Governance (CA-GOV) 5: Governing Body Responsibilities
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PurposeThe organization's governing body guides and supports the planning, development, and achievement of the organization's mission and goals.
- The governing body is ineffective, inactive, poorly organized, or does not otherwise fulfill its fiduciary responsibilities; or
- The executive director dominates the governing body to the extent that it does little more than ratify decisions already made by the executive director.
|Self-Study Evidence||On-Site Evidence||On-Site Activities|
- adopting policies;
- reviewing policies at least every four years and when legislation, regulations, contracts, and programs change;
- adopting any changes to policies resulting from recommendations; and
- evaluating management’s implementation of policies.
InterpretationAn organization that follows a policy governance model may not typically develop, ratify, and maintain statements known as “policies.” However, distillations of the organization’s principles, philosophies, practice, or “ends” may be considered policies for the purposes of this standard.
For organizations with Boards that delegate the responsibilities for adopting, reviewing, changing, and/or evaluating implementation of policy to the Executive Director, evidence of presenting and discussing with the Board, any changes, additions, etc. related to policies should be reflected in the Board minutes to demonstrate Board involvement.
Policy setting is viewed as the board's major means of providing a framework and guidance for the organization's overall direction.
- Governing body practice related to one or two of the elements could be strengthened in some minor way.
- A systematic review of policies has not been conducted for more than four years; or
- In some instances, organizational policies have been implemented prior to, or without, governing body review or approval; or
- The governing body review of management implementation of policies is sporadic.
- The organization's executive director approves policies without involvement of the governing body; or
- One of the elements is not addressed at all.
- works with management to evaluate the organization's financial capacities and the resources needed to provide services;
- works with the CEO to secure adequate resources to implement the organization's strategic planning and budgeting decisions; and
- oversees fundraising activities including establishing fundraising targets and goals that flow from the strategic plan.
Examples: While not all organizations fundraise, it is a vital means to achieving a flexible revenue base and is a traditional role assumed by nonprofit governing bodies. Strategies for resource development can include, for example, fundraising, grants, contracts for service, and new business development opportunities.
- The link between resource development and strategic goals and objectives needs clarification.
- Management is largely responsible for resource development with the governing body taking a secondary role while providing limited oversight of management's activities.
- The governing body is not involved in resource development.
- appointment of the executive director;
- collaboration with the executive director;
- delegation of the authority and responsibility for organization management and policy implementation to the executive director;
- oversight and annual evaluation of the executive director's compensation and performance against the organization’s strategic goals and additional responsibilities outlined in the CEO’s job description;
- approval of the executive director's employment activities outside of the organization to ensure they do not interfere with her/his administrative responsibilities; and
- evaluation of the effectiveness of its partnership with the executive director, at least every two years.
In addition, criteria for evaluating compensation may include, for example: compensation paid to other CEOs in similar positions, compliance with regulations and guidelines regarding reasonable compensation, cost of living considerations, and the total professional experience of the CEO including advanced degrees and other experiences and skills that uniquely contribute to the success of the organization.
- There is minor confusion or overlap as to the relative roles of the governing body and the executive director (e.g., resource development); or
- The governing body annually reviews the executive director's compensation but could improve the quality of its analysis with industry practice and/or federal requirements.
- The governing body evaluates the executive director's performance less than annually; or
- The evaluation of the executive director is informal (not written, dated, or signed); or
- The evaluation of the executive director is not comprehensive or does not use specific performance criteria; or
- The executive director is not involved in the evaluation process; or
- The executive director has not received governing body approval for unrelated external business activities; or
- The governing body does not evaluate its partnership with the executive director.
- At least two of the elements are not addressed at all.
- critical positions within the organization and their key leadership and management functions;
- under what conditions interim authority can be delegated for those positions, including unexpected leadership disruptions and planned departures, and the limitations of that authority;
- to whom various leadership and management functions will be delegated;
- governing body and staff responsibilities as they relate to transition planning;
- how succession planning and leadership transitions will be communicated to the governing body, staff, and other relevant stakeholders; and
- mechanisms for assessing readiness to assume leadership positions and for providing training, mentorship, and other leadership development opportunities to support readiness.
Interpretation Organization staff may be responsible for assessing different areas of risk throughout the year and sending the results of the assessments to the governing body to inform its annual review of overall risks.
Examples: Areas of potential risk can include, for example:
- compliance with legal requirements;
- disruption of operations due to a public health emergency;
- technology and information management;
- insurance and liability;
- health and safety of administrative and service environments;
- human resources practices, including use of independent contractors and volunteers;
- contracting practices and compliance;
- client rights and confidentiality issues;
- financial risks;
- public relations, branding, and reputation; and
- conflicts of interest.
- fraud and misuse of funds;
- tax liabilities;
- physical assets and financial information;
- fundraising practices;
- funding of benefits, including health retirement benefits, pensions, etc.; and
- deferred revenue.
Practices are basically sound but there is room for improvement; e.g.,
- While the governing body assesses risk annually, risk related to different aspects of the organization are reviewed by the board at different times of the year, inhibiting its ability to comprehensively assess overall risk.
- The governing body has not conducted a risk assessment within the last two years; or
- Documentation of the annual risk assessment in minutes is weak or missing.
- A comprehensive risk assessment has not been conducted for more than two years or did not involve the governing body.