Board Orientation – An Excerpt from “The New CEO’s Guide”

August 18, 2015
By Beth Brooks, CAE

I am excited to announce that earlier this month I released my first book, The New CEO's Guide: For new, aspiring or current association Executives (published by ASAE).

In my role at TSAE I council and guide many first-time association CEOs. I have taken that information and coupled it with advice from other experienced CEOs to create a useful guide for new or aspiring CEOs.

The book is available online at the ASAE bookstore, but you can read an excerpt below on the importance of Board orientation (which I am holding for our own new Board members later this week).

Need to hold a Board orientation for your association? TSAE’s new Executive Consulting Services includes Board Orientation and Strategic Planning facilitation by experienced association executives. Learn more

Why Do You Need to Offer Board Orientation?

An excerpt from The New CEO's Guide by Beth Brooks, CAE

Holding an orientation for the full board or new board members allows you the time to fully explain their roles and responsibilities, any legal concerns, and the organization’s finances and strategic initiatives. You may decide to bring in an outside association consultant to facilitate the orientation, Often, hearing this information from an association expert is more powerful than hearing it from staff, especially when talking about roles and responsibilities of CEO versus the board. Even if you bring in a consultant, there are some association-specific topics that you should cover as the CEO, including the strategic plan, financials, and policies. This is your opportunity to show your knowledge of the internal operations, introduce the staff, explain any issues of concern that you have uncovered, and update the board about trends in the industry that may affect the association. 

Bob Harris, CAE, founder of the Nonprofit Center and association consultant, lists the following excellent reasons why you should do board orientation. I recommend that you use these points as part of your discussion with the chairman if you have never had an orientation and as your outline for orientation training if you are doing it on your own. 

  • Legal Protection for the Board. The board should be aware that directors and officers (D&O) liability insurance defends against a suit. Protection is supplemented by the doctrine of volunteer immunity, indemnification, and the corporate structure. If you don’t have D&O insurance, you will want to talk with your chairman and recommend that the association purchase this insurance. Telling the board what insurance coverages the association has should be part of the orientation.
  • Documentation. Directors must comply with the fiduciary principle of “duty of obedience.” It requires that they abide by the governing documents (articles, bylaws, and policies). If a court were to ask a director, “Did you receive the governing documents?” the minutes should affirm that they were officially distributed or accessible at orientation. Review the bylaws and board policies during orientation and have board members sign a commitment form acknowledging they understand their roles. A commitment form, that each board member signs and is kept in the office, confirms that the member understands and will abide by association policies likes conflict of interest and antitrust. If an issue comes up during their term, you can refer to the commitment form that they signed.
  • IRS Form 990. On this required form, the IRS asks a series of questions, including whether the board reviewed the IRS Form 990 prior to its submission. Orientation is an opportunity to acquaint directors with the latest return. After that, the Form 990 should be reviewed and approved during a board meeting each year.
  • Public Records. Volunteers may think the organization’s minutes, finances, and rosters are subject to open record laws and the Freedom of Information Act and that they must give these to any member who requests them.  This is not entirely accurate. Inform the board that the IRS Form 990, the Application for Exemption: Form 1023 or 1024, and the Letter of Determination are public records, and educate the board regarding the potential fine for not making these three IRS documents available upon request. Failure to provide the documents may be subject the association to a penalty of $20 per day for as long as the failure continues, up to $10,000.

Copies must be provided immediately (or by the close of business on that day) in the case of in-person requests and within 30 days in the case of written requests. Reasonable copying fees and postage may be charged.

Associations should have procedures so staff members know of the public record IRS requirements. A simple method is the creation of a notebook or virtual folder in a shared drive or on a service like Dropbox, labeled “IRS Public Records.” The file should include PDF copies of the annual IRS Form 990 for the past three years, the application, and letter of determination.

An alternative and acceptable response to providing copies is to make the documents widely available by posting them on the internet. They can be posted on the association’s website or made available at a site such as Guidestar.org.

  • Antitrust Violations. The Federal Trade Commission expects associations to have antitrust avoidance measures and policies in place. Orientation is a good time to educate the board and to document in the minutes that these measures exist. Again, if you don’t have this policy, help the board develop one.
  • Conflicts of Interest. Because the IRS asks (on the Form 990) if a policy exists to “disclose conflicts and how they are monitored on a regular basis,” dealing with conflicts of interest is a topic for orientation. Potential conflict scenarios should be discussed, and members taught what to do if they have conflicts of interest. Many board members will have questions about this topic, and orientation can be the perfect time to discuss them and firmly state policies of the association.
  • Authority. Directors may think a seat on the board gives them authority to speak for the organization. You will avoid confusion and conflict down the road if you delineate the lines of communication at orientation. Discuss various scenarios and solicit reactions. In the legal principle of apparent authority, it has been established that when a person appears to be an agent of the organization, the organization can be held responsible. So you want to be clear about who speaks officially for the association—it is usually the chairman or the executive director—and what to do should any board member get calls from the media. It is not wise to have board members making statements and representing themselves as an authority speaking for the association.
  • Values. Organizations develop a culture of ethics and values that guide governance. Use orientation to discuss the board’s values, such as transparency and diversity. If the board has not spelled out core values, this is another useful board discussion at some point.
  • Strategic Direction. Orientation is the time to review progress of the current strategic plan. Update the new board members on the progress of the initiatives. If you don’t have a strategic plan, discuss the need to develop one. Note: The discussion about the need for a strategic plan would be with the entire board, not at new board member orientation. 
  • Partnership. At the conclusion of orientation, directors should understand that their role is governance, not management. This concept might take some explaining, but the differences are important to fully understand. Many boards spend their time micromanaging the CEO when they don't know what their respective roles are or if they don't have a strategic plan to follow. They might start questioning or taking over duties of the CEO. One board I know of bypassed the executive director and hired a full time membership recruiter who had no background in sales, association management, member recruitment and retention, or member databases. The board then proceeded to direct the actions of this staff person with no involvement of the Executive Director. This kind of divisive action only harms an association. It takes the partnership of board and staff to advance the organization.

If you follow Harris’ guidelines, the board’s productivity will improve after you ensure that everyone is up to speed. Orientation is one area where you can make a big difference and it will significantly enhance how you are perceived as a leader. Providing this education will cement a good partnership in working with the board. It shows your expertise and clearly defines the roles of the board in relation to you and the staff.

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