Roles

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Roles Responsibilities of Board Members of
Community and Voluntary Organisations 4th July
2006
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Exploring the roles and responsibilities of
Board Members of Community and Voluntary
Organisations

• Justine McCarthy
• 4th July 2006

Member of the Eurogroup Consulting Alliance
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Focusing on

• Importance of governance in the non-profit sector
• Governance framework roles and responsibilities
• What is an effective non-profit Board

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Importance of governance in the non-profit sector
Member of the Eurogroup Consulting Alliance
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Why is governance important in the non-profit
sector

• Good corporate governance is even more important
  in the non-profit sector than the for profit
  sector

• Good corporate governance within non-profit
  organisations can make a substantial contribution
  to their success

• Good corporate governance will increase
  organisational credibility, legitimacy and
  transparency

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Characteristics of non-profit organisations

• Passion for mission
• Atmosphere of scarcity
• Bias towards informality, participation and
  consensus
• Dual bottom lines financial and mission
• Outcomes are difficult to assess
• Mixed skill levels of staff
• Participation of volunteers

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For-profit versus non-profit - Key differences in
corporate governance issues
For-profit Non-profit
Ownership
Shareholder
Stakeholder
Shareholder
Stakeholder
Accountability
Profit
Bringing about positive change in society
Organisational objective/motivation
Paid staff Volunteers
Paid staff
Remuneration
Limited for vast majority of non-profit
Unlimited for some private organisations
Liability
Finance/funding
Customers
Donors/government
Shareholders have strong rights given their
financial input
Stakeholders have less rights
Shareholder/ stakeholder Rights
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Governance framework
Member of the Eurogroup Consulting Alliance
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Governance framework and the importance of
relationships
Stakeholders
Board
Directors
Chair person
Company Secretary
Board Committees
Advisory Board?
Chief Executive
Management Team
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Introduction to the role of the Board

• 10-15 people, ideally
• Representative of stakeholders, appropriate
  balance to avoid domination of views
• Meet quarterly, depending on stability of
  organisation
• Time commitment depends, but consideration
  given to time to prepare and attend Board
  meetings work on Sub-Committees etc.
• In absence of a Nomination Committee, the CEO and
  the Chairperson must decide on an effective
  recruitment process for Directors
• Two 3-year terms is recommended, with performance
  review process built in
• Overall development of the Board should include
• Formal induction for Board members
• Performance review process
• Board Away day
• Informal relationship building by Chairperson

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The role of Board members

• Bring a genuine independent perspective to
  enhance decision making
• Act in the best interests of the organisation as
  a whole, rather than any one particular group of
  stakeholders
• Share responsibility for Board decisions
• Devote sufficient time for responsibilities
• Attend Board meetings and be well prepared
• Be up to date with subjects relevant to the work
  of the Board
• Guarantee independence and objectivity
• Challenge when required
• Contribute to any Board SubCommittee

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Board - responsibilities insights

• Key responsibilities
• Act on behalf of all stakeholders (E.g.
  product/service recipients funders members
  staff/volunteers government tax payers and any
  other party that may have a vested interest)
• Provide leadership
• Establish the direction of the organisation (sign
  off on the strategic plan)
• Provide oversight ensuring fiduciary and legal
  requirements are met
• Monitor and improve performance, ensuring
  controls and procedures are in place
• Ensure effective risk management processes are in
  place
• Demonstrate accountability to internal and
  external stakeholders

• Insights
• Degree of involvement in day-to-day operations
  varies depending on size of organisation
• Difficult to recruit Board members
• Challenge meeting expectations of all
  stakeholders
• Importance of ethos and values of volunteers.
  Critical for Boards to recognise importance of
  volunteers
• Strong characters driving Board agenda (Founders
  friends.Hobby horse etc.)
• Board members often volunteers need additional
  support

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Chairperson - responsibilities insights

• Key responsibilities
• Leadership and management of the Board
• Work with the CEO to achieve the overall mission
  of the organisation
• Optimise the relationship between the board
  members, the CEO and the managers and
  staff/volunteers
• Act as spokesperson and representative for the
  Board
• Chair Board meetings

• Insights
• Founders syndrome, over personalising mission
• Ensure time, energy and skill for the role
• CEO role and Chairperson role should be separate
• Check for Purpose creep

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Company secretary - responsibilities insights

• Key responsibilities
• Provide advice and guidance to Directors on their
  obligations under the organisations governing
  instruments, company law, charity law, trust law
  and other relevant laws and regulations

• Insights
• For a non-profit company secretary two key roles
  are
• Liaise between management and stakeholders
• Be responsible for raising and resolving
  Compliance Issues

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Treasurer- responsibilities insights

• Key responsibilities (will vary widely depending
  on nature of organisation)
• Preparing budgets and developing financial plans
  (for capital developments for example)
• Keep financial records, and develop procedures
  and controls
• Oversight for all financial transactions
• Oversight for financial incomings and outgoings
• Prepare annual accounts and present to Board for
  review
• May develop a fundraising strategy
• May co-ordinate fundraising activities
• Keep records of any funding grants and ensure
  money is spent on items for what it was given

• Insights
• Need good financial background
• Increasingly important role
• Transparency is a key objective

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Board committees - responsibilities

• Put in place to focus on ongoing responsibilities
  of the Board. Examples include
• Audit/finance
• Remuneration
• Ethics
• Nomination
• Fund raising
• Also put in place to manage and deliver on
  specific projects, e.g. capital developments
• Must have a Terms of Reference developed for each
  committee
• Meet 3-4 times a year, depending on role
• Membership will reflect the purpose of the
  committee, often chaired by someone other than
  the Chairperson
• Typically 4-6 people on the committee
• Report presented to Board at time intervals
  agreed by the Board

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CEO responsibilities insights

• Key responsibilities
• Carry out the strategic plan and policies as
  established by the Board
• Advise and inform Board
• Oversee design, marketing, promotion, delivery
  and quality of programs, products and services
• Oversee fundraising, planning and implementation,
  including identifying resource requirements and
  potential sources of funding
• Ensure all staff and volunteers contribute
  directly to achieving the goals of the
  organisation

• Insights
• Non-profits often started by someone with a
  strong vision sometimes suffer Founders
  Syndrome
• Separate roles of CEO and Chairperson
• Relationship between CEO and Chairperson is
  critical to effective governance

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Management Team - responsibilities insights

• Key responsibilities
• Develop and manage the implementation of the
  strategic and annual business plans
• As with a for-profit, manage the day-to-day
  operations of the organisation

• Insights
• Some smaller organisation do not have a
  formalised Management Team. Increased complexity
  merits the breaking down of specific areas to be
  managed by separate individuals
• Challenge to put limited resources to the most
  effective use in the organisation
• Volunteers must possess the necessary skills and
  attributes to manage their departments
  effectively hiring talented people is critical
  to non-profit organisations
• Conflict resolution amongst paid and voluntary
  staff

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What is an effective non-profit Board?
Member of the Eurogroup Consulting Alliance
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What is an effective non-profit Board

• Carry out fundamental responsibility to act in
  the public interest and fulfil legal duties
• Provide leadership to assure that
• The organisations mission is appropriate and
  relevant
• The organisation secures, uses and protects its
  assets to carry out its mission and maximise the
  benefits to its constituencies
• An excellent Chairperson is key to a successful
  Board, as well as having the right people with
  the right skills around the Boardroom table
• Act on a fully informed basis, in good faith,
  with due care and diligence, and in the best
  interest of the organisation and its stakeholders
• Where board decisions affect different
  stakeholders groups differently, the board should
  treat all stakeholders fairly and ethically
• Clarity around roles and responsibilities,
  ensuring a balance is maintained between role of
  Directors and Management
• Transparent decision making

(OECD principles on corporate governance 2004)
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Quality of Board members is key to an effective
Board (1)

• Questions to be considered by the Board in
  recruiting a Director
• Has the Board developed a written job
  description?
• Who is responsible for suggesting Board
  candidates?
• Does the Board search process consider diversity
  of needs?
• What specific skills/attributes is the person
  providing?
• What information do we need to provide to
  encourage Non-Executive Directors to join?
• What channels should we use to recruit a new
  Board member?

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Quality of Board members is key to an effective
Board (2)

• Questions to be addressed before accepting a
  Directorship
• What information do I need to know about the
  organisation (strategic plan etc.)
• How has the organisation performed and what are
  its plans for the future (strategic plan)
• What corporate governance framework is in place,
  if any?
• What are the competencies, capabilities and
  weaknesses of the Board and how can I complement
  them?
• What would be my role on the Board?
• How can I add value to the company?
• What time commitment will the position require?
• What risks am I potentially exposing myself to?

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Justine McCarthy

• Justine is a Senior Manager with Prospectus.
  Before returning to Ireland to join Prospectus,
  she worked as a management consultant and project
  manager for System 21 Management Consultants in
  the UK. Prior to this Justine worked with the
  Jefferson Smurfit Group in four of their
  corrugated packaging and printing plants across
  Scotland, England and Wales.
• Justine has worked with companies developing and
  implementing strategies, reviewing organisation
  structures and governance arrangements, and
  working on strategic positioning pieces and
  business cases. As well as working in the
  governance area, Justines main focus is in the
  healthcare sector, last year working for Beaumont
  Hospital in writing their winning bid to become
  the Radiotherapy Treatment Centre in Dublin and
  most recently writing the winning bid for the
  Mater Hospital as the chosen site for the new
  National Childrens Hospital .
• Justine has published a book on Corporate
  Governance with David Duffy called the Management
  of Management, a practical guide to corporate
  governance. It is a hand-book for anyone either
  on a Board or thinking about becoming a member of
  a Board giving practical advice on roles and
  responsibilities and providing checklists for
  Chairpersons and Chief Executives.
• Contact Prospectus at 2603122 if you would like
  to obtain copies of Justines book, The
  Management of Management a Practical Guide to
  Corporate Governance
• To find out more about Prospectus please visit
  www.prospectus.ie