the perkins law five-finger philosophy of nonprofit board composition
DESCRIPTION
The concept behind the Five-Finger Philosophy of Nonprofit Board Composition is that all of us resemble one of the five fingers on your hand. Which finger are you? Which ones do you want on board? Which ones do you want to steer clear from? For copies of the referenced worksheet, connect with Eric through LinkedIn.TRANSCRIPT
The Perkins Five-Finger Philosophy of Nonprofit
Board Composition
November 30, 2011
Key Issues for Nonprofit Board Members
• Who owns the organization?• What are my legal duties to the organization?• What are the three most likely sources of
trouble for my organization?• What is D&O coverage and why do I care?
Sources of Trouble
• The IRS• The State Attorney General’s Office• The Disgruntled
The Ultimate Nightmare for aNonprofit Director
• Imagine you’re a director or officer of The Second Mile Foundation
• PA Governor Tom Corbett says, “I need to know what the board members knew.”
• Organization (founded in 1977) is basically in wind-up mode at this point.
Other Recent Examples of Nonprofit Troubles
• New Caste Youth Football Program—Managers investigated by state AG for misuse of funds, state police involved, criminal charges filed.
D & O Coverage
• D&O = Directors and Officers• Protects against breach of fiduciary duty
claims• Biggest benefit: Covers legal fees and costs of
defense
The 5-Finger Philosophy
The Concept: Every person on your board of directors (including YOU) fits into one of five categories, each resembling one of the fingers on your hand.
Benefits of the5-Finger Philosophy
• Maximize Effectiveness of Current Board• Better Recruiting and Retention• Self-Actualization (Abraham Maslow)
AN IMPROVED, HIGHER FUNCTIONING NONPROFIT ORGANIZATION
The Index Finger
• The most important
• Need at least 1-2 on your board
The Thumb
• Reliable• Loyal• Hardworking• Perfect candidate for
corporate secretary or treasurer
The Ring Finger
• Inconsistent participant• Flashes of brilliance and
passion• Potential leader• Underutilized asset
The Pinky
• Poor attendance• Minimal input at meetings• Minimal activity• Nonfactor
The Middle Finger
• Type A personality, argumentative, uncooperative, narcissist, controlling, patronizing, etc.
• The trouble with these people• What do you do?
The Worksheets
• Evaluate Your Board RIGHT NOW• Take Extra Worksheets for Your Colleagues• Make It Part of Your Annual Nominating or
Strategic Planning Process
What Happens Next?
• Address Current Problems• Improved Engagement Levels• More Strategic Succession Planning• Better Leadership Development
You Are Now a Guru on Assembling an Effective Nonprofit Board of Directors!
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