How to Chair a Not for Profit Board

Some of AYCC’s first unofficial steering committee aka board, the day before our founding summit in Melbourne 2006.

I’m stepping down from the Australian Youth Climate Coalition’s board in February; it’s time for board renewal! I started writing this guide as a letter to the new Chair (who is still to be confirmed) but in the spirit of open access to information, I’m turning it into a blog post and downloadable guide with a few resources attached. It’s also fulfilling a long-overdue promise made on Facebook at the end of last year to share the notes from a course I did with the Australian Institute of Company Directors on chairing a NFP board.

When I left as AYCC’s National Director and stepped into the role of Chair, I had some idea of what the role would entail because of my law degree. Well. So I thought. I’d studied board mismanagement as part of corporate law – so I knew what constituted negligence and other major mistakes that boards fall into. This didn’t really prepare me, though, for becoming a board Chair. In particular, I hadn’t realised how much work it would be, or how much of an opportunity it would give me to practice leadership skills.

What does a Chair Actually Do?

On a week-by-week basis, chairing AYCC’s board involves checking in with our Co-Directors; following up and doing action items from our last board meeting; and preparing for the next board meeting. AYCC’s board meets every month for two hours, plus has two in-person retreats a year. There are certain times that are incredibly busy for the Chair, like our AGM (every year) and the times we have done National Director recruitment, selection and handover (so far, twice, and both have been extensive processes). We also did a strategic planning process last year that involved the board, staff and volunteers which took a lot of time. In addition, I sometimes attend fundraising meetings, give advice and share stories about AYCC’s history with the senior leadership team. I also mentor a number of young women leaders in AYCC, but this isn’t something related to my role as Chair and will continue after I’ve left the role.

How Much Time Does it Take?

I estimate that on average, being AYCC’s Chair is between 5-8 hours a week’s work. Some weeks it’s less and some it’s much more.

The 2012 Directors’ Social Impact Study from Curtin University found that my experience of the workload is slightly higher that of other NFP board Chairs: NFP Directors in Australia work an average of 35 days a year in their role. Just over 30% of Directors surveyed spent 5-8 hours a month, and just under 30% spent 9-16 hours a month. The survey found that Directors’ work involved leadership and supervision across a range of areas including compliance (an increasing burden according to focus group participants), risk oversight and funding. However, the survey found that directors spend most of their time reviewing the organisation’s performance and developing strategy.

Directors are also spending time on sub-committees. Two-thirds of the NFPs surveyed also have a finance, audit, risk and/ or remuneration sub-committee (and nearly 80% have a fundraising committee). In AYCC’s case, we have a finance sub-committee and a number of ad-hoc committees that pop up when needed, such as ND recruitment, remuneration (deciding on the ND’s wage), board transition, and strategic planning.

More than the time commitment is, I think, the headspace commitment. It’s a lot of responsibility, so the organisation is always at the back of your mind. You have to think strategically, identify risks, support the CEO(s) with the right questions, make sure the board is performing well (reading the reports, engaging with the right questions, putting in the hours required). You have to diagnose what’s really going on, sometimes deal with conflicts, bring issues to a head by raising the heat, and constantly think about how to replace yourself with board renewal. You have to make sure you’re keeping records and there is a lot of compliance to deal with (lodging forms with ASIC, sending the notices for the AGM in time, asking lots of questions of our wonderful lawyers). There’s no end to how much time you could let it take if you wanted to!

The Five Roles of a Chair

At the Australian Institute of Company Directors (AICD) course I did last year, the trainer set out into five coherent roles that Chairs consistently have. I broadly agree with them – here they are:

1.         Managing the board’s effectiveness

2.         Leading the board’s agenda

3.         Providing counsel to the CEO

4.         Representing the board externally in relation to governance matters

5.         Setting the ethical tone of the organisation from the top

Managing the Board’s effectiveness

The Chair has the ability, and responsibility, to influence the design and composition of board’s membership. AICD suggests having a nominations committee to manage the CEO hiring process, think about board renewal, and nominates new people to join the board. The Chair also oversees an annual board effectiveness review process, including reviewing the effectiveness of each individual board member’s performance. This can be confronting process but is essential to make sure all board members are performing.

If board members aren’t performing, it’s important to identify it early. AICD suggests that when appointing new directors, write a letter of appointment that sets out the expectations, including the clause that the director would not seek re-election unless invited by the board to do so. This enables Chair to get resignations from directors if required. Also, when board members are standing for re-election at AGMs, there can be a clause that says ‘the board unanimously supports this person’s re-election’.

AICD suggests having an annual questionnaire as part of a board effectiveness review that asks questions such as: is there the right relationship between the chair and CEO, are there constructive discussions, do we meet frequently enough, and then bringing the results to the annual discussion about board’s collective effectiveness. AICD also suggests that every year the chair should have a one on one discussion with each board member about their performance and how they are going. In this conversation the chair should also ask, ‘are you happy with how the other directors are contributing’ which then gives chair the opportunity to provide feedback to problematic board members.

Facilitating Meetings

The other big part of managing the board’s effectiveness is, of course, meetings! It’s up to the Chair to regulate the tone and engagement of board discussions and make sure every member is actively invited to contribute. Chairs should try to be the last to speak on every issue and ideally try to get their board to reach consensus without their casting vote. You should also be formulating the agenda for meetings a few days before (ideally!), and making sure the meeting is oriented towards decision-making. AYCC has a board-executive distinction policy (you can download it here and are welcome to adapt it to your own organisations – although this is a slightly old version).

It’s important for Chairs to clarify, state and re-state specifically what the board has reached agreement on – e.g. “Let me see if I can state what we have all agreed upon”. Chairs should vet the minutes carefully so they are an accurate reflection of what the meeting has decided. AICD recommends that minutes only contain the minimum amount of information – just the resolutions and enough of a preamble that a board director who was not at the meeting would still be able to understand the decision. “Minutes are a letter to an unknown judge,” said one person doing the course with me, with an eye to potential litigation.

Finally, you should have a policy about missing meetings, such as if someone can’t attend two consecutive meetings (without first having been granted leave) then they have to resign. AYCC’s constitution states, “that the office of a Director will be automatically vacated if the Director fails to attend at least two of the meetings of Directors called in any 6 month period.”

Leading the board’s agenda

Not for profit boards must clarify and define the mission and revisit it annually to make sure the organisation is on track. The biggest role of our board is to safeguard the organisation’s mission, and the Chair needs to make sure that’s happening. It’s also the role of the Chair to sure the board is deciding on the right matters and asking the right questions, even if they’re hard questions.

“Boards work on the organisation not in the organisation,” said one wise person. For every item on the agenda specify whether it’s for noting or for decision. Be clear why things are on the agenda. Make sure it’s ready to go on the agenda (enough information). Sometimes you need a policy that covers potential decisions (e.g. a travel policy) that will enable management to just go and get on with things! Make sure the board’s agenda includes compliance and risk – and make sure your organisation has up to date insurances, including Directors’ Insurance.

Succession planning must be a part of every board’s agenda. This is something the AYCC board has been working on recently; and we should have started thinking about earlier than what we have done.

Providing counsel to the National Director(s)

Providing counsel doesn’t just mean giving advice. It means someone who is there to listen and ask strategic questions (like, “why”, “how” “what could we do if we weren’t afraid”?). Most importantly, the Chair is there to help the National Director(s) “get onto the balcony”. By this I mean helping them step out of the day-to-day headspace and take a step back to diagnose what is really going on both in the group dynamics of the senior leadership team, the dynamics of the organisation as a whole, the climate movement and the Australian political landscape. Sometimes you can go through a regular process of asking “what are the strengths, weaknesses, opportunities and threats this week/ fortnight/ month?”.

Providing counsel also involves asking the National Director(s) about unintended consequences, both positive and negative, of decisions they are thinking about making – because mostly someone in the leadership role only thinks about the intended consequences of their decisions.

You need to have a close relationship – close enough to get past “talking politely” (which often masks the real issues). The relationship can be characterized as “public support but private candour” which means that you will never, ever criticize the National Director(s) in public (or disagree with the decisions they’re making) but you should be very blunt at your private check-ins. You need to be open and direct; there is definitely no room for game playing.

AICD recommends a six-monthly review with the CEOs to revisit specific agreed objectives. They also recommend having some meetings, or part of meetings like ten minutes at the start or end without the CEO or executives to discuss how CEO and organisation is going as a board and give the Chair feedback on what issues to work through with the CEOs.

When there are serious issues of performance or standards of the CEO it’s up to the Chair to take these to the board, not just deal with them on her own! This has never happened at AYCC, but AICD stresses that if the board decides the CEO needs to go, it’s the Chair that needs to guide the termination process. In rare cases, there will be clear grounds for terminating a CEO (e.g. fraud), but for underperforming CEOs it should be a process of collective feedback, a number of discussions talking about what’s going wrong.

What about other senior staff members? What is their relationship with the board?

Various different boards have different policies about whether CEO is the only executive member that should attend board meetings. Often another staff member may come along to part of the meeting – but only one part, like finances. In AYCC we have been careful about balancing the desire to have board members mentor senior staff on the one hand, with the importance of not having staff in direct conversation with the board. To preserve the National Director(s) authority, we have had a clear policy that the NDs are the only line of communication between the board and the staff when it comes to discussing issues that the board needs to deal with. Personal mentoring, however, can discuss things like developing key capabilities.

However, AICD has a slightly different perspective: they feel it is important to allow board members to interact with staff other than the CEO because board members have to have full picture, full information, and understand the quality of people on staff. However, if board members have any concerns, they should bring them up with the National Directors rather than other staff members, and these conversations with staff should have a protocol attached – at a minimum, letting the CEO know the meeting is happening and what questions the board members are asking of staff. If a board member goes and asks for information of a staff member, that information should all be provided to all the directors so they all have the same knowledge.

Finally, Directors must never issue instructions to any staff member or volunteer in their capacity as a board member – under any circumstances. The board can direct the CEO, but no one else. And according to AICD, board members must always be publicly supportive of policies of the organisation (not: “yeah, I hated that campaign). Those are discussions for the boardroom only, because otherwise they undermine the authority of the National Director(s).

Representing the board externally

Whether the Chair does a lot of external representation for the organisation depends on how much the National Director(s) request it. In AYCC’s case, I have done a lot since I left as Co-Director, partly in my role as co-founder and partly in my role as Chair. However, most Chairs of NFPs would do less external representation.

Chairs should expect to do regular funder meetings with the National Director(s), because most funders won’t invest large amounts unless they have confidence in an organisation’s governance structures. Chairs will sometimes make speeches at events like Christmas parties, training camps and farewell parties – but only where requested by the National Director(s).

If you have a highly skilled board (like AYCC), the National Director(s) will often invite board members to run trainings or workshops for staff.

Where the Chair of an NFP is doing any media comment, it would usually only be media comment in relation to the governance matters. All other matters are usually directed to the National Directors.

Setting the ethical tone of the organisation from the top

The Chair of the board must make sure that they, and the rest of the board, sets the highest standards of ethical conduct. For example, Chairs must ensure that boards respond swiftly to any inappropriate conduct in the organisation – for example the response of the David Jones board after the sexual harassment complaint against the CEO.  The Chair must make sure the board is fulfilling its duties properly. For example, make sure directors actively assent to decisions rather than passively say nothing. I always say, after a motion is proposed and seconded, “all those in favour say aye; all those against say against; all those abstaining say abstain”.

It’s not clear-cut whether the Chair have extra legal duties/ liability above and beyond the role of the other Directors, but the OneTel case suggests this may be the case. Remember, Directors’ duties are duties owed to the organisation as a whole – not the CEO, volunteers or any constituency within the organisation. That’s why AICD stresses that people coming to boards with a “representative mindset” don’t work – as in, I’m here to represent the Union, or the rural and regional members, or the radical wing of the movement, or the conservative wing of the movement. The Chair must make sure that all directors and no directors represent all constituencies of the organisation at the same time – if that makes sense J

Conclusion

If you’re considering become a board chair, or you’re being asked to consider it -  and you are passionate about the mission of the organisation – and if you have the time – then I really encourage you to do it. It’s a huge opportunity to make a meaningful contribution to the world, and you get the chance to practice and develop leadership capabilities in the real world. And if you have a good board team, it’s an enormous amount of fun and community. Good luck!

Resources 

1. This guide as a PDF to download: How to Chair a Not for Profit Board
2. AICD course notes as a PDF: AICD course notes
3. Example board-exec policy as a word doc:
 AYCC Board Exec Policy for Blog

About annastarrrose

Author & environmentalist
This entry was posted in aycc, learning, listening, movements, social change, youth. Bookmark the permalink.

2 Responses to How to Chair a Not for Profit Board

  1. Murray Carew says:

    Hi Anna,

    Thanks for sharing all this work and reflection publicly. I’m currently on the management committee (board) of Northey Street City Farm, an incorporated association. I will share your piece with the other MC members. In your research did you come across other materials that could be useful for board members, eg: secretary, treasurer, general member?

    I hope the handover goes smoothly. What’s next for you?

    Cheers,
    Murray

  2. Pingback: Chairing a Not for Profit Board | TRAMthoughts

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