As almost all members of a not-for-profit organization know, the governing body with ultimate power and authority is the board of directors or board of trustees. This is defined in Roberts Rules of Order and the statutes of every state. But the big question is: who should these board members be?

In the Monday, June 7, 2010 blog, it was stated in the fifth paragraph that “for [MCRHS] the structure of primary importance … is the composition of our board of directors. To get at what that board should look like the starting point is to define its function. And I appreciate the willingness of [members who contributed comments] to put their thoughts in public view in response to my request for opinions about a non-profit board’s functions.”

The answer according to the author was derived from the opinions of several members rather than hundreds of years of experience and countless books. He went on to say: “based on their comments I would summarize their ideas in four simple words: inspire, fund, promote and participate.”

According to the “Board Orientation Organizer” distributed by the American Association for State and Local History, the primary functions of the board of directors are: (1) hold safe the assets of the organization; (2) secure support for the organization; (3) ensure proper delegation of authority within the organization; (4) set policies that advance the organization’s stated purpose; and (5) monitor the implementation of policies. The Organizer goes on to expound on each function.

According to BoardSource, formerly the National Center for Nonprofit Boards, they provide these “Ten Basic Responsibilities of Nonprofit Boards” in 1996: (1) determine the organization’s mission and purposes; (2) select the chief executive; (3) support the chief executive and assess his or her performance; (4) ensure effective organizational planning; (5) ensure adequate resources; (6) manage resources effectively; (7) determine, monitor, and strengthen the organization’s programs and services; (8) enhance the organization’s public standing; (9) ensure legal and ethical integrity and maintain accountability; and (10) recruit and orient new board members and assess board performance.”

According to Managing a Nonprofit Organization in the Twenty-First Century by Thomas Wolf
(Simon & Schuster, New York, NY, 1999, p. 48), there are six principal areas of responsibility for trustees. Trustees should: (1) determine the organization’s mission and set policies for its operation, ensuring that the provisions of the organization’s charter and law are being followed; (2) set the organization’s overall program from year to year and engage in longer range planning to establish its general course for the future; (3) establish fiscal policy and boundaries, with budgets and financial controls; (4) provide adequate resources for the activities of the organization through direct financial contributions and a commitment to fund raising; (5) elect, evaluate, and if necessary, terminate the appointment of the chief executive; and (6) develop and maintain a communication link to the community, promoting the work of the organization.

And according to The Manual of Museum Management by Barry Lord and Gail Dexter Lord. (Rowman & Littlefield Publishers, Inc. NYC, 1997, p. 19) governing boards have the following ten responsibilities in common: (1) ensure the continuity of the museum’s mission, mandate and purpose; (2) act as an advocate in the community (national, international, state, province, county, local, or community of interest) for public involvement in the museum; (3) provide for the present and long-term security and preservation of the collection, and the safety of staff and visitors, at a level consistent with the museum’s mission and mandate; (4) ensure that the museum serves as wide a public as possible; (5) ensure that the museum undertakes research to create and disseminate accurate and objective knowledge relevant to its collection; (6) review and approve policies consistent with the museum’s mission and mandate, and to monitor staff implementation of these policies; (7) plan for the future of the museum, including reviewing and approving a CORPORATE PLAN (or STRATEGIC PLAN or BUSINESS PLAN) that identifies the museum’s goals and ways to attain them, and monitoring implementation of the plan; (8) assure the financial stability of the museum through reviewing, approving and monitoring budgets and financial reports, arranging for regular audits, investing the museum’s financial assets wisely and raising funds as required to allow the museum to meet its current and future financial responsibilities; (9) recruit and negotiate a contract with the museum’s director, to evaluate his or her performance, and to terminate his or her employment if necessary; and (10) ensure that the museum has adequate staff to undertake all museum functions.

There is an overlying theme in these examples. “Trusts and boards around the world hold their museums’ collections and other assets in public trust, not only for the public of today but for their descendants. They are fiduciary in character – a word describing trusteeship of property of others – meaning, in the case of museums, that trustees have an obligation to manage the property of others (in this case, the public) with the same diligence, honesty and discretion as prudent people would exercise in managing their own affairs.” These sentences were quoted directly from The Manual of Museum Management.

This is the big question. Does Mid-Continent or any other railroad museum exist for its members or for the public and does operating antique equipment show responsible stewardship? In other words, is Mid-Continent a club where members can operate equipment or a dedicated museum with preservation in mind? A club would require that all board members come from the organization or become members of the organization, whereas a dedicated museum seeks the best minds where ever they may be. The way this works is that management brings their plans to the board for approval and must be able to defend them. The rank-and-file should have equal opportunity to propose ideas to the board just as any board member should have that right. The board then balances these ideas versus the assets, financial support, mission, purpose, and master plans.

If you look at the board compositions of every medium and large for-profit corporation in America, you will find that many boards have no board members who are employees of the company and essentially all boards have only one or two members and rarely three board members who are employed by the company. History has shown that this arrangement results in the best decisions for the company and eliminates personal agendas. You will find university professors, officers of totally unrelated companies, theologians, social activists, employee liaisons, and statespersons all working together on their board bringing diverse ideas and expertise to the table. It would not be expected that everyone agrees, which is why they VOTE and the majority carries.

One of the leaders of Mid-Continent replied to the June 7 blog that “the board needs to function as a unit.” This is essentially the same as he mentioned when I was on the board. I believe that that leader is absolutely incorrect and this view only relegates the board to a rubber stamp. Some of the best boards have split decisions but all members live by the majority rule. To say that each board member must function as a unit implies the stifling of individual thought and ideas. One big risk of having bylaws where board members are elected by other board members can imply that a board member will not be re-nominated if his ideas are out of line with the majority for whatever reason.

One point I want to make clear -- The president is not the decision-maker; the board is. The role and responsibilities of the president are presented below and are from boardsource.org: (1) oversee board and executive committee meetings; (2) serve as ex-officio member of all committees; (3) work in partnership with the chief executive to make sure board resolutions are carried out; (4) call special meetings if necessary; (5) appoint all committee chairs and with the chief executive, recommend who will serve on committees; (6) assist chief executive in preparing agenda for board meetings; (7) assist chief executive in conducting new board member orientation; (8) oversee searches for a new chief executive; (9) coordinate chief executive's annual performance evaluation; (10) work with the nominating committee to recruit new board members; (11) act as an alternate spokesperson for the organization; and (11) periodically consult with board members on their roles and help them assess their performance.

My next forum discussion will center on member rights and responsibilities.

Huh? Seems oxymoronic by my reading.......how can virtually all boards include 1, 2 or 3 employees while most have none at the same time? Am I misunderstanding something?

Structure and management is worth a lot of consideration - while i'm happy to see it discussed, i'm wary of any one size fits all approach to how things need to be structured.

dave

So how does a non-profit organization recruit people from outside of the organization to the on the Board of Directors?

Mere membership in a nonprofit is a poor indication of insidership. This is a mistake also made on Wikipedia, where some say a member of an organization is by definition an insider.

That logic fails because membership is too easily obtained. A trivial donation will get you "into" anything from the NRA to IRM to your local PBS affiliate. And what does that mean? Very little. It doesn't make you an authority on the thing. Though its absence would speak volumes to you NOT being an authority.

So, if a board member is not a member - he can't bother to throw $35 in the kitty and get a newsletter? What's he doing on the board?

You ask a very good and difficult question. The relevant answer depends a great deal on the age, reputation, and community service (visitor and member) of the not-for-profit organization. It stands to reason an organization that has been around for a while with a proven record for growth, that has an adherence to its mission, that is well run, and that has strong community and member support will find it easy to bring in outstanding board members from outside the organization. This is because they will be proud to serve and devote their time to such an organization. On the other hand, if an organization does nothing new year after year and appears stagnant, does not make an effort to serve the community, is not run well, and/or is more focused on entertaining its members that the public, then recruiting outside members may be more difficult. Let me just suggest it is probably easier to recruit board members for a hospital than for a tourist railroad.

Mid-Continent had moderate success at recruiting outside board members in the past decade. One was an official from Kalmbach Press, one was president of several mid-west railroads, one later became the executive director of a local community foundation, and one is on the board of a large foundation. The problem some of these individuals faced was that they were the minority on the board and a couple left after less than full terms on the board.

That leads me to another question. Whose duty is it to recruit board members? President, membership or both? I know in my previous experience that the board members of the club pretty much were the only people who volunteered for the job. Unfortunately they were probably not the best suited for the job.

There are two sides to every story, and as a member of Mid Continent, I would like to voice my approval for both General Manager Don Meyer and President Jeff Bloohm. I have been to Mid Continent many times, and rare have been the weekends that I have not found both of these gentlemen hard at work. Don has done a very good job at both fundraising and the "cat herding" that managing a volunteer organization entails. He has a great vision for the museum, and I deeply admire the persistance he has shown through the challenges of the past couple of years. Don, if you're reading this, thanks for all you have done for our organization.

You'd be hard pressed to find another organization with as active and dedicated a president as Jeff Bloohm. I have seen him volunteer to do everything from 92 day inspections to mundane things such as servicing the water softener in the depot. Without fanfare, he has also made extremely generous contributions to the museum over the years. I continue to be impressed with Mr. Bloohm's devotion to the museum.

I also heartily endorse the policy of keeping member contact information private. I have absolutely no interest in receiving unsolicited communications. Also, with identity theft on the rise, you can't be too careful with that type of information.

-Stu

Burlington, you may wish to ask yourself the following question: are these persons you mention giants or little people standing on giants? In other words, is the Society and its Museum better off or worse off now in comparison to before they came? What have the leadership done to protect the collections and increase the value in the eyes of the public? Everyone should ask these questions about their leaders and be free to ask these questions in public.

It may be useful to know what the Midcontinent bylaws say regarding the president, the board and its members. What is the Midcontinent's mission statement?

Mid-Continent's mission statement can be found on this page of their website:
http://www.midcontinent.org/about/about.html

Thank you Boyd. It seems to me a fairly comprehensive objective encompassing a 36 year window of railroading history in the rural upper Midwest. The statement should make a good guide for decision makers.

S.O.

While a "trivial donation" may get you an IRM membership card, the right to vote at IRM is earned with volunteer hours and effort, NOT with money.

Jeff