This is the last of a three part series on nonprofit board management. Read part one here.
The point of a robust, well-planned orientation is to make sure new board members feel ready to contribute on day one by being:
Board members who walk through the doors feeling this way are your most engaged and productive board members. They are the organization’s future leaders.
Beyond financial loss, directors can be sued for harassment, wrongful dismissal, or failing to have appropriate policies to avoid bad situations with employers, volunteers, or the community they serve. |
The binder is for new board members to read, review, take notes and write questions in the margins. The binder should be sent out to the new board member ahead of the in-person session and should also be available in an electronic format for those who are comfortable with information provided in this manner.
Here is a checklist of what should be included in the board orientation binder:
The chair of the board, executive director, chair of the board development committee (who will run the meeting), lead program person and chief fundraiser should attend this meeting with the new board members.
Agenda (allocate a maximum of 90 minutes):
Ensure each new board member understands the scope of the responsibility they are taking on. They should be aware that they could be held personally liable for any acts or omissions the board makes. For example, if a board member makes a financial decision that results in the loss of the organization’s assets, the nonprofit could be hit with third-party claims. Creditors will make attempts to recapture loss by suing not only the nonprofit, but the directors and officers as individuals as well. Beyond financial loss, directors can be sued for harassment, wrongful dismissal, or failing to have appropriate policies to avoid bad situations with employees, volunteers, or the community they serve.
“Directors and officers of nonprofit organizations are required to exercise the same degree of commitment, attention and care as directors of for-profit corporations,” says Jamie Saunders, Account Executive at the Axis Insurance Group, a Canadian insurance brokerage conglomerate that specializes in nonprofit insurance. “While it is true that there are no profit oriented shareholders in a nonprofit setting, the organization is still operated for the benefit of some group of persons. Employees, creditors, customers, members, regulators and many others are all potential plaintiffs against directors and officers of nonprofit organizations.”
Regardless of how frivolous the claim if a director is named in a lawsuit, and there is no insurance in place, they will be personally responsible for the costs of hiring a lawyer to defend the case and any resulting award or settlement. This could mean their house or livelihood is on the line.
This makes having a directors and officers liability insurance policy particularly important as lawsuits become increasingly common in Canada – it removes the risk from the individual board members. Ensure all members are aware of how their policy protects them in the event of a lawsuit.
Learn more about the Axis nonprofit insurance program
The prospective board members have been vetted and voted onto the board; they have received a thorough orientation. Now their work begins as full-fledged directors.
But the work of the board development committee is not over: evaluating the board’s work is a key function of this committee.
There are many evaluation templates and tools available to assess:
Whichever tool is used – one presently available or one designed by the board development committee – it should consider:
The key to this evaluation process is what the board development committee does with the information it receives. The overall purpose is to strengthen the board so that the organization is well served in meeting its mission and driving to its vision.
The responses to the evaluation questions may determine the need for education for board members, e.g., what is governance vs. management, what are the key elements of a fundraising campaign, how to facilitate meetings, etc. It may point to the need for more strategic thinking, perhaps through the strategic planning process. It may showcase conflict or dissatisfaction with the board chair’s abilities; this in turn may lead to reappointment of officers, the removal of a board member or learning how to reach consensus on difficult matters.
Finally, the evaluation will assist the board development committee in understanding what is needed during the ongoing recruitment process and how to strengthen the orientation program.
A well-functioning and engaged board of directors plays a critical role in the success of an organization. It is linked to the retention of senior staff members, success in reaching organizational goals and an enhanced credibility of the nonprofit and its work. This type of board is not formed by accident; it takes a thoughtful investment of time and energy through the leadership of a board development committee.
If you would like more information on nonprofit risk management, or have any other insurance-related questions, please don’t hesitate to reach out.
Vivian Smith, CFRE, is known for her commitment to philanthropy and her passion for the fundraising profession, which has led her to become one of the most respected and sought-after advisors to the charitable sector in Canada. Recently, after 17 years managing her own consulting firm, she took on the role of executive director for the Langley Memorial Hospital Foundation. Vivian is active in the Association of Fundraising Professionals as a Master Trainer and a director on its international board. She is also a director on the board for the Greater Langley Chamber of Commerce and a frequent presenter at conferences and educational sessions throughout North America. |