The article below is an excerpt from the author’s book Successful Nonprofits Build Supercharged Boards:
The importance of setting expectations
Everyone lives with a set of expectations, whether at work, within a family, or in the community. Setting, communicating, and enforcing expectations is essential in our workplaces and in the community, because humans typically seek the norm. That is, most people will conform to what is average among their peers. If your board has two high-performing members, eight mediocre members, and two low-performers, a new board member is likely to be only as involved as the mediocre members.
More important, individuals with the potential to be truly high performers are unlikely even to consider joining a board with only two other high performers. For this reason, boards of directors need to develop, approve, and enforce minimum expectations for all board members.
Reviewing board evaluation data is the first step in identifying expectations that board members already share, as well as expectations the board needs to set. [board evaluation is covered in a prior chapter] Specifically, evaluation data is likely to indicate whether there is agreement on the following:
- Meeting attendance and participation
- Fulfillment of fiduciary responsibility Conflicts of interest
- Committee participation
- Personal financial gifts
- Fundraising requirements
The system outlined in this book will help the board develop consensus on expectations, approve the expectations as policy, and enforce them.
Expectations: Board meeting attendance and participation
Attendance and participation in board meetings is crucial for a functioning board and is essential for board members to fulfill their individual fiduciary responsibilities. After all, how can a member knowledgeably vote at meetings if he or she does not attend a majority of those meetings? [Six Reasons Board Attendance Matters]
Setting expectations for attendance and participation starts at the executive committee level. The executive committee should first review the organization’s by-laws to determine whether this important legal document outlines the attendance requirements and the consequences if someone does not meet them.
If the by-laws address attendance requirements, the executive committee should determine whether those requirements and consequences are still acceptable. If they are, then the chair should remind board members of requirements at the next meeting and document expectations as described later in this chapter.
If the by-laws do not fully address desired attendance requirements, the executive committee must deliberate and make a recommendation to the full board about the number of meetings a board member must attend each year. Additionally, the executive committee’s recommendation (or existing by-laws) should address members who attend only part of the meeting, attend meetings remotely or provide a proxy.
While each board will set its own expectations and must abide by (or change) their by-laws, recommended rules are as follow:
- Boards meeting monthly require attending ten meetings per year; boards meeting bi-monthly, five meetings per year; boards meeting quarterly, four meetings per year.
- Members must attend at least 80% of any meeting for attendance to count.
- If the organization has the capacity to host a conference call or video link, attending a meeting remotely is acceptable as long as the board member has a work or health related reason that prevents attending in person.
- A member who votes by giving proxy to another (if by-laws allow) is not considered to have attended the meeting.
Expectations: Fiduciary responsibility
Since every board member has a fiduciary responsibility, your organization should outline specific expectations regarding the exercise of prudent fiscal oversight. Since legal requirements may vary by state, it is important to consult an attorney in crafting your own board expectations regarding this matter.
At a minimum, board members must meet the following expectations:
- Have a basic ability to read and understand financial statements, including balance sheets, income and expense statements, and statements of accounts receivable and payable.
- Review financial statements before every meeting and ask for an explanation of items they do not understand or that they believe to be unusual, incorrect, or outside of acceptable ranges.
- Review the annual independent auditor’s report and audited financial statements, and vote to accept or reject the auditor’s report. This process usually includes a meeting with the auditor to discuss any findings or issues of concern.
- Review IRS form 990 and raise any concerns before the organization submits it to the IRS.
- Review and vote on salary ranges for all positions. (Note: the board should not vote on the specific salary of any employee other than the executive director.)
- Vote on the compensation for the executive director or CEO and ensure it is comparable to similarly sized organizations in the same region.
- Deliberate and vote on board motions in a manner that protects the organization’s assets while remaining consistent with the organization’s mission and complying with all regulations and laws.
- Avoid all conflicts of interest unless they have been expressly disclosed in writing and the board has properly voted to allow the conflict.At least annually, every board member should certify in writing whether they have conflicts of interest. When unsure whether a conflict exists, board members should disclose the potential conflict of interest. If a conflict of interest is disclosed and allowed by the board, members with a conflict should recuse themselves from any deliberation and from all votes related to the matter in conflict.
Expectations: Committee participation
Since committees do most of the work of a supercharged board, your board needs to have a common expectation about active committee service. An upcoming chapter offers in-depth discussion of the important work that committees undertake, so this section will focus entirely on expectations of committee service.
Serving on a committee enables board members to really connect with a specific aspect of the organization. While board meetings expose all members to a breadth of information about the organization, committee service ensures that members become intimately familiar with programs, finances, human resource challenges, and other aspects of the organization’s operations.
In setting expectations regarding committee service, the board must determine the minimum number of committees each board member is required to join.
The size of the board will, of course, impact the number of committees on which members are required to serve. A five- member board, for example, may need each member to serve on several committees, while a board with fifteen members may require each member to serve on only a single committee.
Just as with board meeting participation, expectations regarding committee work should also provide a definition of active participation. This will include attendance at a specified percentage of meetings and may also address those who arrive late or leave early.
Expectations: A personal financial gift
All boards should expect that each member will make a personal financial gift every year. There are three reasons that 100% board giving is critical:
- Foundation and corporate funders review the percentage of board members who made a financial contribution in the past 12 months. They view less than 100% giving as indicating a weak and disengaged board. As a result, organizations with board members who don’t contribute financially are significantly less likely to obtain grants.
- Board members should be actively involved in fundraising, but they cannot ask others to give without having made a personal donation themselves.
- Board members who are donors typically have a stronger sense of investment in the organization’s mission and success.
If your board does not already require an annual personal gift from each board member, officers need to guide the board in reaching agreement on this expectation. Such guidance is critical because conversations about money can be quite difficult and uncomfortable. As with other difficult conversations, it is best to discuss this matter directly and openly.
If any officer of the Board has not made a gift in the past twelve months, the first step is to get financial buy-in from each officer. This may mean the board president meets with officers individually to discuss the importance of 100% board giving and to solicit a personal gift.
Once each officer has made a personal financial gift, the executive committee can determine an appropriate policy recommendation for board approval. Boards typically set the minimum board giving in one of the following ways:
- As a minimum dollar amount. The stated dollar amount could be as low as one dollar or as high as thousands of dollars. This method provides real clarity about the minimum acceptable gift, but has two primary drawbacks. If the minimum amount is set too high, potentially good board members may be unable to serve. If set too low, some board members with greater ability to give will still give the minimum acceptable gift.
- As a top philanthropic priority. Many organizations ask board members to place the organization among their top three philanthropic priorities. This approach recognizes that board members may have other philanthropic commitments, while helping guide their decision about the amount to give relative to their other gifts.
- As an undefined commitment, such as stating “everyone must make a gift at least once a year.” This is the least effective policy, as it gives no guidance to board members.
The Executive Committee should present this clearly defined board giving expectation to the entire board. After developing an expectation supported by a majority of members, the board should pass a motion requiring that each board member make an annual contribution to remain in good standing.
Expectations: Fundraising and relationship management
While fundraising and relationship management strategies are discussed in an upcoming chapter, the board should establish basic expectations for board member involvement in fund development. This process should begin in the development or fundraising committee. If your board does not have a functioning development committee, then the executive committee should start the process of forming a policy while also establishing a development committee.
In recommending an appropriate minimum amount for each board member to raise, the development committee should discuss the fundraising efforts they are individually willing to undertake and existing fundraising opportunities available to board members.
Additionally, the development and executive committees should determine the appropriate number of relationships for each board member to manage. The chapter on fundraising will provide greater depth on this topic, but essentially each board member should help cultivate relationships with a small number of individuals, foundations, and/or corporations. This can be as simple as keeping them up-to-date on the organization’s progress and personally inviting them to important events.
The committee should present to the Board a formal proposal for board fundraising expectations that includes:
- The annual minimum each board member should raise
- The minimum number of relationships each board member should manage and cultivate
- A statement that continued board service requires meeting this expectation
Documenting expectations for board service
The process of developing expectations is finalized with a one- page document that outlines the basic expectations of board service and the manner in which they are enforced. Each current board member should acknowledge they have received the document, and it should become an integral part of the recruitment and orientation of new board members.
A sample board expectation document is provided at the end of this chapter.
Enforcing expectations for board service
For this reason, the enforcement mechanism must be intrinsic and occur without any deliberation or vote. Too many boards create an enforcement mechanism that states a board member “may be removed” for not meeting expectations. However, these boards rarely vote to remove under-performing board members, which then undermines the expectation for all board members.
When considering possible enforcement mechanisms, the executive committee should ensure their proposal is consistent with the organization’s by-laws. If the recommendation is not consistent with the by-laws, the proposal must also recommend appropriate revisions to the by-laws.
Once expectations are approved, documented, and acknowledged, the executive committee is charged with ensuring that board members meet them. Each executive committee meeting should review a dashboard indicating each board member’s status, which should require less than five minutes to review and discuss. An example is below:
After reviewing this report, the executive committee assigns its members to contact those at risk of not meeting expectations.
If, for example, the board requires attendance at 10 of 12 monthly board meetings, an executive committee member would reach out to Jon Johnson and encourage his attendance at the last three meetings of the year because he has already reached the maximum allowable number of absences. In this conversation, Jon may indicate that his job will prevent him from attending meetings for the next three months and either ask for a leave of absence or offer to resign from the board.
The personal communication from an executive committee member is essential because an under-performing board member should be given every opportunity to meet expectations.
Additionally, every board member receives a personal status report showing his or her own summary of attendance, donations, fundraising success, and conflict of interest compliance. These individual reports are typically prepared and sent by a staff member before each meeting.
Placing a Board Member on Leave of Absence
If the enforcement mechanism includes an automatic leave of absence for an under-performing board member, the process for placing a member on a leave of absence can be a positive experience for everyone.
The officer assigned to communicate with an under-performing member should do so with the utmost respect and compassion. The conversation may start by asking what is preventing the board member from meeting the expectation. Most often, the board member will cite unexpected work or family issues. Perhaps the member is now doing the job of two people due to a workforce reduction, or perhaps he or she has recently begun caring for a sick parent or child.
At this point in the conversation, the board officer needs to communicate that the member brings great skills and assets to the board but the organization needs every member’s full participation, citing the specific expectation that is not being met.
Then the board officer can communicate, again with compassion, that the member will be placed on leave of absence from the board until the work or family situation allows the member to return to full service. During that time, the member will be relieved of all board responsibilities to concentrate on the other issue(s) that are preventing full board commitment.
The board officer should offer to follow-up in three months. The officer should also let the board member know to expect a letter from the board president confirming the leave of absence.
When leaves of absence are used, it is essential that the board follow-up with the member who is on leave. First, the board president must send the follow-up letter referenced above. Additionally, it is important that a board officer actually follow-up at the established time to ask whether the member is able to return to full board service. This follow-through demonstrates that the organization sincerely values the person’s previous service and that board representative’s compassion is genuine.
At the three-month follow-up, most people on a leave of absence will either express an ability to return to full board service or offer to resign, having come to the realization that they will be unable to meet the expectations of board service.
Terminating an Under-Performing Board Member
If the enforcement mechanism is automatic termination, the executive committee should once again communicate this with the utmost compassion. A member of the executive committee should personally speak with any board members being terminated to inform them of their removal from the board.
In this conversation the officer should (a) thank the member for previous service and point to a specific contribution the board member made; (b) explain that the decision was not personal and remind the member that termination is automatic based on the enforcement mechanism; and (c) explore other ways the person can be involved in the organization.
This post is an excerpt from the author’s book Successful Nonprofits Build Supercharged Boards. Purchase the book on Amazon if you’d like to learn more about evaluating your board, setting and enforcing expectations, building rules of engagement, creating a healthy relationship between the board and executive, board recruitment, and orientation.