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Tip #60 Know the Truth. Three Common Nonprofit Board Myths.

 

Myth #1 Board Members Can’t be Fired

Last year, shortly after the news broke that Florida GOP Rep. Ted Yoho had a highly inappropriate exchange with Democratic Rep. Alexandria Ocasio-Cortez, there came a second headline: Ted Yoho Resigns from the Board of Bread for the World. The organization sought Yoho’s resignation claiming his actions and words were “not reflective of the ethical standard expected of our Board of Directors.”

In the nonprofit world, this caused a bit of a stir. A board member fired? How does that happen? The Yoho case is an extreme one, where actions were in clear violation of ethical guidelines. But what about the less extreme bad board behavior so many nonprofits deal with, e.g., no-shows for meetings, requests for personal favors, lack of engagement.

There are a plethora of resources when it comes to determining when and how to let a poorly performing employee go, but the board seat is often deemed a safety zone. Once there, you can’t be touched. Not only is this a myth, but it’s also a dangerous myth. Board members are fiduciaries of the nonprofit they serve, but they are also volunteers. While understanding your governance structure and bylaws is crucial to even investigating how to remove or discipline board members, it is not an impossibility. As with employee matters, the more documentation you have – both of expectations and behavior – the less dramatic a parting of ways will be.

Myth #2 Roberts Rules is the Law

It may be in your bylaws to follow Robert’s Rules of Order, but there is no legal requirement to do so. The popular tome has been in use since the mid-1800s and, in the sector, has become the norm for the governance and structuring of boards and meetings. The thing is…these rules do not fit every board. Perhaps your board is more casual and reaches consensus or majority decisions through a more conversational style. Perhaps your agenda doesn’t follow the customary order of reporting. It’s ok … you can make your own rules. The thing is, you do need to have rules (parliamentary procedure) for your meetings. We’ve all found ourselves in unwieldy committee meetings where no procedure model was in place. As cumbersome as the rules seem at times, they prevent even more inconvenient outcomes like… 

  • Misinterpretation of decisions
  • Lack of records
  • “Who’s the Boss” scenarios in the board room
  • Lots of discussion with no decision

 If your board is on board with it, consider small changes to make your meetings flow and be more dynamic, i.e., a modified agenda, alternating who leads meetings, or even having a custom protocol for dissenting opinions.

Myth #3 Board Members Can’t Profit from Their Work for the Organization

It’s pretty widely accepted that U.S. charities are primarily volunteer-led and therefore they don’t pay salaries or wages to board members. A common assumption then becomes that a board member can’t be paid for services to the organization outside their board duties. This is false.

Unless prohibited by an organization’s bylaws (and in few cases, state law) a board member can enter into contracts or provide paid services or goods to organizations where they serve. There is a need to throw an abundance of caution toward these situations, however. Not only can this appear less than proprietary to outsiders, but there is also a risk to the parties involved (see a scary legal synopsis here and some equally scary IRS penalties here). It also becomes a stewardship issue if not carefully managed. Consider these examples:

 A board member is an attorney and becomes the go-to for legal filings and counsel. Over time, your organization ceases “shopping” for the best rate and subsequently overpays.

  1. A board member provides copywriting services to your organization for payment. Over time, they miss deadlines and provide poorly prepared pieces. Since they are a director, the ED is nervous to hold them accountable and no board members wish to confront the situation.
  2. Your organization budgets $10,000 for a venue rental for an upcoming gala. A board member who is part owner in a venue proposed the organization use his/her space. Conveniently, the venue’s fee is $10,000. The board and director are left wondering if the fee was based on the budgeted amount or the normally charged rental fee.  

There is a reason these situations are required to be carefully documented in conflict-of-interest statements that accompany a charity’s Form 990…they represent a conflict between the interest of the organization (best stewardship of funds for maximum benefit) and the interest of a business/businessperson (maximized profit).

If a board member is capable of providing a service or product, they are probably just as likely to oversee a non-conflicted company or individual, and that may be the best way for them to use their gifts and experience to benefit a mission they serve.

If your organization does desire to conduct paid business with a board member, consider these precautionary measures:

  1. Take a vote. Make sure all on board and that all potential conflicts are discussed.
  2. Ask the member to recuse themselves from discussion and votes related to the matter in which they serve. See example #3 above. If the board member didn’t know the amount budgeted for the venue, the conflict would be diminished.
  3. Invite impartial review. Consider asking an attorney or non-governing sub-committee to oversee the board member’s work and contract.
Katie Appold

Katie Appold, MPA
Executive Director | DO MORE GOOD

DO MORE GOOD is a registered trademark and not permitted for unauthorized use.
DO MORE GOOD is a registered 501c3 tax-exempt organization founded in the State of Michigan.

 

 

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