" I just fired my board, every last one of them," said an executive in an e-mail to me this week. "I need board members who will actually do something, and those folks just weren't committed to doing the work."

Now I’ve had many discussions with frustrated executives who have fantasies about firing a few board members, and that’s about as far as it goes, but this exec apparently got away with it. Without diving into technique used to run what was obviously a very good bluff of his board, there is an issue here that bears some scrutiny, and that is confusion about who has authority to do what.  As I travel the country working with boards and executives, I frequently run into some misunderstandings about assignment of authority that could pose some serious risks.

1) Individual board members have no authority.  The reality is that all authority rests with the full board, the corporate body.  By law, a nonprofit corporation must have a board of directors, and that board of directors is granted ultimate authority to run the organization in whatever manner they wish that is consistent with the law.  Individual board members, including officers, have only the authority granted to them by the full board.

2) Executive directors have no authority to do anything beyond what the full board has granted. Each board must choose what will be delegated to their executive. When the executive is actually the founder of the organization, there is often a misappropriation of authority because of what I call “the founder’s syndrome”. When the founder decides to make the organization an incorporated nonprofit, complete with a board selected by the executive, all authority, and virtual ownership, transfers to the corporation governed by the board of directors. The new board often doesn’t realize, or chooses not to recognize, that all authority now rests with them and not the founding executive. Sometimes the executive chooses to perpetuate  that misunderstanding, but the bluff only works until you get a board member who understands who is really in charge, and the potential for problems looms large.

3) Committees have no authority to do anything beyond what the full board has granted.  How many times have I seen a board abdicate authority to an Executive Committee, and then be always suspicious and envious of the work of that committee.  Any committee of the board is subservient to the board and should have a clear charge—job description--from the board that authorizes the committee to do specific tasks for the board.  The board must also demand accountability from all committees to report what they are doing, and bring recommendations for action to the full board.

4) Advisory committees have no authority to do anything beyond what the full board has granted.  Often these are called “Advisory Boards,” which is an invitation to misunderstanding of their authority.  If you have such a committee at all, do not call it a “board,” and write a clear job description, as you would with any committee, that spells out board expectations and assignments.   

5) Boards of directors that operate under the umbrella of another organization’s corporate status, typically have no authority other than what the board of the parent organization has granted.  I frequently work with such boards that believe they are autonomous, and have full authority to run their organization any way they wish.  The reality often turns out to be that the parent organization has chosen to allow that board to operate without interference, but the real authority still rests with the parent board. 

Boards operate successfully in a myriad of ways, and there is certainly not one good model to fit every situation.  None of the above examples are absolutely wrong.  The point is, however you choose to run your organization, everyone involved should be very clear about where the bottom line authority, responsibility and liability rests.  If it takes an attorney to help you figure it out, then spend the money, and get it clarified.  It’s just good business.

My Board Policy Builder is the ideal tool to help you sort out authorities and responsibilities.  It contains over 100 model board policies such as “Board Authority” and “Committee Authority”.  I’m offering it right now on my web site www.cain-consulting.com at a special price.

On the road this spring and summer

Q &A this month

            I’ve received more than the usual number of phone and e-mail questions this month, some new and some that bear repeating.  Here are a few of the more interesting.

Question:  Our board chair cancelled a board meeting the day before the scheduled time, because he said there was not enough business to hold it.  Can he do that, and should he do that?

Answer:  Seems like a simple enough issue, but there are some problems here.  First, the board chair has no power to cancel a board meeting unless it’s spelled out in board policy that way.  Your board policies should dictate who can cancel a meeting, for what reasons, and the process to do so.  Also, canceling a meeting has some other ramifications that need to be taken into account, such as:

• How will the board give oversight to the financials over such a long period between meetings? 

• Is there really not enough business for the board to justify a meeting?  That’s hard to imagine if the board has some good long-range goals that need to be monitored. 

• Is the organization so financially sound that the board doesn’t need to be strategizing about funding? 

• Are there no legislative or public relations issues for which the board could be building advocacy plans? 

• Does the board know so much about the organization and how to do their job that some board development activity would not be valuable? 

The board always has enough business to hold a meeting.

Question:  Our board treasurer has been doing the job for over fifteen years.  He has always done a good job, and provides the board with good reports of financial activity.  That’s the problem—he provides the report.  As the executive director, I have no control over the cash management.  The treasurer moves money from account to account, writes all checks, and I have no say in the matter other than to give him the bills and request checks from him. We’ve had serious problems when the treasurer cannot be found to pay bills or even write payroll checks.  We’ve grown quickly from a very small budget organization to a budget that is approaching a million dollars, so this really has to change.  Any ideas?

Answer:  In very small organizations it is common, and not inappropriate, for the board treasurer to be real hands-on.  But as the organization grows, the treasurer’s job needs to evolve to one of oversight of finance, not day-to-day management of finance.  This is not a turf issue, but rather an issue of giving management the latitude to work effectively.  It is a terrible waste of management and staff time chasing the treasurer around to get a check signed.  Have a sit-down with the board chair and document clearly how the current financial management system is harming the organization.  As always, do not approach it as a personal issue for you, but as an organizational issue.  The board cares about you, but they care much more about the effectiveness of the organization.  Also, ask an accounting professional to help you set up a good system that allows the executive to manage the finance, but also gives the board good oversight.  Look at how similar organizations manage their finances, and demonstrate that your current model is unusual.

Question:  I annually present my executive director’s report to the board about the past year’s happenings and successes, and overview of the upcoming year.  The board always seems very bored with the whole thing, but when I ask if they want me to discontinue it, they always say no.   Any ideas to spice up my report?

Answer:  Consider content and presentation.  Content should be what board members really want, not what you think they want to hear.  Ask them.  You’ll probably discover that your board really wants to hear about the big successes and the vision that you have to move the organization forward in the year ahead. Boards don’t always see the results of their governance decisions, so tell them anecdotes of interesting happenings this year that can be connected to something the board approved.  Use a PowerPoint presentation or a video to jazz up the presentation. 

Question:  A couple of my board members don’t see the need for the board to be involved in writing the long-range plan.  I want them involved.  How can I convince them of the need?

Answer:  I help many organizations write their long-range plans, and I believe it is crucial for the full board to be involved for several reasons:

1) Board members bring perspectives of constituent needs that management and staff don’t have.  

2) If the board is not involved at the beginning stages of the plan, board members will not take ownership of the plan.  Without ownership, they give only weak support of the plan.  

3) The plan determines what the board expects the organization to accomplish, and provides benchmarks for the board to mark progress of the organization throughout the year.  It tells the executive what the board expects.  If the management does the plan and presents it to the board, then the management is making board decisions about what the organization should be doing.

Sincerely,