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Governance Gone Wild: 5 Common Mistakes Boards Make

governance-homepage-image-slider-2 In my experience, governance issues are always top of mind for association executives. Countless articles and books have been written about how they can manage their boards most effectively. Because we knew this was such a critical area, we developed Fonteva For Associations with robust committee management features, such as defining and assigning committee positions and management structures, communicating with entire committees, tracking, publishing and distributing committee documents and minutes; and creating individual committee calendars and discussion forums. Certainly, while it’s an important component, we recognize that good governance goes beyond effective committee management. Ongoing attention to how people, processes, and politics are managed is critical. Recently I came across an article by Ellis M. Carter, an attorney at Carter Law Group in Phoenix. Carter outlines the top 10 nonprofit governance mistakes from a legal perspective. Here I’ve briefly summarized five of her key points.
  1. Failing to understand fiduciary duties. It is no longer sufficient to rubber stamp committee or staff recommendations or to simply “abstain” from dicey decisions. Today, board service comes with real responsibilities and real consequences for those that fail to live up to them.
  1. Micro-managing staff. The board’s key duties are to provide oversight and strategic direction, not to meddle in the organization’s day to day affairs. Similarly, staff should not invite micromanagement by asking the board to take on day-to-day tasks that the staff should be handling. The size and budget of smaller organizations necessitates some blurring of these lines, but board members and staff should know their roles and attempt to adhere to them as much as possible.
  1. Lack of awareness of laws governing tax-exempts. It is essential that directors of tax-exempt entities be aware of the various federal, state, and local laws that apply to the organization. Many directors are unaware whether they are governing a private foundation, a public charity, a supporting organization, or another form of tax-exempt entity, all of which are subject to different limits on their activities.
  1. Operating with outdated, inconsistent governing documents. Over time, many organizations change their mission and purpose without updating their governing documents. Similarly, many organizations develop governance practices that do not comply with their original governing documents.
  1. Airing disagreements outside the boardroom. Every board’s motto should be “what happens in the boardroom stays in the boardroom.” Inherent in the duty of loyalty that all board members must adhere to, is an implied duty of confidentiality.
None of these issues may be a concern for your organization. However, it’s probably good to keep a mental check on these areas to be sure that your governance hasn’t gone wild.
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