Ten Simple Tips for Good Governance (What I Learned from PANO)

The end of the year is quickly passing. At the end of October, Liz and I attended the PANO Standards for Excellence consultant training. The session was full of very beneficial information. Liz wrote this article summarizing some of what we learned on good governance in our firm's newsletter for nonprofits and I wanted to post it here as well.

1. If your Mission Statement is more than 1 sentence, it is probably too long.

2. Review your Mission Statement every three years. Document your review and approval of the Mission Statement by clearly noting it in the Minutes.

3. Your Minutes should include who was present--identified as Board or staff, who was absent, the type of meeting, what was done not what was said, the start and end times and should be signed by the Secretary.

4. Question to ask when reviewing financials “Are all the bills input (whether they are paid or not)?

5. Every organization should have a Reserve Policy. 3-6 month Reserve is recommended.

6. 3:1 ratio is minimum when looking at funds raised vs. expenses (some exceptions apply)

7. If you are soliciting gifts in other States, you need to be registered there. Use a service like Labyrinth, Inc. to assist in the process. http://www.labyrinthinc.com/

8. Conflict of Interest Policies are not just for the Board-but for anyone who has decision making authority for the organization including staff and volunteers.

9. If your organization is involved in Lobbying, even a little bit, consider making the federal 501(h) election. The h election is an expenditure test that answers the question of whether your organization is doing too much lobbying by examining how much you spend on lobbying (lobbying expenditures).

10. Invest in the Standards of Excellence Educational Resource Packets. They are inexpensive and chock-full of great information.

Energized by the BoardSource Conference

I have just returned from the annual BoardSource Leadership Forum in Orlando, FL and I am re-energized to advance the cause of good governance. It wasn’t just the 80 degrees weather, the palm trees, the lake view, and the sound of the multiple waterfalls outside. (Although I suspect an environment like this on a daily basis could only continue to create energy) It was the reinforcement of what can be accomplished in any organization when they are established on a firm foundation.

We have worked with nonprofit organizations for over 25 years. Some organizations accomplish their goals very effectively. Their programs work, they are good at attracting donors and volunteers, and even in these difficult times, they are strategizing ways to continue on. Other organizations are not so effective. The key ingredient that is missing from the less effective nonprofits? Good governance.

The popular definition site, “Wikipedia” defines governance as: “consistent management, cohesive policies, processes and decision-rights for a given area of responsibility” We see it as the cornerstone for the foundation of a well run nonprofit.

BoardSource’s own site says it best “dedicated to advancing the public good by building exceptional nonprofit boards and inspiring board service” They accomplish this by focusing on Board governance and provide numerous resources and training on Board structure, meetings, legal issues, policies, financial management, etc.

My next couple of posts will focus on some of the great governance messages from the BoardSource conference.