In April, the Federal Reserve published a 118-page autopsy on what caused the failures at the Silicon Valley Bank. The Fed’s first paragraph reads, “[The Silicon Valley Bank’s] board of directors failed to oversee senior leadership and hold them accountable.”
Do board members understand their responsibilities as fiduciaries, representing the interests of stakeholders or members? Meeting minutes should document evidence of compliance and best practices.
Some board discussions reflect tactical decisions (the color of the conference room, what to serve at the annual banquet, etc.) These are lower-level program details or directives to the staff. Most tactics do not require a board motion.
On the other hand, I’ve heard directors say, “We see the budget every year, but we didn’t know we should make a motion to approve it.”
Boards should be aware of their duties in compliance, risk management practices, and internal controls. This list is to help the board avoid omissions in governance. It is not intended to be comprehensive. Rely on legal, accounting, and insurance counsel.
| Motion |
Purpose |
|
Budget
|
Proof that the board reviewed and approved the budget. |
| Financial Statement |
Motion to accept the financial report, having had the opportunity to discuss it. |
| Policies |
Policies are the wisdom of the board; they are approved by motions. |
| Amendments |
Amendments or recommendations to amend the bylaws require a board motion. |
| Government Positions |
The board usually approves recommendations made by a Government Affairs Committee or lobbying staff. |
| Minutes |
The board motion indicates that the minutes are accurate. |
| Consent Agenda |
Reports that were circulated in advance of the meeting should have a motion to accept as presented. |
| Auditor |
The board selects the financial auditor, indicated by a motion in the minutes. |
| Audit |
The board reviews and makes a motion to approve. |
| IRS Form 990 |
For exempt organizations, the IRS expects the governing body to see Form 990 prior to submission. While the board does NOT approve the report, the minutes should reflect they have had an opportunity to review it. |
| Conflicts of Interest |
Conflicts of interest should be noted in the minutes. |
| Confidentiality |
Reminders about who speaks for the board and the confidentiality of discussions and documents may be noted in the minutes. |
| Antitrust Avoidance |
The fine for price fixing, bid rigging, or boycotting may run up to $10 million. Noting in the minutes that notice was given may potentially protect the board. |
| Strategic Plan |
Associations and chambers tend to update a strategic plan every three years. A board motion to approve the strategic plan ensures future leaders understand its importance. |
This list of motions may guide nonprofit boards in executing their trustee and fiduciary responsibilities. By recording these motions in the minutes, boards can provide evidence to members that they are fulfilling their governing duties.
Note: Bob Harris, CAE, provides free governance tips and templates at www.nonprofitcenter.com.
