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Can the treasurer be the bookkeeper?

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A new nonprofit was struggling to put together its first board of directors. The organizers had contracted with someone to be the bookkeeper and they wondered if it would be acceptable to have that person also serve on the board as the treasurer. The answer: maybe, but it might not be the best idea.

One issue is conflict of interest. Directors of nonprofits are not to benefit financially from their role on the board. So, even if the bookkeeper were a director but not the treasurer, if her firm is paid to do the bookkeeping, that could easily be seen as a conflict of interest. That might be mitigated if the firm did the bookkeeping pro bono. Another possible mitigation is to get bids from several bookkeepers and, if the bookkeeper’s firm is willing to do the work for significantly less, then that also might mitigate the conflict. In the latter situation, the board would want to clearly document the research that was done, and the bookkeeper would recuse herself from participating in the decision to contract with her firm.

A second issue to consider is that a fundamental part of the treasurer’s responsibilities is to provide financial oversight. So, if the treasurer is the bookkeeper, he/she is overseeing him/herself. In that case, it would be prudent to put a structure in place to ensure oversight. For example, the board might formally appoint another person to be the Chief Finance Officer and provide a written description of the CFO’s duties, which would include oversight.

The board also needs to keep in mind that if the organization is paying the director/bookkeeper, then that person becomes an “interested person.” In California, no more than 49% of the board of directors may be interested persons.

Finally, whatever arrangements are made, the board would be wise to put in place some basic internal controls. Here are two useful resources on that topic.

Executive Committee Membership

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Can someone be on the executive committee who is not a member of the board of directors?

It’s an interesting question. The short answer is, “Perhaps, but probably not.” As can so often be the case, it depends on the situation. Here are things to consider.

Look at your bylaws

A great place to start is to read your bylaws. What do they say about committees? Do they specify that there is an executive committee? Do they say who should be on it? Do they say what the executive committee is supposed to do?

For example, I recently was helping an organization whose bylaws said nothing about an executive committee, but they did include a provision that the board could establish committees by resolution, and that “all committees have the full authority of the board” (italics mine).

Board committees

The next thing to consider is the type of committee. There are two types—board committees and non-board committees. With a few exceptions, the board may delegate authority to board committees. According to California law, all members of board committees must be directors.

On the other hand, membership on non-board committees is not restricted to directors. These committees, also called advisory committees, can serve a variety of purposes. As that name implies, they can provide counsel to the board. The board might also assign various tasks and responsibilities to them. For instance, a non-board committee might develop fundraising plans or be responsible for volunteer training. Because non-board committees have no legal authority to act in place of the full board, anyone may be a member. Non-board committees are often used as a way to engage additional people in the work of the organization.

Returning to the example above, since the organization’s bylaws clearly state, “all committees have the full authority of the board,” any committee established in the organization would be a board committee. Only board committees can make decisions on behalf of the organization, and all members of board committees must be directors.

So, what’s the answer?

If the board has delegated authority to the executive committee, then all members of the executive committee must be directors. Certainly, others might be invited to attend executive committee meetings and/or provide input, but such people are not members of the committee and do not have a vote on motions or decisions. Theoretically, a non-director could be a member of the Executive Committee, but only if the Executive Committee was given no authority to act. In such circumstances, that executive committee would, in fact, be an advisory committee. And what would be the sense in that?

And don’t forget…

State law trumps your bylaws. If your bylaws include any language that suggests non-directors can be members of your board committees, it’s time to revise your bylaws.

References

Managing Conflict

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Do you have advice about how to manage conflict on our board? We seem to be in two camps and can’t agree on what to do.

Conflict is bound to arise when a group of people is involved in a common endeavor. It’s not a bad thing. In fact, differing opinions can lead to creative solutions. On the other hand, serious and unresolved conflict can cripple an organization. Here are some suggestions for preventing, managing, and resolving conflict gleaned from some expert resources.

Pointers

In her article “Moving From Dissonance to Harmony: Managing Conflict on the Board,” Jill Sarah Moscowitz offers these basic pointers:

  • Start by reminding yourselves of your common interest in furthering the mission of organization
  • Identify the key issues. Even if they seem obvious, take the time to label them and write them down.
  • Begin with facts rather than assertions.
  • Avoid taking about “my position” versus “your position.” Instead, seek out your common interests. What do you all want to see accomplished.
  • Be truly curious. Focus more on listening than having the answer.

Face-to-Face Communication

Writing in “Managing Conflict: A Guide for Volunteer Boards,” E. Grant MacDonald emphasizes that “Confronting a conflict situation almost always can benefit from face-to-face communication.” He suggests holding a series of meetings and offers these recommendations:

  • Involve a trusted third party to facilitate the meetings.
  • Insist on confidentiality.
  • These are private meetings, not board meetings, but they are not secret meetings.
  • Make sure everyone knows that no decisions will be made in these meetings that bind the organization. The goal is for the parties to agree on recommendations that they will make to the board at large.

Avoiding Conflict

MacDonald also offers these ten practices to help avoid unnecessary conflicts in the first place. Many of them can be part of your board development activities.

  1. Practice good interpersonal communication.
  2. Operate with a strategic plan.
  3. Clarify roles and responsibilities.
  4. Help develop a skilled chairperson.
  5. Learn about conflict resolutions processes.
  6. Establish a code of conduct for directors.
  7. Encourage performance evaluation.
  8. Implement a grievance procedure.
  9. Celebrate agreements and new understandings.
  10. Look to gender and cultural differences as a way out of a mess.

References:

Moving From Dissonance to Harmony: Managing Conflict on the Board

Managing Conflict: A Guide for Volunteer Boards

Short Bylaws?

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Do you have a good example of short bylaws? Ours seem so lengthy.

That question came up in our Board Academy Governance session. The key to good bylaws is to cover all the bases carefully and stop there.

Your bylaws need to provide clear rules for how to operate your nonprofit. For example, your bylaws need to specify how many directors you have, how and when they are elected, and the length of their terms. Similarly, your bylaws need to specify what officers you have, their terms, how and when they are elected, and what they are required to do.

That said, your bylaws shouldn’t attempt to “micromanage” your organization. For example, your bylaws might state that your board president “will preside over meetings of the board and execute other duties as assigned by the board of directors.” If you want the president to do more than preside at meetings, write a job description for the president, formally adopt it, and record that in the minutes.

Another example relates to committees. If you have an executive committee, your bylaws should certainly say so and specify what that committee is authorized to do. As for other committees, include in the bylaws how they may be formed and constituted. Every committee needs a specific, written charge but it can be adopted by the board; it does not have to be in your bylaws.

Here are some resources to explore.

Resources for Effective Board Governance

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BoardSource is a great resource for all things related to nonprofit board leadership and governance. For example, Recommended Governance Practices is a six page document that gives high level advice in three areas:

  • Essential Practices: practices to function successfully.
  • Leading Practices: practices to move toward board excellence
  • Compliance Practices: practices that address legal requirements

Download a free copy here.

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