What’s Your Cause?  How to Tie Board Decisions to Your Mission

Institutional Asset Management | InspireHer: Plancorp Women’s Initiative

 Beth Thomas By: Beth Thomas

­­Because one of my favorite things is pizza, I often joke that it gives me “purpose.” What better motivator is there during a long week than a family dinner at Farotto’s?

All joking aside, “purpose” and “mission” discussions are a major part of my day-to-day life. I’m passionate, proud and grateful to be serving many organizations in my role as an Institutional Client Service Representative at Plancorp.  Organizations, too, must have a reason for being: a purpose and an identity.  For them, this is called a “mission.”  But what does that really mean?

What Is a Mission Statement?

A mission statement differentiates your organization from others. It should identify your long-term purpose and drive every decision your board makes.  It may be useful for board members  to remember the ideas below when crafting their mission statement.  Studying other organizations’ statements can fuel creativity, too.

Your mission statement should have three main components:

  1. A statement of the vision of the organization
  2. A statement of the core values of the organization
  3. A statement of the organization’s goals and objectives that are feasible and attainable

To define your purpose, start by answering the following questions:

  • Why does your organization exist?
  • What image of your organization do you want to convey?
  • Who are your clients, and what can you do for them?
  • How does your organization impact the communities you serve?
Every word counts, so polish the language to include dynamic, visual images that inspire action. Keep it as simple, specific and to the point as possible.

Mission-Based Decision Making

Your board can take several steps to enhance its decision making with mission in mind.

  1. Share the mission statement in advance.

Include your mission statement as part of the material board members review in advance of each board meeting. This will help mentally align everyone and ensure you’re working toward the same goals.

  1. Reference the mission statement during board discussions.

Before finalizing any decision, ask: “Is this outcome consistent with our organization’s mission?” If there are doubts, delay the decision until they’re resolved. To use this time wisely and facilitate a good discussion to get to the bottom of a misalignment, make sure to involve all board members. Do a lot of thinking out loud and brainstorming by asking a lot of “what if” questions. This will lead to conversations about BOTH sides of the decision.  Encourage active listening to understand, while always directing comments back to the mission.  Lastly, make sure the conversation stays positive at all times. 

  1. Review mission-based decision making with new board members during orientation.

Not only does this ensure, once again, that your board members are striving for the same objectives, it also establishes credibility with new board members on your behalf.

  1. Revisit the outcomes of your process on a regular basis.

Discuss how the board used the mission-based decision making process to make an important decision.  What worked?  What didn’t? How can we improve/change this?

  1. Share the board’s commitment to the use of mission-based decision making.

Not only does this bolster your credibility, it also holds you accountable to making sure your decisions are consistent with the needs of your community.

Decision Making on Behalf of Donors

Serving on a board for a nonprofit organization can be a rewarding experience.  It offers the chance to make real connections within the community while contributing to the leadership of a meaningful cause.  However, the directors of a nonprofit board can be held personally liable under some circumstances. If you’re asked to serve on a board or are currently serving, be aware of the legal risks and responsibilities that board service entails, especially around the fiduciary responsibilities of care, (staying reasonably informed of the organizations’ activities) loyalty (acting in the interest of the organization, not in your own personal interest) and obedience (adhering to the organization’s mission and complying with applicable laws and with the organization’s governing documents).

But, what about mission-based board decisions that need to be made on behalf of an organization’s donors? As investment stewards, board members must care for the organization’s assets and are responsible for acting as good fiduciaries of the gifts, monetary and other, that are received.

For starters, fiduciary duties are not only enforced by fellow directors, officers and members of the organization, but also by the state attorney general. It’s a good practice for directors and officers to have Directors and Officers (D&O) insurance and require the organization to indemnify its directors against attempts to hold them liable. D&O insurance and indemnification can protect directors except in situations involving fraud, criminal activity or the director’s improper receipt of a personal benefit.

There are also some circumstances in which directors can be personally liable under certain tax provisions, especially if the nonprofit qualifies as a 501(c)(3) or 501(c)(4) organization. The sanctions relate to conflicts of interest and impose penalty excise taxes on transactions between organizations and closely associated insiders such as directors, officers and key employees in which the person(s) receives more value than he or she confers on the organization. The excise taxes apply to the person(s) who received the benefit of the transaction and any directors and officers who knowingly participated.  Directors can also be held personally responsible for any federal payroll taxes owed by the organization.  

Regarding director protection against acts and omissions, it’s best for the organization to indemnify its directors by maintaining errors and omissions insurance and/or employment practices liability coverage.

As a “best fiduciary practice” we suggest considering attaining a CEFEX Investment Steward Certification. The CEFEX (Centre For Fiduciary Excellence) mark is a public demonstration of the organization’s commitment to accountability, diligence and fiduciary excellence. The positive effects of earning this certification can result in an increase of the number and size of charitable donations as well as the opportunity to better serve your grantees.

After all, like pizza, the organization’s mission and vibrancy depends on it. 

Resources

  1. CEFEX
  1. Mission Enablers
  1. Trustee Mag
  1. Nonprofit Accounting Basics
This material has been prepared for informational purposes only and should not be used as investment, tax, legal or accounting advice.  All investing involves risk. Past performance is no guarantee of future results.  Diversification does not ensure a profit or guarantee against a loss.  You should consult your own tax, legal and accounting advisors.

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Beth joined Plancorp in 2015, bringing with her nearly 20 years of experience in the financial services and banking sectors. As a Client Service Representative, she prides herself in problem solving and seamlessly serving her clients in a timely manner. More »