Chapter Board Member Orientation

- [Beth] Hello. My name is Beth Brooks and I'm the executive director for the Texas College of Emergency Physicians. And I serve on the ACEP national chapter relations committee. I want to congratulate you and thank you for serving on your chapter board. Being a part of the board can be very rewarding. You know, you get to work with dedicated professionals, really get to know the association and be part of moving an organization forward. This online program was created by a subgroup of the ACEP national chapter relations committee. The members who worked on this with me are Jason Langenfeld, board member from the Nebraska chapter, Andrew Zinkel, board member from the Minnesota chapter and Maude Hancock, who works with ACEP. President Theodore Roosevelt in 1908 said, "Every man owes part of his time to the business or industry to which he is engaged. No man has a moral right to withhold his support from an organization that is striving to improve conditions within his sphere." This quote epitomizes the essence of associations. A common way for people to give back to their profession is through service as a volunteer member. Serving on the board of a professional association is usually a high point of a member's career. The unique structure of associations practically guarantees that anyone joining a board needs training to understand the role, to be effective and to help the association thrive. This orientation is a broad presentation on the responsibilities of being a board member. This applies to all chapters, large and small. There are many things that are chapter specific which we won't be able to cover today. You will need to ask for this information from your chapter leaders or staff. Some of those areas that you'll need to find out more about include monthly financials, the budget, pack information, bylaws membership data and policies. So let's get started. First, you need to understand your fiduciary responsibilities. Unlike for-profit boards, nonprofit board members or volunteers, and you do not get paid, but there are fiduciary duties that you need to be aware of. Board members are called fiduciaries because you are legally responsible for managing a non-profit entity's assets. Non-profit board members have three fiduciary responsibilities, and each of them is important. The three fiduciary responsibilities of all board members are duty of care, duty of loyalty and duty of obedience as mandated by state and common law. Duty of care means that board members must give the same care and concern to their board responsibilities as any prudent and ordinary person would. You are to act in the best interest of the association, not your personal desires. Due diligence includes preparing for board meetings by reading materials in advance, attending and participating in the chapter meetings and events and supporting the association staff. Good decision making includes using research and data in making decisions. It includes developing a strategic plan to direct the organization's activities and hiring and firing the executive director. Fiscal responsibility includes overseeing and monitoring the chapter's activities. Board members are expected to be able to read and understand the financial reports and be willing to question expenditures and examine variances. You must ensure that adequate resources are available for the operations that are planned. It is important to know your chapter's major revenue and expense programs and monitor trends over time. Ask your chapter about your major revenue producers, the income and expenses. You know, another thing is what percent of your income comes from dues, educational meetings and non dues income. Membership responsibilities include knowing how many members you represent, who they are and mentoring a pipeline of future leaders. It is the board's responsibility to plan for the organization's leadership succession. Duty of obedience involves ensuring organizational compliance with all applicable laws and regulations and with its own internal documents and policies. Be sure to review and understand and follow your bylaws. If a court were to ask a board member, "Did you receive the governing documents?" The board minutes should affirm that they were distributed or accessible at orientation like this. One good practice is to sign a commitment form acknowledging you understand your role including policies such as conflict of interest and antitrust. Another duty is serving as steward of the association mission. This guarantees resources are dedicated to accomplishing the mission. You also guide the association, the organization. You monitor, adjust, develop policies in order to clarify ambiguity or to address conflicts. Duty of obedience means that board members must make sure that the chapter is abiding by all applicable laws and regulations and doesn't engage in illegal or unauthorized activities. The duty of obedience also means that board members must carry out the organization's mission in accordance with the purpose they stated in getting qualified as a nonprofit organization. The board is responsible for creating and approving policies and being transparent to the membership about these policies. You know, some of the things that often aren't talked about is board meeting protocol. The president runs the meeting and develops the agenda, many times in conjunction with the executive director. When you want something added to the agenda you need to contact the president or executive director ahead of the meeting to make that request. And what exactly are executive sessions? Well, this is when the board members only meet in closed doors. All guests and staff are asked to leave. Many times the executive director stays if it's something dealing with litigation or alleged improper activities, but when there's the executive director review the executive director usually leaves the room. Any actions that are taken during an executive session need to be noted in the minutes when everyone comes back into the room. You need to ask for board minutes from the past year or two. This will help you get up to speed on what the board has been discussing and working on. Duty of loyalty. This means that board members must place the interest of the organization ahead of your own interest at all times. This includes disclosing potential conflicts of interest and not using board service as a means for personal or commercial gain. Board members should speak with a unified unified voice outside of the boardroom, maintain confidentiality, objectively evaluate the executive director and hold other board members accountable. The board's role is governance, not management. A lot of people are confused about governance and government. Governance is what's best for the whole like your chapter. Government is best for the region. It's represented by a town, a county or a state. The board sets policy, the staff administer it. A formal evaluation of the executive director should be held every year. Sometimes this is done by the executive committee with input from the board members. It should address goals achieved, plans for the upcoming year, improvement suggestions and professional education. The final report should be a great opportunity for the president or executive committee to discuss and work together with the executive director to improve the association. All right, let's talk about nonprofits in general. Chapters are incorporated as nonprofits under state law. There are 20 types of nonprofits under the IRS. An association is one type of organization under the non-profit umbrella. People get confused about the IRS designations. Let me give you a couple of examples. A 501 is a charitable organization. People give donations for a cause, like the American Cancer Association or American Heart. They don't have members, they have donors. Donations are tax deductible and they have very limited lobbying. A 501 . This is an association, a business league. This probably what your chapter is. And people pay dues to belong as a member, they are voting members. This type of association can lobby and dues are usually not fully tax deductible. Your chapter may have a foundation which is a 501 . Couple common myths I'd like to dispel. First of all, it's a myth to think associations don't pay taxes. America's non-profit associations pay more than $1 billion annually in payroll, sales and property taxes. We also pay UBIT. That stands for unrelated business income taxes. These taxes are imposed on certain activities of a non-profit if those activities are found to be business activities unrelated to your tax exempt purpose. A couple good examples of UBIT are advertising in your magazine or newsletter. If you have unrelated income, you must file a 990-T with the IRS. Ideally, your expenses would offset any income you get from this non dues revenue and you would owe no taxes. Another myth is that we can't, we're a non-profit means no profit, right? You can't make a profit. Well, that's wrong. In order to maintain your nonprofit status, income cannot be distributed to members or directors or officers. There can be reasonable reimburse for direct reimbursement expenses like airfare or registration reimbursement, depending on your policies, but we can, and we should make a profit. The nonprofit status is with the IRS only. Why do we need to make a profit? Well, what would you do if your major income source ended? Could you pay the monthly bills? You need to have reserves. Reserves are needed in case you have to cancel your convention. Remember COVID? Or revenue from registration and sponsorships and exhibits is lower than expected. Maybe you have a special project, like a public relations campaign or you wanna do some white papers, research white papers or surveys or technology upgrade. That would need additional funding. A good benchmark is 6-12 months of operating expenses held in reserves. Let's go through the governance structure and systems. The governance system starts with the articles of incorporation, founding the chapter your bylaws and your mission. These should guide the board in decision making. There are a variety of policies and systems that fall underneath this. First is your bylaws. This determines your chapter's organization and governance. National ACEP developed model chapter bylaws that chapters can adopt or adapt to their organizational structure. The mission guides everything that the board does. If a proposed suggestion does not fulfill the mission, question doing it. Always have your association mission front and center at board meetings. I like to put it on the agenda. It's a reminder of what your purpose is. Policies interpret the bylaws and articles of incorporation. They set parameters or specific mandates for action and decision making. As a new board member, ask for the policies that the board has approved in the past. These could include things like your membership policies, financial and investment policies, reimbursement policies or conflict of interest. When talking about a strategic plan, remember Yogi Berra said, "If you don't know where you're going, you might end up somewhere else." Now this doesn't have to be a huge undertaking or a huge document. Maybe it's just a plan of work for the next year or two. A lot of times associations will look at pain points. What do we need to deal with? Is it our financial situation? Is it improving membership, building some educational programs and they'll work specifically on that plan of work and develop that. So there's like a roadmap for staff and the board to move toward and through. The entire board should be involved in discussing future plans and the budget should reflect new programs or projects that were approved. As far as budget and decision making processes. A few questions to ask are, "Do the board meeting agendas focus the board's attention on issues of strategic importance?" "Are board members provided with information needed for effective decision making?" "Are the organization's strategic priorities adequately reflected in the annual budget?" "Are the committees doing work that is needed?" Understand what committees your chapter has. For the nomination process, think about this. Do you have a lot of people running for the board or counselor positions? If not, you may want to review the requirements and how the nominations are done. Some things to consider, are the terms too long? Are you just asking for too many years of commitment? Is there too much work? Too much time? How often are the meetings held? You wanna make sure that you have members who want to serve and that time and cost are not a deterrent. Does the board's composition reflect the strategic needs of the organization? Do you have a leadership identification program that addresses diversity and inclusiveness? High performing boards invest in themselves through a culture of learning, holding orientation like this for new and continuing board members is crucial. Ongoing education at board meetings and periodic self evaluation is also recommended. As a board, there are several documents that you have to review and approve. Remember duty of obedience? For example, a financial audit. Has your chapter done a financial audit recently? An outside CPA will do the audit to ensure that all financial procedures are being done correctly. They will also check on fraud prevention steps that should be done to avert fraud. The board needs to approve the audit report at a formal board meeting. Yes, this costs money, but you want to be confident that all financial work is being done correctly. Many, many associations have been victims of fraud. You don't want to be on the board if that happens on your watch. Form 990. This is required by the IRS. It's an annual filing due by the 15th day of the fifth month after the close of your tax year. It is required that the board review this form before filing. You will note that several questions on the 990 pertain to your governing policies. For example, they ask if you refer to a compensation survey when evaluating the salary of the executive director. They ask if you have a written conflict of interest policy and do you have a whistleblower policy? Now just a special note, many small tax exempt chapters can satisfy the requirements by submitting a form 990 N. It's an electronic notice. It's an ePost card, which is done electronically. The budget, annual budget. Some of the board members may be involved in creating the annual budget as part of the budget or finance committee. The whole board needs to review and approve the budget. You need to know what the budgeting cycle is for your chapter. Monthly financials. These should be sent to you each month by the executive director or the treasurer. It's important that you understand how to read these. Ask about big swings and income or expenses from year to year. Bylaws. Is your chapter following the bylaws? When was the last time they were updated? Any bylaws changes need to be approved by ACEP, the chapter membership and of course the board. The chief executive evaluation. We've already gone over this, but make sure that everyone understands that the evaluation of your executive director is confidential. Board meeting minutes should be approved at the next board meeting. Please read them before approving. We've talked about policies in general, but what exactly are some policies you should have? One is an antitrust policy. This prohibits contracts, combinations or conspiracies in restraint of trade, conflict of interest policy potential conflict scenario should be discussed maybe before they happen. And the policy should outline what the board members do if they have a conflict of interest. Who do they tell? When do they disclose that? How does the board deal with that? Get those things done before there actually is a conflict and everybody's questioning what they should do. A whistleblower policy prohibits publicly traded companies and nonprofits from retaliating against whistle blowers. Now, if you have reserves, you might want to have a financial policy, especially if you have funds that you invest and a reimbursement policy would be helpful if your chapter reimburses travel or any kind of expenses. Let's talk about insurance. You may not think about insurance but your chapter needs to be covered. First there's general liability. You should have this in case someone is injured at an event or in the chapter office. DNO. Directors and officers liability insurance. This is very important. This is legal protection for you, a board member. It defends you against a lawsuit. This means that you cannot be sued personally. If you don't have DNO insurance, you as a board need to discuss purchasing this. You will not regret having that insurance should something happen. Meeting cancellation. Now this is, it may affect you, or it may not. If you get a lot of your money from holding a large annual meeting, you should consider this coverage. It's usually purchased if your meeting is held like in a coastal location, which could be or an area which could be affected by inclement weather. Like if there's a hurricane and you're meeting during hurricane season in a coastal town, think about that. Or if there's, if it's in the wintertime and there could potentially be ice storms. So this is an overview of the role of the board. We've gone over all these things, your mission, your purpose, your goals. Stay informed of trends in the organization's field of interest. Faithfully read and understand your financial statements. Prepare for board meetings, uphold confidentiality, speak with one voice outside of the boardroom, act as an ambassador for the organization when in public. Depending on the size of your chapter, you may find that the roles of board members vary from one chapter to another. While the overriding governance and legal aspects of serving are the same, your chapter may assign different responsibilities on top of your board role. That can include membership recruitment and retention, educational planning, event planning and advocacy. Some things to think about. To help understand your chapter better, the following items are things that should be shared with you. So ask for this information. How many members do you have? How does that compare to two, three years ago? Do you get regular membership updates at the board meetings? What can you do to grow membership? On the finances, again, make sure you're getting regular financial reports and you know how to read them. The upcoming board meetings, get the list of all the board meetings coming up this year for the rest of the year. Understand if any travel expenses are reimbursed. And if so, how do you do that? What about hotel reservations? Do you have to make that, or does the staff do that? What is your term? A lot of people don't know how long they've actually been elected for. Is it a one year term or two, three year term? And can you run again when that term ends? Are you also an ACEP counselor or alternate? Is that automatic if you're on the board? Does your membership elect counselors, how's that done? On advocacy, understand what the issues are and who works on them. Do you have a legislative day? Do you have a lobbyist? How do members find out what's going on? And of course, ACEP has a lot of resources that can help you as a leader of your chapter. There's opportunities they provide for chapter leaders to connect with each other, through virtual or maybe some in person or an online community. And then online resources, there's toolkits, there's public policy grants, and administrative services. If you'd like to note more, please contact Maude Hancock at the ACEP office. We hope that this has given you a good grounding on your role as a board member. There is still more you need to know about your chapter, details that you need to help you do the best. Serving on the board can be very beneficial for your personal growth and for the chapter. You'll be so proud in making changes and helping the association flourish. We wish you the very best. Thank you.