With between 300 and 400 nonprofits in La Plata County, a lot of boards of directors have oversight responsibility for their organizations.
But what does that mean?
“Boards have the duty of care, loyalty and obedience,” said Daniel Harris, senior vice president, Business Initiatives consultant, Philanthropic Services for Wells Fargo Private Bank. He gives presentations and classes about effective board membership around the state. “The duty of care includes the statutory trust law about fiduciary responsibility, being aware of what’s going on, preparing for meetings, and the most difficult, asking hard questions.”
Loyalty pertains to avoiding conflicts of interest or achieving personal gain from a decision made from a board’s decisions. And obedience is about being faithful to an organization’s mission.
“Boards have a strong desire to avoid conflict,” Harris said. “But not only is it OK to have disagreements and discussions, boards should.”
Most local boards don’t provide training to incoming board members, said Paulette Church, former executive director of the Durango Education Center and current director of the Nonprofit Management Program. She could think of only three out of the hundreds located here that do.
“My hunch is that for most boards, they just learn it as they go along,” said Rich Hoehlein, who sits on several local boards and has taught classes about being an effective board member. “But board training is something nonprofits really need.”
Harris and Church agree.
“A recent study showed the importance of strong orientation,” Harris said, “beginning with recruiting. Boards need job descriptions, people need to understand why they’re being asked to sit on a board and what will be expected of them, as well as understanding why they want to serve on a board.”
All three said fiduciary responsibility is the single most important duty of a board member.
“But in my experience, fewer than 20 percent, 2 out of 10, board members have the ability to read financial reports and understand them,” Church said.
Every board should review the financial situation and balance sheet at least quarterly, she said, and someone on the board needs to look at the checkbook reconciliation monthly, which helps to evaluate cash flow. Church also thinks the auditor should present the audit results directly to the board, so they’re not filtered through an executive director.
“It’s just so easy to be driven by passion, but the job is to keep the nonprofit going, and if they don’t have the information or skills, they can’t do their job as board members,” Church said.
It’s not easy, Hoehlein said.
“Unless they come out of a financial background, it’s not exciting, it’s kind of dry, there are a lot of details,” he said. “But you better suck it up and pay attention.”
This is not meant to be a discouragement for serving, Harris said.
“I don’t want people to read this and think, ‘I don’t want to be on a board,’” he said. “Every single person who sits on a board could be doing something else with their time. But their service is invaluable to nonprofits.”
abutler@durangoherald.com
To learn more
The Community Foundation Serving Southwest Colorado is planning to host the Community Resource Center in the fall for a day-long training for board members. More information will be available as the date approaches.
Dan Harris recommends these resources to learn more about serving effectively on a board:
BoardSource at www.boardsource.org, a nonprofit committed to helping individuals and boards become more effective.
Mario Maurino’s book, Leap of Reason: Managing to Outcomes in an Era of Scarcity, and www.leapofreason.org.
Peter Drucker’s book, The Five Most Important Questions You Will Ever Ask About Your Organization.
