you are going to do about it. If the CRA read the Vision 2015 document I suspect they might have some searching questions over phrases emphasizing “increased profitability”, “sales” etc. It is not that you can’t sell or make a profit but if those are your primary objectives as opposed to advancing education etc. there may be cause for concern.



Regulatory definitions changingHistorical

CNCA ONCA

SolicitingNon-Soliciting

Public Benefit Corp.

Non- PBC

Not-for-Profit Corp.

CHARITY

CHARITY

CHARITY

And one note. The regulatory definitions are changing. Previously, whether federally or provincially incorporated, typically you would have found just “not-for-profit corporations” (i.e. everyone was the same), in and amongst which were some that had applied for and been given charity status. Now under the new federal legislation, everyone is not the same; you are either a soliciting or a non-soliciting corporation, which may incidentally have applied for charity status. Under the Ontario Act (not yet in force), you will either be a public benefit corporation or a non-PBC, but note that charities are defined as PBC’s - they are grouped not scattered throughout. Suffice it to say that as a charity you still have to meet the requirements of the CRA. What these different classifications impact are things like the number of directors an organization is required to have and the stringency of the audit requirements imposed. CCRW will be a soliciting corporation under the CNCA.



Type Example Primary fundingOther major

funding Assets Staff

Universities U. of T. Govt. funding EndowmentsPhysical & financial

UnionizedPaid

Housing Agency

Houselink Govt. funding Fund raisersPhysical & financial

UnionizedPaid, Volunteer

Independent schools

Branksome Hall

Fees EndowmentsPhysical & financial

PaidVolunteer

Foundation Terry Fox Donations Gifts FinancialVolunteer

Paid

Sports ClubsLeaside

Curling ClubMembership

duesFund raisers Physical Volunteer

Specialized charities

Project Canoe Grants Donations PhysicalVolunteer

Paid

Residents’ Associations

North Rosedale R.A.

Membership dues

None None Volunteer

Variety:

Next thing I would call your attention to: the variety of organizations. Not only are they different from the corporate world, they are different among themselves. Some local Toronto examples of not-for-profits (not necessarily charities) some may be familiar with…They are highly varied! Look at these examples and how they differ. Consider the different challenges each poses from a management standpoint - funding, assets management, staffing challenges.

Points of differentiation include:

Regulatory environment

Size

Internal/external focus

Assets

Governance

Organizational structure

Objectives

Ways of counting…



Variety:

The variety of not-for-profits can be seen in many different aspects. Easy to end up comparing apples to oranges!

Regulatory environments depending on the applicable legal framework; where the nfp is registered, whether it is a charity etc.Size - $1,000 to $100million, people involved <10 - >10000Internal / external focus - 100% int. sports club, 100% ext. Right to Play, 50%/50% Tim Hortons FoundationAssets - buildings, equipment, artwork, investments v. box of old letterhead?Governance - who is responsible for what: c.f. Sunday a.m. soccer v. medical support group v. housing agencyOrganizational structure - corporate-like professional staff v. incorporated ED & small staff v. totally volunteerObjectives: solving world issue, growth & influence, member’s interests, status quo, providing feel good hobbyWays of counting - e.g. membership



Type Example Primary fundingOther major

funding Assets Staff

Universities U. of T. Govt. funding EndowmentsPhysical & financial

UnionizedPaid

Housing Agency

Houselink Govt. funding Fund raisersPhysical & financial

UnionizedPaid, Volunteer

Independent schools

Branksome Hall

Fees EndowmentsPhysical & financial

PaidVolunteer

Foundation Terry Fox Donations Gifts FinancialVolunteer

Paid

Sports ClubsLeaside

Curling ClubMembership

duesFund raisers Physical Volunteer

Specialized charities

Project Canoe Grants Donations PhysicalVolunteer

Paid

Residents’ Associations

North Rosedale R.A.

Membership dues

None None Volunteer

Variety:

Multiple differentiators

Experience not necessarily transferable

The point of all this is to emphasize that one person’s not-for-profit is not necessarily another person’s charity and you may well find that your experience with one charitable or not-for-profit organization does not transfer readily to another, like the CCRW. Things have to be tailored to the organization. So Challenge 1, if I can call it that, is always understanding the particular organization you are dealing with.



Evolutionary/Maturity State

Board = everyoneHigh energyMaximum involvement

ManagingNo ED

Board = electedLower energyStart of burn outManaging / policy making

Vision/missionED

Board = recruitedCommitteesRenewed commitment

Fundraising emphasis

Managing & policy making split

ED & staff

Corporate-like Board

Professional management

Strategic alliances

Declining interestBoard / staff disconnect

Operational / funding challenges

…where are you?

Starting up

Developing

Growing / maturing

Transforming

Stagnating / declining

As said, the interesting question to ask of any organization is where, along this journey, does it see itself. Typically, it does not fit nicely into any one of the descriptions here but will show elements of more than one. This again is a challenge for any director – establishing where on the evolutionary scale an organization is. Where is CCRW? Has elements of Transforming but also elements of Developing (vision / mission questions)

I’d like to highlight one other problematic aspect of this evolution. Note the comment on managing v. policy-making.



What sort of a “Board”?

Many different descriptors; are they the same?

= expert panel? no liability / responsibility

= a true board, likely involved in operating

= a true board but with no hands on involvement

= a true board usually when there is an advisory one

= a true board but with no hands on involvement

= a true board but involved in hands on operations

“…”

“Advisory”“Executive”“Governance”“Main”

“Policy”“Working”

“Managing” = a true board; operational involvement uncertain

The Board is the collective term given to the directors of the corporation. It is common to hear the word “board” qualified in some manner, though CCRW avoids that. Sometimes that added descriptor can be helpful though. Let’s look at these in turn because one of the challenges organizations have is who does what as they evolve. Firstly, the nature of the Board changes as staff are employed and so on and secondly there can be differing expectations (not stated) between individual board directors as to the kind of Board they are on and certainly between the ED and individual directors or even, worst case, the ED and the Board as a whole. The trick is to ensure there is agreement between all parties as to the role of the board and nature of the relationship…



What sort of a relationship?

Board

E.D.

Impractical nature

Micromanaging

E.D.

Board

Mushroom effect

Legal niceties

Board E.D.

Focus on direction &

policy

Focus on counsel & operations

Take the first model: the Board is in charge and the ED is simply supposed to act as little more than the office coordinator in making things happen. “Answer the phones, attend to the mail, keep the books and leave the big ideas to us.” You will not attract the sort of person needed to run an organization the size of CCRW if that is the prevailing model and I am not suggesting for a moment that anyone here thinks like that. Firstly, if the Board is meeting only times per year for a few hours it is completely impractical to operate in that way. I have seen examples where Boards “compensate” for this by having bursts of micromanagement as if to remind staff that they are “in charge”. Almost as bad, and occasionally worse, is where the ED assumes the role of Commander in Chief, with the Board treated at best as an advisory board when there is some particular problem but is otherwise kept in the dark and fed “agricultural bi-products”. This totally ignores the legal niceties of Board responsibility but a remarkable number of Boards and individual directors often don’t seem to mind being treated like this. In my view the best arrangement is when the Board and ED see themselves very much as a partnership, working in unison for the greater good. And just like any good team they don’t try to do the other’s job, they focus on their area while being willing to help out when asked with the other’s role. My sense is that that is very much the model CCRW is working towards and I encourage you in it. What ever you do, though, have the conversation and make sure everyone is on the same page!



Another challenge

Absence of a shared metric

V.

I do want to focus on another challenge. What’s the metric of success? How does anyone judge performance? In business, people do not work just for a paycheck; a job provides meaning and satisfaction or a means of achieving something else or a blend or all. But the common metric is money - what you are paid and what the company makes. Dollar figures are prominent and held in common with the world outside. But in the not-for-profit sector the metrics are not shared, between the world outside, the Board members, the staff, and individual volunteers / members. And that makes for significant difficulties. What is CCRW’s metric of success? What’s your personal metric of success as a Board member?





The Board in action


✔

So, with that preamble, let us now focus on the heart of the subject matter for today - governance.

This is, as we have just noted, the primary responsibility of the board of directors.

“He who would govern others, first should be the master of himself”

- Phillip Massinger

“Ignorance is no defence”

Thoughts for the day:

- Legal maxim



Two thoughts to start with:

1. Going to explore governance but with a particular emphasis on what you, as an individual Board member, need to be aware of and think about. Responsibility may be collective but accountability is personal! And if you are going to act in a position of authority, of governing others, then it is only right that you have your own act together (to use the vernacular) and act appropriately.

2. You need to recognize that being a Director involves work - work at understanding just what is required of you and of the organization and work at establishing if those requirements are being met. You cannot say “I didn’t know” or “I wasn’t aware” and hope to get away with things. The law says clearly you are expected to know and to have been aware!

So, with those thoughts in mind…

Topics:

1. What is governance – why is it important?

2. Exploring governance – the five essentials



3. Getting it right

Three topics to go over…

What is governance?

Governance =

“The act, manner, function of governing”

“The action, manner or system of governing”

“Direction; control; management”

“The way that [an organization] is controlled by the people who run it”

“The process of decision-making and the process by which decisions are implemented (or not implemented)”

Oxford English Dictionary

Collins English Dictionary

Nuttalls English Dictionary

Merriam-Webster’s Learner’s Dictionary

UN ESCAP



Firstly, what is governance and why is it important? Depending on where you look, you can find as many different definitions as you want. Whichever one you look at, though, they all speak to the same thing: governance is about how the organization is directed and run. Arguably, that makes it quite important!

UN ESCAP = United Nations–Economic & Social Commission for Asia and the Pacific

1. = A Board responsibility

Historically, duties and responsibilities of Board members were uncertain, subject to interpretation by the courts on a case-by-case basis

New legislation spells out what the duties and responsibilities of directors are

What is governance?

2. ≈ Having your act together as a Board of Directors



“Directing and running the organization” is the primary Board responsibility. It is not a staff responsibility - it is a Board responsibility. Some, indeed most, day-to-day things will get delegated to the ED and staff but the ultimate responsibility, in law, is the Board’s. So, governance is a Board responsibility. Less formally, we can say that governance (“directing and running”) is all about having your act together as a Board. But it is also about having your act together as an individual director.

In times past, just what your obligations as a director were could be much debated, being largely defined by the courts on a case by case basis. Now, the new not-for-profit legislation, federally and provincially, is changing the game. Now your duties and responsibilities as a director are spelt out. For example…

Legislation imposes, among other things, a duty of care for individual Directors:

“The standard of care is to: act honestly and in good faith with a view to the best interests of the corporation; and exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.”

Not-for-Profit Corporations Act, 2010,c.15,s.43

What is governance?



The federal and Ontario provincial acts provide the same statutory standard. Note the phrase “in comparable circumstances”, which is why the context of what sort of “not-for-profit” you are associated with becomes important. Here we are talking about a $?m enterprise so the expectations are substantially corporate like, not those of a Sunday morning soccer league or the knitting circle supporting a hospital shop. So high standards might be expected to apply and saying “I didn’t know” or “I wasn’t aware”, which is never acceptable, is absolutely not going to cut it here.

Governance, then, is not something to be taken lightly, either collectively as a Board or individually as a director. So the question is: ‘Just what is involved?’ – and that leads to our second topic “exploring governance”…

The five essentials

Exploring governance



To establish the organization's vision and direction and to plan and monitor performance in achieving the same

There are five things that are the essence of governance. The first of these is setting direction and monitoring performance against it. Think of it as going on a journey; you set a destination, lay out a route on the map, and check your progress against it (all the while reserving the right to change your mind and do something else!). You don’t have to be the driving the car but you are responsible for seeing it is being driven properly and in the right direction. That raises a second big question:


Big Question #2:

Just where has CCRW been heading and is it where you want to go??


I am not trying to put anyone on the spot because I am aware that there has been work done on endeavouring to develop a strategic plan and coming to grips with these issues. What I do want to do by raising the question is to encourage those efforts. This will be a major task, I would suggest, for the Board in the upcoming year is to address.

The five essentials




To ensure the financial health of the organization and to manage risk


Next thing that governance comprises is making sure the organization has the funds it needs and is not exposed to unnecessary risks that might threaten its continued existence. Money is important in that without it not a lot can get done! So have you got gas money and has the car been serviced recently, so you don’t have an expensive breakdown? I was surprised to hear that the Board has only been focussed on a subset of the organization’s revenue stream and corresponding operating costs. Believe me, you are responsible for everything! You cannot argue that somehow you are only responsible for paying for gas but not insurance or car tax or oil! And just what exposures and vulnerabilities does the organization have and are they being actively managed?

The five essentials



To ensure the organization has sufficient and appropriate human, physical and technical resources




But money is not the only thing and money itself is of little value until it is turned into staff or buildings or computers or whatever is needed to achieve the organization’s purposes in life. So the third element of governance is focussed on that; ensuring the organization has what it needs in terms of appropriate resources. Do you have a GPS? Having money in your pocket won’t help you answer questions about where you are or the best way round some incident.



The five essentials

To ensure the organization has sufficient and appropriate human, physical and technical resourcesTo direct organizational operations and formulate necessary policies and implement appropriate systems to facilitate the same




The fourth element is in ensuring those resources are deployed properly, that the requisite policies are in place and the necessary systems and procedures are working well to achieve the organization’s purposes on a day-to-day basis. The expectation of donors or grantors is that money will be spent wisely and in the best possible manner. The fourth element of good governance is ensuring that expectation is met. Did you need to hire a chauffeur as opposed to share the driving? Funders get interested in this! And, when government is the provider, as is the case with so much of CCRW’s revenue, then as we know from Bev Oda and others, you don’t want to be caught having to answer questions about spending the public purse on £15 glasses of orange juice at the Savoy Hotel in London. Efficiency and effectiveness are the watchwords.




The five essentials

To ensure effective stakeholder relations through transparency of action and open communications

To direct organizational operations and formulate necessary policies and implement appropriate systems to facilitate the same




And the fifth essential element has to do with how you act as a Board. Your role is to ensure that everyone involved with the organization, be they members, clients, supporters, donors, or the community at large within which you operate, feels (a) their voice can be heard and (b) understands what you are doing and why. It is not sufficient just to act (or not, as the case may be); what is needed is transparency about decisions made and the open two-way communications that leads to understanding and trust about what is done and why, even if it may not lead to agreement (after all, everyone is entitled to have their own interests and point of view). You are going to, say, Montreal because you all voted on it - not just because someone wants to see their aunt.

DIRECTION & PERFORMANCE

FUNDS & PROTECTION

CAPABILITY & MAINTENANCE

EFFICIENCY & EFFECTIVENESS

UNDERSTANDING & TRUST



The five essentials


So there we have it, briefly, the five essential components of governance:1. directing and monitoring performance;2. ensuring adequacy of funding and managing risks to protect the organization;3. making sure the organization has the capability - the people, the space, the technology etc. - to do its job and that those assets are not untrained, decrepit or falling apart but properly maintained;4. looking to see that things are done as well as they can be - as efficiently and as effectively as possible - to get the biggest bang for the donated or entrusted buck as one can; and5. building relationships with all stakeholders by acting in a way that builds understanding and trust.


FUNDS & PROTECTION




“Management”

“Money”

“Means”

“Methods”

“Manner”



The five essentials


Let’s make that easy to remember; think:Management MoneyMeansMethodsand Manner

These are the five key aspects of governance. These are the responsibility of the directors, the Board, and constitute the fundamental ways of examining the organization and, if you like, the lenses through which decisions are made.

Any immediate questions? Let’s try these out. Case Study…



Case Study - Organization A

How should this be looked at?

Through which lens or lenses:- Management- Money- Means- Methods- Manner

should this be best evaluated and why?


Think about this for a few minutes. Then write down (a) “yes” or “no” regarding whether you think the Board should adopt the motion and (b) which lens or lenses you think this is best to evaluate this - in reality, how you looked at it to come up with your answer. It is often easy to say “yes” or “no” but often more difficult to articulate why, where you were coming from in arriving at the conclusion you came to. And I want to encourage you to be very mindful and aware of the why?


Vision statementStrategic PlanOperating Plan & BudgetMonthly reports

✓✓✓✓

Management



The five essentials


Now we have those five essentials of governance clearly established, I want to reflect on good practices. (I think “best practices” is much over used and often ignores fundamentally different circumstances about what is reasonable or financially possible.) What do good organizations do therefore?

Good practice dictates they have a clear vision. They have a strategic plan to achieve that, which in turn drives an operating plan & budget and they have regular reports on how things are coming along. My experience suggests that, in reality, lots have organizations have things they call a vision but which are, in practice, little better that a marketing slogan, they have a strategic plan developed at a weekend retreat two years ago which has not been referred to let alone mentioned in the last two Board meetings and the reports they get are cash flow summaries from the Treasurer and nothing to do with operational performance.

This is a really important aspect of governance so I just want to spend a few moments and talk about that!

Vision, Strategic Plan, Operating Plan & Budget

Vision


An expression of what the organization wants to achieve in the long termAnswers the general question of “Where are we going?”May lack precision and detail but is sufficient to facilitate decision making about general direction, resources, etc.

Mission - what the organization does everydaySlogan - engaging catch phrase

Distinct from:

What does vision mean in my book? It has these characteristics…

Future state (not activity) so you can tell when and if you get there. Hence a noun not a verb.

Gives direction and typically sets boundary conditions.

“Be a doctor” at least means “get to university” so facilitates decision-making in the here and now.

Look at some examples:


Vision


CCRW Vision:To create a Canada where all persons with disabilities have equal employment opportunity.

Not a future state but an activity. Better to say “A Canada where…” Does not speak to CCRW’s role (or assumes total responsibility). How does it help decision-making?Is it realistic? Would it be better to say “disabilities do not represent a barrier to meaningful and economically rewarding employment”?

Let’s start with CCRW’s vision

3 comments

Look at some examples developed for an agency which delivers sign language services


Vision


“A country where deafness no longer represents a significant social or economic barrier, with the organization being recognized, publicly and nationally, for the practical contribution its programs and services have made to that position, through enhancing sign-language based communication in the home and workplace.”

Desired future stateExternally focussed but not exclusivelyPragmaticHas boundary conditionsSpeaks to organization’s contribution / role

✔

#1 Long winded but:It presents a desired future state. This is what the organization would like to see come to pass. It is external. It is pragmatic (‘significant’, rather than ‘any sort of’); it has boundary conditions (country not world, programs & services not fund-raising or advocacy, specifically sign-language based) and it speaks to the organization’s contribution and performance level (nationally recognized).

#2 Does not reflect a state but an activity - hopefully what is done everyday. Much more like a mission statement in style and content but is unbounded - could do fund-raising in China and still be compliant.

#3 Unrealistic in breadth and current lifetimes. May be achieved in a manner that has nothing to do with the agencies services. Does not speak to any role the organization might play.

#4 No sense of purpose in relation to the world outside. Can always be better but if nirvana is achieved, so what? What has it done for anyone?


Vision


“A country where deafness no longer represents a significant social or economic barrier, with the organization being recognized, publicly and nationally, for the practical contribution its programs and services have made to that position, through enhancing sign-language based communication in the home and workplace.”

“To provide excellent services to assist the deaf community, especially among those suffering economic hardship or other barriers.”

“A world where the deaf are fully accepted and integrated into society.”

“To be the best provider of ASL services that we can be.”

✔

✘

✘

✘

#1 Long winded but:It presents a desired future state. This is what the organization would like to see come to pass. It is external. It is pragmatic (‘significant’, rather than ‘any sort of’); it has boundary conditions (country not world, programs & services not fund-raising or advocacy, specifically sign-language based) and it speaks to the organization’s contribution and performance level (nationally recognized).

#2 Does not reflect a state but an activity - hopefully what is done everyday. Much more like a mission statement in style and content but is unbounded - could do fund-raising in China and still be compliant.

#3 Unrealistic in breadth and current lifetimes. May be achieved in a manner that has nothing to do with the agencies services. Does not speak to any role the organization might play.

#4 No sense of purpose in relation to the world outside. Can always be better but if nirvana is achieved, so what? What has it done for anyone?


Mission


“To provide a range of American Sign Language community and family-based services and programs to assist the deaf community in their everyday lives, with a particular focus on family communication.”

Slogan

“Quietly helping”

By way of comparison; mission is what the organization does everyday. Slogan is an inspirational summary of what the organization is about, with a subtle play on “quietly”, reflecting not just what the organization does but the values it espouses in conscientious, modest and non-judgmental.

OK, back to vision



A Framework - The Vision Pyramid

Vision

Assumptions, Beliefs & Values Goals

StrategiesOperating principles

AIMS

DECISIONS

© The Coordination Group

I’ve found this a very useful framework. Let’s suppose we have agreed our “Vision”. The reality is that that is based on a set of assumptions, beliefs and values. “The world will not end tomorrow” to take an extreme example. In the previous example, there is an assumption that “Scientific developments around cochlear implants will continue but will not reach a stage in the next 20 years such that sign language communication will be made obsolete”. I suspect every agency needs to have an assumption on funding along the lines of “That government financial support will continue at a level not less than 75% of current funding”.

Must express these ABV’s. They influence our goals. The absence of clearly stated assumptions is the singular biggest cause of plans failing in my book. How many times have you said… followed later with a “but I thought…”?

Goals are major milestones on the way to achieving the vision, taking into account our beliefs, assumptions, value set. Goals should be S.M.A.R.T.…



Goals

Specific

Measurable

Achievable

Relevant

Timely

“Funds raised to exceed 2013 levels by 15%, with private donations at twice current levels in terms of percentage contribution, by 2016.”

“To continue to offer sign-language facilitated tax preparation advice.”

“Class participation at 90% capacity with at risk children representing >50% of participants.”

✔

✘

✘

Again, I see organizations really struggle with these, often not being aware of why. The “why” comes from the goals not being SMART. Take these three examples. I am sure you have seen examples like these.

#1 Statement about an activity (note is has a verb; should be a noun.)

#2 SMART

#3 Not SMART. No baseline, no definition of capacity (which can be adjusted), no timeline…



A Framework - The Vision Pyramid

Vision

Assumptions, Beliefs & Values Goals


AIMS

DECISIONS

© The Coordination Group

So far we have talked about vision, assumptions, beliefs & values and goals. These represent the top of a pyramid. Beneath these are two other aspects. Operating principles are some general rules of thumb we can adopt to help filter all the different options we may be faced with when it comes to strategies (e.g. “we want to offer the same level of service everywhere” or “we will only do things if we can do them well”). Strategies reflect how we are going to meet our goals. (If we have a monetary goal, are we going to do that through fund raising or charging or seeking sponsorships or what?) Note that all these aspects interact. Perhaps we find that no strategy looks very promising and - as we will only do things if we can do them well - we may have to go back and modify the goal as it looks unattainable. Let’s hope not! So armed with our completed pyramid…we take our goals and identified strategies and generate a plan!

Goals

Vision

Assumptions, Beliefs & Values


Next 5 years:

Goal 1Goal 2Goal 3Goal 4Goal 5Goal 6Goal 7Goal 8Goal 9

Next 12 months

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12-24 months

24-mon

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Strategic Plan

Operating Plan & BudgetBoard

Meetings



Now the reality is that all the goals we identify cannot be achieved in the next 12 months - if only because some things need to be done before others and there are the normal constraints of time, money and resources to consider. So the list will get prioritized; this in next 12 months, this in subsequent 12 months etc. That gives us our Strategic plan. From that, the Next 12 Months’ list then becomes the Operating Plan and gets properly budgeted. And that Operating Plan & Budget will be reviewed at the Board’s regular meetings throughout the year. Each month (or however often the Board meets)…



Regularly:Check “working” assumptions/beliefsCheck progress towards goals (= Operating Plan & Budget)

Annually:Check vision, “core” assumptions etc.Confirm goals & strategiesSet Operating Plan & Budget

Board meetings

… the assumptions get checked and performance gets reviewed. Adjustments are made to the Operating Plan and budget accordingly and may, if necessary, cause fundamental changes to the vision framework. At least annually there is a more thorough review of the big picture. Does the vision still hold, are our strategies working? So there is continuous cycling.

Goals

Vision

Assumptions, Beliefs & Values


Next 5 years:

Goal 1Goal 2Goal 3Goal 4Goal 5Goal 6Goal 7Goal 8Goal 9

Next 12 months

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12-24 months

24-mon

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Strategic Plan

Operating Plan & BudgetBoard

Meetings



So there is continuous cycling… necessarily – because things don’t happen at fixed points in time. You don’t get to choose when you have a car accident and end up in hospital for weeks or your Aunt Maria dies and leaves you a legacy. Life happens all the time. Corporate life also happens all the time! A Strategic Plan is not a nice document that gets put on the shelf but the embodiment of what it is the board is doing all the time. Strategic planning is what drives everything you do and, in reality, is what is done in every meeting. It is not a once-a-year phenomenon. Here ends the sermon!


Vision statementStrategic PlanOperating Plan & BudgetMonthly reports

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Management



The five essentials


To summarize: Good boards establish and maintain the vision (review based on events but at least annually). They have a strategic plan (review based on events but at least quarterly). That plan includes measurable goals, assumptions and operating principles. Then they have an operating plan detailing steps towards achievement of strategic goals within the current year (reviewed monthly). They have a budget accompanying the operating plan detailing revenue and expenditure forecasts and actuals (reviewed monthly). And they maintain follow-up and to-do lists which form the backbone of each monthly meeting. Depending on maturity level, some of the more tactical stuff may fall to an ED & staff if such exist but as a director you are always expected to know what is going on. And that is true if your budget is $3,000 a year or $3,000,000 a year.


Funding strategyRisk management frameworkPolicy documents - controls, HR, volunteers, childrenEducation; codes of conductDisaster / contingency plan

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Money



The five essentials


The next key element is money and managing risk. You need to focus on funding and fund-raising. Money matters and that is a key part of being a Board member. Not only do you need to gather monies, you need to protect the organization and its assets from harm. So good organizations not only have a clear funding strategy but also a risk management framework. You need to clarify risks (on an on-going basis), you need to use common sense in evaluating them, you need to prioritize them and you need to take action as appropriate…

Risk Management

Risk identification


Governance in the Not-for-Profit sector

Risks to:PeoplePropertyIncomeGoodwill

Employees, Volunteers, Clients, Participants, Donors, Board members…

Buildings, Equipment, Facilities, Contents, Media, Papers…

Donations, Membership fees, Grants, User fees, Investments…

Reputation, Community standing, Public image, Attractiveness to staff, volunteers, donors…

It does not take much to sit down and think through what the risks might be. Everyone can bring their own experience to bear. There are a great many checklists out their to help as well. The big issue, as far as I am concerned, is boards actually doing it! When you are dealing with an at-risk, disadvantaged or other sensitive (for want of a better word) population, as CCRW staff are in many cases, this needs special attention. My understanding is that CCRW might be considered highly vulnerable at present.

Risk Management

Risk identification



As said, the big issue, as far as I am concerned, is boards actually doing the work! Ask yourselves: if something does go wrong are people going to ask “why didn’t you think of that?”

Risk Management

Mapping



Impa

ct

Occurrence

Monitor &

Manage

Monitor &

Accept

Control &

reduce

Action &

LimitRisks to:PeoplePropertyIncomeGoodwill

Then use a simple tool like risk mapping to help determine what to do. Are risks likely? What would be the consequences? Use the framework to position risks and guide actions taken. Always consider how things will look if the worst happens. Is your approach “reasonable” under the circumstances? (You can’t protect against nuclear war but do you have a policy on handling distressed or disturbed clients?)


Funding strategyRisk management frameworkPolicy documents - controls, HR, volunteers, childrenEducation; codes of conductDisaster / contingency plan

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The five essentials MoneyExploring governance

Much can often be dealt with by having written policies and procedures and associated training. Some risks can be dealt with by insurance. Some can simply be eliminated. Some of the simplest and most serious are, remarkably, the most ignored - the risks of non-compliance (e.g. with by-laws, with reporting requirements, with restrictions on donated funds). Back to our first big question - are you in conformity with your objects? Regardless, what is needed is to evolve a culture not of avoidance but of awareness and appropriately measured responsiveness.

Indeed, this gives rise to a third big question…



Big Question #3:

Are finances, overall, in good enough shape and just what are the major risks being run??

I understand a number of things: 1. You are running a deficit; 2. The Board has historically not been given the complete budget to review and approve! 3. Most of your money is government money, which brings its own problems; 4. You may not have appropriate policies in place, regarding background checks, codes of conduct etc.

Please don’t get defensive over this – see it as an opportunity to really help the organization get better. You the Board, current and future, have a lot of knowledge (and access to knowledge) you can bring to bear to help Maureen and her staff, whether it is model policies or financial know how or whatever. Seize the opportunity!


Strategic Plan - resource strategiesOperating Plan & BudgetSuccession plansInventory and asset life-cycle policies

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Means



The five essentials


Third essential element; resources. Managing this requires the strategic plan must address resource needs; not just where is funding to come from but where are volunteers/staff to be found, where are premises to be located and how is equipment to be sourced. And broad strategies need to be interpreted into operational targets and specific actions so the board can ensure the rights things are in the right place at the right time. The board also needs to plan for responsibilities & know-how to be passed on (not just theirs but key staff or volunteers) [back to risk management - not just passed on in a planned manner but in an emergency / fatality situation] and to actively manage organizational assets. Two key concepts…

Inventory & asset management



Two key concepts

Total Cost of Ownership

Life Cycle Management

Nothing is “free” Knowing what is where & in what state?

Do look gift horses in the mouth! That “free” video conferencing system that was donated is going to cost you a lot of money - in maintenance, operator training time (“she is the only one who knows how to…”) etc. And I know of too many organizations that do not know what they own or have, what state of repair it is in and where items are mindlessly replaced without regard for whether that is appropriate or where the board get surprised by the sudden big bill to replace something as “the old one they have is no longer supported”. These are concepts (TCO and Asset Life Cycle Management) that I suspect you are very familiar with in your corporate life - and this is where you can help by ensuring CCRW knows how to do the same thing. Moreover, you need to think of the two things together. While you may have perfectly “adequate” technology from a life-cycle point of view, it may well be costing you in terms of your ability to recruit and retain staff. Bright young things coming out of university or college don’t expect to do financial analysis or graphic design or web publishing using a 19” monitor. They are used to using a widescreen display and if you don’t have them they are going to wonder what other relics are hiding in the cupboard when it comes to HR policies, work environment etc.


Strategic Plan - resource strategiesOperating Plan & BudgetSuccession plansInventory and asset life-cycle policies

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The five essentials MeansExploring governance

So resource management means having to plan for assets to wear out or become obsolete (whether it is one computer or fifty) so that maintenance is carried out or replacements are funded in a timely manner. It means doing that for people too! The key is that the organization has the means to do its job and that its operations remain viable and sustainable.

To direct organizational operations and formulate necessary policies and implement appropriate systems to facilitate the samePolicy and Procedure manualsOrganizational & workflow documentationReporting systemsMission metrics

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The five essentials MethodsExploring governance

To our fourth point - doing things efficiently and effectively. That means having policies and procedures in place that address these issues. It means having effective organizational design and clear responsibility definitions (whether you are an organization of 20 people or one of 2,000), combined with documented workflows and uncomplicated systems that are easily learnt and followed. It means having good reporting systems, focussed on exceptions and trends. And, here is an idea, it means keeping everyone focussed on the ultimate purpose by using “mission metrics”.

Mission metrics



Keeping the focus on purpose and outcomes

Cost ≈ $4 each

Cost differential = “100 blankets”

Mission: helping street people

Cost difference = $400

Instead of counting and reporting “dollars”, use an equivalent mission metric such as “meals” or “blankets” or “test tubes” such that “$100” becomes “25 meals” or “20 blankets” or “100 test tubes”, measures associated with your purpose. Now the difference between one sort of desk and another is 100 blankets - do you really want to forego those?

By the by - just what do you individually see as an appropriate mission metric for the organization?

To direct organizational operations and formulate necessary policies and implement appropriate systems to facilitate the samePolicy and Procedure manualsOrganizational & workflow documentationReporting systemsMission metrics

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The five essentials MethodsExploring governance

Now a lot of Boards in your position might argue, and with some justification, that this is really operational stuff hardly the direct responsibility of the directors. Moreover, they don’t want anyone to think they are micromanaging the ED and his or her staff - and I would sincerely hope they weren’t doing that. But, nevertheless, this is your responsibility and while you may delegate much to the ED you cannot delegate the responsibility. You need to ask the right questions - what is being done about this or how is this being managed? - and you need to offer help where you can; for example, providing access to model policies or researching what other organizations (such as other nfp or charities you may be associated with) have done. And think about mission metrics!


Two way communication strategyMedia trainingMarket surveys & needs analysisRelationship managers

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The five essentials MannerExploring governance

Last M - Manner. Last but not least. How is this to be accomplished? Not by accident. Do you even know and collectively agree who your stakeholders are? How do you communicate with them? How do you expect them to communicate with you?! BEING RESPONSIVE to them can go a long way to creating an open and trusting relationship. As for media training…

Communications strategy



Managing the message

Media training for Board members is important too – not just on “answering a journalist’s question” when problems arise but on how to use new social media like Facebook. Operational issues can give rise to challenges too. TFR band and noise makers - informing neighbouring houses i.e. getting ahead of the problem was a solution. Don’t forget that at some level you are the message! What you do and how you do it and why you do it has real meaning to people, whether its staff or clients or funders, potential or actual. Walk the talk!!


Two way communication strategyMedia trainingMarket surveys & needs analysisRelationship managers

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The five essentials MannerExploring governance

Do you understand your audiences and their needs? Just how well do you understand the community you serve? Think of the money many of your organizations spend on understanding the customer (especially in these days of big data) and in shaping their corporate image? Why is that? Because it matters! So how well do you, as individuals and collectively, know clients, staff, funders?

Consider making board members individually responsible for key relationships, be it with staff or volunteers as well as, in your instance, perhaps government bureaucrats and politicians or foundations. Again, whether your Board is still actively managing everything (a Stage 1 organization) or a well-established policy focussed, near corporate, board (a Stage 3 or 4 organization), like yourselves, building understanding and trust with stakeholders is key. And to do that you have to act in an open, honest and, most importantly, pro-active manner.

OK, let’s review…

It is about getting your collective and individual act together around:

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FUNDS & PROTECTION






The five essentials

“Management”

“Money”

“Means”

“Methods”

“Manner”


Around Direction & Performance - every board member should, individually, be able to articulate the organization’s elevator speech* on its purpose. Every director should know where the organization stands in terms of meeting its targets for the year and the state of its bank accounts. Everyone should “walk the talk” when it comes to values.Around Funds & Protection - every board member should be personally involved in ensuring adequate funding and, individually, know the types of risk the organization is running and how they are being managed. He or she should be completely familiar with the legal obligations the organization has, be they from by-laws or contracts that have been signed or restrictions placed on certain funds or whatever. Ignorance is not a defence. Around Capability & Maintenance - every board member should, individually, be familiar with their area of responsibility and know that necessary resources are planned for and provided. They need to attend to life-cycles and appreciate that it is not just a matter of providing an asset - be it a person or a computer - but that all such assets need to be kept up-to-date, to be maintained, and that, too, costs money and takes planning. They need to ask questions and satisfy themselves about the answers. Around Efficiency & Effectiveness - every board member should, individually, be prepared to challenge the status quo and educate themselves on current practices inside and outside their organization to ensure donated dollars are used in the best possible manner, whether, as said, the budget is modest or magnificent. They are in a position of trust when it comes to donated dollars and need to recognize and discharge that responsibility.And around the building of Understanding & Trust - every board member must discharge his or her obligations in an open, honest, respectful and mindful manner, recognizing not just their personal obligations and accountabilities but the collective responsibility the board has to speak, ultimately, with one voice. Regardless of size or mission, five areas of focus; five lenses to look through; five essential components of good governance.And now let’s look at getting it right…*elevator speech - a simple “speech” of few words, taking not more time than it takes an elevator to go from one floor to the next i.e. a succinct summary of an idea


Common governance problems

Poor selection criteria for Board membership

Lack of understanding of roles & responsibilities

Poor understanding of concepts behind planning and policy development

Lack of time commitment & business thinking

Inability to influence mission & direction arising from inadequate understanding of organization’s functioning and governance documents

Getting it right


The third topic I want to touch on briefly concerns suggestions to help you get it right in practice - collectively and individually. Let’s start by recognizing certain missteps. These are things to avoid. We have touched on most in passing today. Poor selection criteria; are there indeed any established or is it just who you know? Do the Board members understand their roles and responsibilities? Many board members do not have the opportunity to experience this sort of three day workshop and Hong Fook is to be congratulated for arranging it. Then we have board members who have never seen the organization in action - they have never been to the drop-in centre or talked to a client. Remember, I advocated taking board meetings out and about as part of that familiarization process. Too many directors have never read the organization’s by-laws let alone the articles!! Take the fourth item - planning. We discussed the “Spent the Saturday, did the Plan, let’s move on!” phenomenon. And I reflected on the time commitment not being a few hours in a meeting every month or so. Not only that but directors can, I have observed, exhibit very little business sense on occasions - even basic considerations like value-for-money - and don’t seem to grasp the concept of trusteeship and their obligations to donors and supporters.


Staff reluctance to let Board function as it should

Lack of balance between internal focus (e.g. operations) & external focus (e.g. fundraising)

Over-reliance by Board on staff’s “professionalism” and business skills

Lack of communication between Board & staff, staff & volunteers and Board & stakeholders generally


Getting it right

Common governance problems

Other things…Firstly, the issue where staff, working in the trenches on a day-to-day basis, are inclined to think they know it all and the Board is at best a group that might occasionally be useful to solve a problem but otherwise should just keep out of the way and let people do their job! If nothing else, that attitude ignores certain legal niceties about who is responsible for what! The second point reflects the converse, of the Board over-relying on staff. Many people gravitate to working in a not-for-profit or charity setting because they do not care for the cut-and-thrust of business and espouse a softer, less absolute approach to life. When it comes to issues like service delivery to clients such an empathic approach is highly desirable. But it doesn’t cut it with the CRA. Either numbers add up or they don’t. And the operations, the internal administration, of a not-for-profit has to be business-like. Things have to be done properly and they have to be done efficiently. Donors and grantors demand nothing less. So it is important to ensure that the organization has the right people in the right roles. The sensitivities needed in one area are not those needed in another and Board members need to ensure they don’t assume capabilities among staff or volunteers (as reflected in the last point here, which we discussed earlier). And comfort levels can often lead to a board focussing on the one thing to the exclusion of the other. Boards have responsibility to be both inward and outward looking. And as we noted more than once, transparent and open communications between all parties is a “good thing”.


Hold formal orientation sessions

Have well-managed meetings based on clear agendas and a board calendarHave straightforward decision-making processes

Maintain an up-to-date Board manual and refer to it regularly

Hold each other accountable and speak (outside the room) with one voice

Have standards for meeting preparation, attendance & participation


Getting it right

Board actions - doing it right

Let’s talk about the positives. We have discussed all these I think but we should go over them again regardless of the fact “we hold these truths to be self-evident”. Apparently, they aren’t always! Start by getting off on the right foot and making sure everyone knows what is expected of them and what the job is about! Have formal training sessions and issue and maintain a director’s manual with everything in it. Have clear Board policies around all aspects of meetings. Have good processes to support those policies. Be disciplined and exercise that discipline. Don’t accept unacceptable behaviour, whether it is always being late, or not having read stuff or wanting to revisit decisions or always give a speech regardless of whether a simple “yes” or “no” is asked for. Perhaps, as mentioned before, one of the more difficult ones to observe is the one about speaking with one voice. Disagreements are appropriate (a Board is supposed to comprise different perspectives after all) and often force fuller and better discussion of topics than immediate casual agreement. But it is not individual Board members that decide issues. It is the Board collectively. So once a decision has been made, collective responsibility means there should be no nay-saying outside the room.


Ask yourself if you are in the right room & why?

Understand your responsibilities and obligations, legal, moral and ethical; fulfil them

Pay attention to the money

Pay attention to policies, to by-laws, to contracts

Pay attention to people

Educate yourself and others - and ask for help

Be supportive


Getting it right

Personal actions - doing it right

Now let’s talk about individual actions. Remember, when we talked specifically about governance we started with a quotation - “He who would govern others, first should be the master of himself”. Before even joining a board, know why you are doing it and do it for the right reasons. What is your reason for being there, for being “in the room”? Are you truly interested in the cause? Do you fully understand everything it does? How do you fit with the other directors? Understand what you are getting into. Avoid conflicts of interest. Ensure there is Directors Liability insurance - and what exclusions it may contain! Attend meetings and contribute. But do you understand the time commitment required to read and keep up with everything, long before you attend a meeting? Take notes! Make sure you understand the organization’s finances and associated statements. Make sure things are properly conducted, that they follow the rules, obligations etc. and that risks are managed. Read and understand agreements (LHIN SLAs are a nightmare!) Make sure volunteers and staff have written job / position description with appropriate codes of conduct. Support the organization; recognize the obligation to lead by example. And continually look to educate yourself and to invest in staff & volunteer training for the betterment of all. And don’t be afraid to ask for help when you need it.Be masterful in your role as a Board member. Only then can you govern others.





The Board in action


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Now we have a much better sense of what’s involved in governance and what the Board is responsible for, let’s look at some of the mechanics of Board work - about operating in practice.


The Board in action

7 key ideas:

Rules

Time commitment

Collective responsibility / personal accountability

Dissent

Conflict of interest

Committees

Calendars & agendas

I want to explore, briefly, seven often misunderstood or overlooked aspects of Board operations that I think can, if everyone is on the same page, make for a much smoother and easier time for all concerned.


The Board in action

7 key ideas

1. Laws of the land!

2. Constating documents of the corporation

3. Meeting procedures or “Rules”– Robert’s Rules of Order– Democratic Rules of Order

Rules

– CNCA, especially default rules– Income Tax Act– Charities Accounting Act

– Articles– By-laws

Making decisions should be a lot easier if everyone is fully aware of the three sets of rules that should be followed. Saves a lot of pointless arguments on occasions! Firstly, the laws of the land. You can’t very well decide that you are not going to pay property taxes or you are going to set up a grow-op. You could do, of course, but such decisions are likely to land you in jail and would hardly be seen as a proper exercise of your duty of care as it relates to the organization! As a director of federally incorporated charity you need to ensure that you are following the appropriate acts, especially the default rules that apply because you have elected (or will elect) to follow them, rather than adopt some alternative by-law. The second set of governing documents are the corporation’s “constating” or governing documents (i.e. articles and by-laws). Personally, I find these the most ignored and abused, particularly in time past where the directors had to be given powers under the by-laws to take certain decisions, a requirement now much relaxed. Nevertheless, the aims and purposes of the corporation have to be considered and decisions have to fit within that framework. Thirdly, it is very helpful to have a defined process regarding things like making motions and voting, to avoid everyone speaking at once and no one being certain as to what is being discussed - I’m sure you have all had those experiences! There are two commonly quoted sources of such procedures. I make no argument for one over the other. Simply make sure you have some agreed written procedures and that they are followed. So, item 1 – make sure you know what you can and cannot do and then do it properly!


The Board in action

7 key ideas

Time commitment

≠ number of board meetings x 2 hours

= reading & preparation time + research time+ follow-up time+ committee / other task time+ other meeting time+ …

There is an unfortunate tendency, when asked to join a Board, to make an assumption about time commitments, which is totally unrealistic if you are serious about doing your job as a director. You may well be encouraged in your assumption “Its only 6 meetings a year for a couple of hours…” I always suggest that the time spent in Board meetings represents less than 10% of the time you should be prepared to commit if you are to do your job properly. If everyone understands that then everyone will have read the minutes and financials before the meeting, will have developed a thoughtful set of questions to ask about some report, will be prepared to get to know staff, will be expecting to do some committee work, will undertake the self-education that comes with any job and so on. Moreover, they will mutually respect other people’s time and not be late for meetings, not be wasting time in meetings because they have not read briefing material etc. Boards work better when everyone is on the same page about what it takes, time-wise, to serve as a director.


The Board in action

7 key ideas


Board as a whole make decisions, not individuals

Individual powers are those in the by-laws

The problem of titles and qualified professionals

The Board make decisions - not individuals. They have collective responsibility. But each director has individual accountability for those decisions and for fulfilling his or her duties. Speak your mind in the room but toe the line outside it!Just because you are Chair doesn’t mean you get to make the decisions. The role of Chair is as defined in the By-laws and is frankly the key one of process facilitator: around agenda management, around meeting procedures, around decision procedures, around meeting management in a larger sense and around people management. It is not to play God!I have concerns about titles: titles can often imply some unique responsibility (and that others therefore have none) and can reflect inappropriate positioning (“vice president”, “2nd vice-president” - with three year terms!!!). Keep it simple: Chair, Secretary, Treasurer may be. And that leads to the problem of professionally qualified directors, most typically lawyers and accountants. They have problems, because of their professional insurance, in being seen to give advice.Addressing these somewhat vexed issues in a positive, up-front manner can save much heartache later!


The Board in action

1. Disagreements are often healthy

2. Boards should reflect a diversity of view

3. Recording dissent can avoid culpability

7 key ideas

Dissent

On the subject of dissent, I would just like to make 3 observations.

If everyone agrees and just nods without there being any of the discussion that flows from differing opinions, matters sometimes do not get properly thought through and certainly not given the scrutiny perhaps they should get. (Sloan example.) Secondly, if everyone on the Board thinks the same way then perhaps you have a Board that is not representative of the undoubted spectrum of opinions you are likely to find among any group. I would question whether it has become an old boys’ club or is a valid representative body. And thirdly, if a director is opposed to a decision and, indeed, votes against the decision, recording the fact can be used to relieve the director of responsibility in the event the decision proves illegal in some manner. Boards that do not experience differences of opinion, reflected in dissent, likely do not have the variety of experience and view they need to do their job properly!


The Board in action

7 key ideas

Conflict of interest141. (1) A director or an officer of a corporation shall disclose to the corporation, in

writing or by requesting to have it entered in the minutes of meetings of directors or of committees of directors, the nature and extent of any interest that the director or officer has in a material contract or material transaction, whether made or proposed, with the corporation, if the director or officer1 (a) is a party to the contract or transaction;2 (b) is a director or an officer, or an individual acting in a similar capacity, of a party to

the contract or transaction; or3 (c) has a material interest in a party to the contract or transaction.

(5) A director required to make a disclosure under subsection (1) shall not vote on any resolution to approve the contract or transaction unless the contract or transaction1 (a) relates primarily to the director’s remuneration as a director, an officer, an

employee, an agent or a mandatary of the corporation or an affiliate;2 (b) is for indemnity or insurance under section 151; or3 (c) is with an affiliate.

Canada Not-for-profit Corporations Act

I touched on the problem of professionals. Another issue which a Board like yours can have and which needs not to be avoided but to be pro-actively managed (through policy?) is the one of subject matter experts. When you have a subject-matter expert on the Board and you then want that person to do some work in a professional capacity e.g. lead a full-time research project utilizing that individual’s firm and its staff there is a conflict of interest, arising from a perceived (and often actual) commercial benefit. Best, possibly, to resign from the Board in the circumstances. Otherwise, when to recuse oneself: not allowed to participate in decision in which one has a personal benefit, be it direct or indirect – e.g. your family / business is awarded a contract. Now have to make the disclosure in writing or get disclosure formally minuted. That again is a problem for lawyers, acting as rainmakers. Think about the issues ahead of time and avoid the problems later.


The Board in action

7 key ideas

CommitteesGovernance

Usually defined in by-lawsFormal reporting arrangementsFormal budget

MandateRecommend v. decide

v. Task Forces:Finite needProject oriented

v. Panels:InformalSpecialized experienceExtended representation

Much work is done out side of formal Board meetings. If you want things to go well, focus on this. The challenges of committees! Perception is often that they have associated with them a certain level of administrative rigour and formality. They typically have a chair and a secretary for formal minute taking, they will have regularly scheduled meetings, they will have structure and governance processes often incorporated in the organization’s by-laws. One of the biggest challenges is often created by the fact that the President (Board Chair) and/or the Executive Director, if there is one, is customarily made an ex-officio member of all committees. That represents an unrealistic level of participation - of time commitment.A second, enormous source of frustration among committee members is the issue of mandate. Often not clear. They get to do all the work, look through all the documents, all the numbers, spend countless hours in tedious debates about what should or should not be done, finally come up with an answer that everyone recognizes is the correct answer and then finds their mandate is only to recommend to a Board, which promptly ignores their recommendation and decides to do something else! So, be careful with committees - regard them as a necessary evil if you will! Take a moment to compare committees with two other forms of organization which I think are often underused - with the deliberate implication that committees are over used! The “committee” label puts people off, with its overtones of meetings, and minutes and formalities and endless debating and possibly lack of commitment to any sort of follow through (isn’t that how you bury things politically by referring them to a committee?)… Who wants to be “on a committee”, when they could be on an action-oriented “task force”, with its sense of clear purpose and intent to achieve something? I would argue it is much easier to recruit people to join a “task force” with its sense of go-getting, purposeful action than a “committee”.The second is the panel, much loved by marketeers but under-used by not-for-profit organizations. These are people recruited to give their opinions on things - and who doesn’t like to do that! Again, much easier to recruit people on that basis, lacking the formality of a “committee” and requiring little in the way of time commitment. Yet this is a great way to involve more members or specialized help, again without the formality of an “Advisory Board” - though, to be fair, lacking the perceived status of the same, which may be important to academics or professionals.Make sure these adjunct structures are properly conceived and employed to get work done!


The Board in action

Organizations have a rhythm

Annual:Fund-raiserGrant applicationsAGM / electionsBoard orientationMembership driveAuditGovernment filingFunder reportsPersonnel reviewsBudget setting

Monthly:Accounting cycleBudget reviewOperational reports

7 key ideas

Calendars & agendas

The last key idea I want to look at when it comes to the Board in action – and effective, smooth operation – is the use of calendars and well considered agendas. All organizations have a rhythm, typically annual but perhaps modified by some form of seasonality or by some more major happening every few years. What is CCRW’s?

Be aware of that rhythm and look at using calendars to exploit that…Do you do that?


The Board in action

JANUARY Government filing

FEBRUARY Fund-raiser

MARCH Audit

APRIL AGM/elections

MAY Board orientation

JUNE Grant applications

SEPTEMBER Budget setting

OCTOBER Personnel reviews

NOVEMBER Funder reports

BOARD CALENDAR

7 key ideas

Calendars & agendas

Annual:Fund-raiserGrant applicationsAGM / electionsBoard orientationMembership driveAuditGovernment filingFunder reportsPersonnel reviewsBudget setting

There are two conceptual benefits behind a calendar: 1. Spreads the work load out over the year2. Allows everyone to plan and focus their attention appropriately

If you look at this and say “Where’s strategic planning in this?” then I would remind you of our earlier discussion - or at least my strongly held position on the subject! If, as I have said before, you think strategic planning is one of those “two Saturday mornings in September events” then you do not understand what strategic planning is about. Strategic planning and the associated management and execution of that plan is what the board does all the time - all of the above actions are part of the plan and essential actions in achieving the plan. Name one that isn’t?! You can then take this and build the regular meeting agenda around it…

BOARD AGENDA


The Board in action

1 Approval of minutes

2 Matters arising from Minutes

3 Matters arising from Monthly Reports

4 Committee Report items

5 Other Report items

6 Scheduled Calendar item

7 Information items

8 New business

Monthly:Accounting cycleBudget reviewOperational reports

7 key ideas

Calendars & agendas

So you can see how we have carried over items from the Board calendar (item #6) and we are reflecting regularly on the status of the strategic / operating plan (item #3). The regular Board meetings should have an agenda that looks much the same each month, though the topics that get discussed, debated and decided will vary depending on who is reporting what from committees or from say some task force that has been established. The primary trick to having efficient meetings, though, is to get all the reports circulated ahead of time and sufficiently ahead of time to allow directors to have read and thought about the contents before they get into the meeting.


The Board in action

7 key ideas:

Rules

Time commitment


Dissent

Conflict of interest

Committees

Calendars & agendas

So, 7 ideas to think about…or continue with. The biggest disincentive to serve on a Board is the sense that you are sitting in meetings wasting your time and that, in the big picture, you are not getting anything achieved. Attend, collectively, to these 7 things and I think you will find yourselves operating in a more productive and rewarding environment. Any questions?





The Board in action


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So now let’s move on to the last session of the morning - Governance and the current (not proposed) By-laws. What are the issues here?



3 areas of change:

CNCA changes

Governance challenges

Business challenges

I get called in to many organizations to “help us rewrite our by-laws to fit with the new Act”. The answer is always the same. Firstly, we don’t rewrite anything - I am not a lawyer and you need to employ one to assist with the drafting. Secondly, it is not the rewriting that matters so much as the thinking that goes before. Looking at the present by-laws, there are three areas where change could and should come from. Firstly, changes necessitated by the Act. Secondly, changes you as a Board want because of operational or other issues you have with the current governance structure. And thirdly changes that are appropriate when you think about the future and where you are going or might want to go. Let’s briefly look at all of these in the context of the present by-laws before we get onto the proposed ones later…



3 areas of change:

CNCA changes

required changes e.g. ex-officio directors, calling of meetings

needed changes e.g. objects / purposes, classes of membership

permitted changes e.g. electronic meetings, board powers

CNCA changes themselves fall into three categories: stuff you have to do, stuff you really need to do, and stuff you should take advantage of.

With regard to the present by-laws, you have a number of issues as indicated. You have ex-officio directors (no longer allowed), the membership structure is “awkward” shall we say, and you can now do things differently and less expensively such as have electronic participation in meetings of members.



3 areas of change:

Governance challenges

functioning of Executive Committee

director recruitment / continuity

plan execution / monitoring

reporting

…

Governance challenges reflect what might be considered operational issues and practical problems you have at present; things that don’t work as well as they might. Examples, as I see them, might be…

The way the Executive Committee is set up under the current by-laws and the way it operates in practice seem somewhat flawed to me. Firstly, why make a subset of the Board notionally responsible for running things? Secondly, if all they do is set the agenda for the up-coming Board meeting then that hardly justifies their existence and or constitutes “managing the affairs of the Corporation”!

Director recruitment and fulfilling the by-law requirements regarding representation e.g. from “labour” (not defined) is obviously challenging!

You are not getting / approving all the financials while being responsible so something is broken there…



3 areas of change:

Business challenges

funding quantum and sources

actual business v. managed business v. notional business

viable plan

organizational structure / capability / capacity

…

And then, not so much the by-laws but the objects of the corporation as notionally set out in the by-laws, give rise to some business challenges. Leaving aside the issue of which version applies(!), does the work of most of the organization’s staff actually meet the specified objects? Is the Board capable of fulfilling its essential governance role (as set out in the present by-laws) and exercising its powers of managing matters in the absence of a proper strategic plan? The point is that this requirement to apply for continuance under the new Act presents you with a marvellous opportunity to get a lot of these issues out on the table and clear things up. I am delighted that CCRW is taking this opportunity to really think through and question a whole range of issues as they related to the business, its operations and the appropriate governance mechanisms. New by-laws are just a by-product of the process; an important one but still just a by-product. It is the thinking and navel gazing that is important. And that is very much a part of what has been discussed by the Task Force on the by-laws and you will continue to have those discussions. The reality is that you have a hard deadline for applying for continuance and it may well be that some matters, especially around the business focus, are not fully resolved and implemented so there is a need to get at least an improved and more appropriate set of by-laws drafted. That’s what the Task Force has been focussed on…



Work to date:Task Force review of current necessitated changesTask Force development of governance changesLegal review of outlined changes

Outstanding items:

Future plan impacts (business challenges)Board acceptance of proposed changes

Accurate legal draftingAcceptance by membershipApplication for continuance by 17th October, 2014

Final Board review

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So where are we? Task Force has done a great deal of the required work. And there has been a legal review done which will assist in the final drafting. The two big issues outstanding are (1) resolving where the business is going and whether and how that will impact what goes into the articles and by-laws (2) Board acceptance of the proposed changes to date. So those two items will form the major part of the rest of the day’s agenda. And in so doing, I hope the discussion on governance and on your collective and individual responsibilities will provide a useful background.

board governance 101 - ccrw...things have to be tailored to the organization. so challenge 1, if i...

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