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GCAA 2016 Annual Conference - Techniques and Tools for Effective CAA Board Leadership

GCAA 2016 Annual Conference, Savannah, Georgia - July 20, 2016

Veronica Zhang

on 20 July 2016

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Transcript of GCAA 2016 Annual Conference - Techniques and Tools for Effective CAA Board Leadership

Techniques and Tools for Effective CAA Board Leadership
CSBG Organizational Standards Resources
Case Study:
Board Entanglement

CAPLAW Resources
More Facts
GCAA 2016 Annual Conference
Savannah, GA
July 20, 2016

Christopher Logue, Esq., Staff Attorney
Blake - Executive Director of CAP
Jackie - COO of CAP
Lisa - Chairwoman of CAP board
Rachel - CAP board member
Sofia - CEO of eConsult, Inc.
Organizational Policies
Fiduciary Duties
Duty of Loyalty
Act in best interests of CAA; put CAA's interests above individual interests
Disclose Lisa's conflict of interest
Approve transaction by a majority of disinterested directors
Should not divulge confidential information
Duty of care
Reasonable person standard
Ensure directors are reasonably informed and participate in meetings
Ensure adequate time for discussion
Conflicts of Interest
CSBG Org. Standard 5.6 (Private):

Each governing board member has signed a conflict of interest policy within the past 2 years.

CSBG Org. Standard 5.6 (Public):
Each tripartite board/advisory board member has signed a conflict of interest policy, or comparable local government document, within the past 2 years.
Succession Planning
Plan for different circumstances:
Unplanned vs. planned
Voluntary vs. involuntary
Short-term vs. long-term
ED Compensation and Review
Incentive compensation
must be paid according to agreement
Periodic Risk Assessment
Risk assessment should cover all aspects of the CAA's operations:
Financial management
Contracts and procurement
Human resources
Service delivery
Protecting vulnerable populations
CSBG Org. Standard 4.5 (Private):

The organization has a written succession plan in place for the CEO/ED, approved by the governing board, which contains procedures for covering an emergency/unplanned, short-term absence of 3 months or less, as well as outlines the process for filling a permanent vacancy.

CSBG Org. Standard 4.5 (Public):
The department adheres to its local government's policies and procedures around interim appointments and processes for filling a permanent vacancy.
CSBG Org. Standard 7.4 (Private):
The governing board conducts a performance appraisal of the CEO/executive director within each calendar year.

CSBG Org. Standard 7.5 (Private):

The governing board reviews and approves CEO/executive director compensation within every calendar year.
CSBG Org. Standard 4.6 (Private):
An organization-wide, comprehensive risk assessment has been completed within the past 2 years and reported to the governing board.

CSBG Org. Standard 4.6 (Public):
The department complies with its local government's risk assessment policies and procedures.
Financial Oversight
: Who is coordinating with the board to
Prepare and regularly review financial statements
Prepare annual budget
Coordinate annual audit and review auditor findings
Work closely with Audit Committee during transition period
Shared services
with another CAA or non-profit organization
Strategic dashboards
to facilitate sharing key financial metrics with the board
CSBG Org. Standard 8.7 (Private):

The governing board receives financial reports at each regular meeting that include the following: 1. Organization-wide report on revenue and expenditures that compares budget to actual, categorized by program; and 2. Balance sheet/statement of financial position.

CSBG Org. Standard 8.7 (Public):
The tripartite board/advisory body receives financial reports at each regular meeting, for those program(s) the body advises, as allowed by local government procedure.
CSBG Org. Standard 8.9 (Private):
The governing board annually approves an organization-wide budget.

CSBG Org. Standard 8.9 (Public):
The tripartite board/advisory body has input as allowed by local governmental procedure into the CSBG budget process.

CSBG Org. Standard 8.10 (Private):
The fiscal policies have been reviewed by staff within the past 2 years, updated as necessary, with changes approved by the governing board.
CSBG Org. Standard 8.2 (Private):

All findings from the prior year’s annual audit have been assessed by the organization and addressed where the governing board has deemed it appropriate.

CSBG Org. Standard 8.2 (Public):
The department follows local government procedures in addressing any audit findings related to CSBG findings.
CAA Self-Assessment Tools
Nonprofit CAAs and Public CAAs:

Glossary of Terms
Provided as guidance by the Organizational Standards Center of Excellence (OSCOE)

Intended to
clarify intent
of the CSBG Working Group in the development of the CSBG Organizational Standards
Series of 10 Short Videos for Board Members
Intro video + nine videos
on each of the nine Org. Standards categories (each approx. 10 minutes long)

Videos review each of the 58 Org. Standards (for private CAAs) and highlight how they relate to the oversight role of a CAA board
Calendar of Required Actions
Checklist divided by how often the board must take action to help CAA boards internally plan and track what actions must be taken and when

Tools for Top-Notch CAAs
Bylaws Toolkit
Form 990
Does the CAA require directors, officers, and key employees to
sign an annual disclosure form
CSBG Org. Standard 8.6 (Private):
The IRS Form 990 is completed annually and made available to the governing board for review.
Confidentiality/Code of Ethics
Duty to safeguard proprietary information
obtained in the individual's capacity as a director, officer, employee or volunteer
Whistleblower Policy
Develop a formal policy to handle
reports of fraud or illegal activity
CSBG Org. Standard 7.7 (Private):

The organization has a whistleblower policy that has been approved by the governing board.

CSBG Org. Standard 7.7 (Public):
The department provides a copy of any existing local government whistleblower policy to members of the tripartite board/advisory body at the time of orientation.
Procurement Policy
Uniform Guidance

(2 CFR 200.318)*:

CSBG Org. Standard 8.11 (Private):

A written procurement policy is in place and has been reviewed by the governing board within the past 5 years.

CSBG Org. Standard 8.11 (Public):
Strategic Dashboards
Succession Planning Toolkit
3-part guide to succession planning
What organizational and personnel policies are potentially implicated in this case study? How should CAP revise these policies?
Discussion Questions
1. Do you think the board acted properly in approving Blake’s bonus? What other options would you have considered?

2. Think about your own CAA’s succession plan (if any). How well would the plan address sudden departures like Jackie's and Blake's?
Issues to Consider at Board Meeting
Incentive Compensation - 2 CFR 200.430(f)
Severance Payments - 2 CFR 200.431(i)
Severance Payment:
A payment in addition to regular salaries and wages to workers whose employment is being terminated.

Allowable only if:
Required by law
Required by employer-employee agreement
Required by established policy that constitutes, in effect, an implied agreement on the agency's part
Required by circumstances of the particular employment
Dynamic Duo
Nonprofit CAAs
Powers of the Board
Federal CSBG Act
Boards of nonprofit CAAs must
the CSBG program by
fully participating
in the
42 U.S.C. § 9910(a)
of the CSBG program
Development, Planning, Implementation, and Evaluation
Responsible for oversight and governance of the CAA
Key player in needs assessment
Primary source of information/insight about community served

Long-range strategic planning (broad goals, procedures)
Annual planning (performance expectations, milestones)

Exercise fiduciary duties ("reasonable person" standard)
Oversight of agency programs and fiscal controls*

Request/receive outcome and performance-focused information
*Nonprofit CAAs and Public CAAs to the extent power delegated to them
A majority of disinterested directors:
Determines transaction is fair/in the best interest of the CAA
Determines CAA could not have obtained a better arrangement with reasonable effort
Formally approves transaction
Head Start prohibits any
“financial conflict of interest”
between a board member and agency
Term not defined
Head Start
Nonprofit CAAs
CSBG Org. Standard 7.4 (Public):
The department follows local government procedures for performance appraisal of the department head.

CSBG Org. Standard 7.5 (Public):

The compensation of the department head is made available according to local government procedure.
Customized Risk Management Tool for CAAs
Risk Assessment Webinars
Receiving Regular Financial Reports
Annual Budget / Fiscal Policies
Addressing Audit Findings
CAA Leaders' Legal Guide
5-Part Webinar Series:
Director Liability
director who acts in
good faith
reasonable care
is not liable to the CAA for his/her own actions
Nonprofit CAAs
Conflict of Interest Policies
Form 990
Whistleblower Policies
Procurement Policies
Engaging the Board
Make board meetings matter
Structure board meeting agendas around important questions and strategic priorities
ED Performance Review
ED Performance Review
Risk Assessment
conflict of interest
exists whenever any of the following parties has a financial or other interest in the firm selected to receive the contract:
No employee, officer, or agent of a CAA may participate in the
selection, award, or administration
of a contract paid out of federal funds if he or she has a
real or apparent

conflict of interest
Uniform Guidance
2 C.F.R. § 200.318(c)

Understanding board roles and responsibilities through case studies
Main Topics
Board roles and responsibilities

Organizational policies and procedures

ED supervision, evaluation, and compensation

CSBG Organizational Standards
Link to workshop presentation:
Certified Awesome Programs, Inc. ("CAP")
A CAA in Anytown in the state of Bliss
History of being a high functioning and performing organization
Services three large, rural counties
Photo credit: Carol Wycoff, http:/www.flickr.compeople/80909625@N00
Programs CAP offers include:
Head Start programs
employment training
Photo credit: Tadas1980, https://commons.wikimedia.org/w/index.php?title=User:Tadas1980&action=edit&redlink=1
ride share
CAP board considering 3 bids for an outside consultant to help with strategic planning
- $150,000; 4 weeks to complete
Government Solutions
- $130,000; 6 weeks to complete + on-call assistance
- $110,000; 4 weeks to complete
Directors may be
for damages to corporation for
self-dealing transactions
and D&O
Process for Addressing Conflicts of Interest
Conflict of interest policy: require ongoing disclosure
Separate policies for board and key employees
Review contractor list annually
Enforce conflict of interest policy
Sanctions for violations
Disclose all material facts of the transaction
Employees, officers, or agents of the CAA;
A member of his or her immediate family;
His or her partner; or
An organization that employs or is about to employ any of the above parties
Define the scope of coverage
Or allow board to evaluate the extent of the potential influence on the board member
Does the CAA
regularly monitor and enforce
its conflict of interest policy?
Communications Policy
Communications policy between staff and board:
Designate a spokesperson (Chair)
Set up a process for board members to follow when contacted by staff
Sample Procurement Grid
Specify who is involved in procurement decisions
Have written procurement policies
Ask for representations regarding conflicts of interest
Document cost/price analysis and vendor selection
Keep procurement records
Engage in full and open competition
Allow staff to communicate directly with board:
To arrange board meetings
To report complaints involving ED or officers of CAA
Open meetings laws
Check to see if state laws apply to you
client, donor, member, staff and volunteer
personal records
Note state privacy laws protecting personally identifiable information
investigation of whistle-blower complaints
of issues
Specify the
matters covered
(e.g., financial fraud, workplace safety, employment practices)
Protect against
Describe the
reporting process
To supervisor/ED or board if ED/officers involved
Board Engagement and Development
Ensure each member is an active participant on the board
Match up skills/interests with
Prioritize board development and growth
Have regular board orientations and trainings
Assign mentors and pair up more and less experienced board members
Engage board members in the CAA's mission
Build in hands-on opportunities for board members to get to know the CAA's programs and people
Regularly assess board performance
Board self-assessments, individual check-in meetings
Share the impact of board's work and recognize board service
Board Development
Jackie terminated for cause

Blake forced to resign as ED

Board approved a $5,000 departing payment to Blake

Jackie's Chief Operating Officer position remains vacant at the end of CAP's fiscal year
Severance payments
can only be paid with grant funds in limited circumstances (2 CFR 200.431(i))
IRS rules
: Total compensation cannot be excessive
"Intermediate sanctions" for excessive benefits to insiders
Penalties against recipient of benefit and organization officials who approved it
Rebuttable presumption if certain procedures are followed
Head Start cap if federal funds used to pay any part of the compensation of an individual employed by Head Start agency
Cannot exceed level II of Executive Schedule ($185,100 in 2016)
Emergency plan:
Who appoints?
Interim leadership options
Provide oversight and support of interim ED
Communications plan with funding sources and public
Broader succession policy
for planned transitions
*2-year delay in implementation
Must be based on cost reduction, or
efficient performance

Allowable to the extent that the
overall compensation is determined to be reasonable

Must be documented in an
with the employees
the services were rendered, or
pursuant to an established plan
followed by the agency so consistently as to imply, in effect, an agreement to make such payment.
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