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Yancey Arts Consulting Board Development Plan Outline:

Basic Version

© Yancey Consulting, LLC 2010

YAC Opening Disclosure: This document was created for reference purposes only. It outlines key areas
addressed when undergoing a board development process. It is not recommended as a substitute to engaging
the internal or external services of a professional consultant or experienced advisor, who is often needed
during this process. The purpose of this outline is to provide the intended recipient with a thorough checklist
of what an organization may want to consider when undergoing board development. It was developed from
practical engagement, board development classes and workshops, research on the latest strategies in the field,
and ongoing conversations with other arts professionals.

The Basic Version of YAC’s Board Development Plan provides broad overview of considerations to assess
when building and establishing an effective board of directors. There are definitions and clarifying points in
understanding the role and fiduciary responsibilities of this governing body included in YAC's Standard
Version; sample language, checklists, and detailed definitions are included YAC's Optimum Version-the most
comprehensive of all three outlines.

Board Potential
Boards are entrusted with governing the public service and solvency of all not-for-profit organizations in the
United States of America. If armed with a clear set of directions, expectations, responsibilities, and
fundraising objectives, they can play a critical role in the growth and sustainability of their organization. If
they are excited and committed to the mission and vision of the organization, they can become champion
advocates of the organization, recruiting other like-minded individuals who believe in the organization. They
can also serve as a springboard to increase the organization’s contributed revenue. They should be the
strongest resource for the organization and are necessary for institutional sustainability.

Do not be deterred in this process if you feel that you do not have access to the type of individuals that you
want to serve on your board. If you are clear about your mission and clear about the difference your
organization makes in the lives of the people you aim to serve, then you will be able to identify, target, and
cultivate the relationships you need to build the board you want.

YAC would be delighted to answer any questions that you may have and welcome all feedback on this
document. Let us know if it met your expectations in terms of thoroughness, clarity, and completeness.
Email us at info@yanceyartsconsulting.com. Someone will respond to your feedback and inquiries promptly.
I wish you the best during this very important process.

My absolute best,
Lisa Yancey

Lisa Yancey
Founder/President
Yancey Arts Consulting,
A subsidiary of Yancey Consulting, LLC
 BOARD DEVELOPMENT OUTLINE

I. An Effective Board

II. Board By-Laws

III. Board Duties

IV. Legal Obligations

a. Duty of Obedience

b. Duty of Care

c. Duty of Loyalty

V. Sarbanes-Oxley and Implications for Non-For-Profits

VI. Board Structure—The Officers

VII. Board Structure—The Committees

VIII. Diversifying Your Board

IX. Board Recruitment & Selection

X. Board Evaluation & Self Assessment

XI. Addressing the Under-Performance of Board Members

XII. Facilitating Board Succession & Transitions

Yancey Arts Consulting: Board Development Outline [Basic] Page 2

 AN EFFECTIVE BOARD OF DIRECTORS

An effective Board of Directors, also called a Board of Trustees, is a motivated, result-driven body of

individuals with a legal and fiduciary duty to oversee an organization’s financial solvency, assets, operational

policies, and support, as well as fundraise, on behalf of the organization. This body of individuals is entrusted

to facilitate the sustainability of the organization, enhance its public relevance, and ensure its mission is always

at the root its strategic direction. It is imperative to the success and longevity of a not-for-profit organization

that a Board of Directors who not only believes in its mission, but also possesses the collective vision and

resources to position the organization for immediate and future growth governs it. [Note: Characteristics

of effective Board Members are included in YAC's Standard and Optimum Version available at

www.yanceyartsconsulting.com]

Often, these are affluent individuals, with a rich history of supporting the community. However, personal

wealth is not the only consideration for Board member recruitment.

The Board should be committed to the organizational mission, have a vision for its long-term growth, and

believe in the community where it resides. Ultimately, they must be willing and ready to work on behalf of

the organization. Depending on the organization’s location, it may make sense to have a Board member who

works in a particular industry that is dominant in that locale.

Diversity is very important. Yes, you want a Board that will safeguard the interests of the organization.

Consider Trustees that can relate to the interests of the constituents served by the organization.

Yancey Arts Consulting: Board Development Outline [Basic] Page 3

 Financial competency is also very important. When building your Board, be sure to recruit at least one

individual with the financial competency. Overall, an effective Board will create (and re-create as

necessary) the proper systems to ensure the future of their institutions. [Note: Other

considerations are included in YAC's Standard and YAC's Optimum Version available at

www.yanceyartsconsulting.com]

Yancey Arts Consulting: Board Development Outline [Basic] Page 4

 BOARD BY-LAWS

The Board’s operating guidelines is governed by the organization’s by-laws. It is the governing doctrine that

outlines the rules and regulations that will preside over the internal operations of your organization. These

rules and regulations are subject to state statutory law and the organization's articles of incorporation; they do

not, however need to be filed in the state's corporation filing office.

Regarding the Board, the by-laws outline the responsibilities of the board members including the

requirements for election, termination, member dues, meetings, power and responsibility and more. They

should be clear and concise, and correspond in accordance to the purpose of the organization.

Board terms are determined by the by-laws (usually three years), with an annual review to remove members

who are not fulfilling board responsibilities and expectations.

Board meetings should be scheduled well in advance and occur approximately the same time, for the same

length of time every one, two, or three months—based on the needs of the organization. They should not

exceed 2 hours as a practice. Agendas should be provided at least a week in advance and organizational staff

should prepare materials. [Note: Comprehensive information on Board By-Laws is included in YAC's

Standard Version; Sample By-Laws are included in YAC's Optimum Version available at

www.yanceyartsconsulting.com]

Yancey Arts Consulting: Board Development Outline [Basic] Page 5

 BOARD DUTIES

As Trustees, the Board of Directors is responsible for:

 Financial Stewardship--ensuring the organization’s financial solvency;

 Assets Stewardship—managing the organization’s endowment, etc

 Governance—developing sound management practices, structure, and policies

 Fundraising—making personal donations, cultivating relationship with donors on behalf of the

organization

All Board members must contribute to the organization. One of the most essential means of contribution is

through monetary donations. Board members must commitment to a minimum personal contribution

amount that must be fulfilled by all members. This amount will vary depending on the size of the

organization, but a committed amount is absolutely necessary to the fundraising success of the organization.

In addition to personal and solicited financial contributions, a commitment of time and expertise are both

very valuable trustee donations. [Note: Comprehensive definitions and examples of Board Duties

are including in YAC's Standard and Optimum Version. Board vs. Management Duties is

included in YAC's Optimum Version available at www.yanceyartsconsulting.com]

Yancey Arts Consulting: Board Development Outline [Basic] Page 6

 LEGAL OBLIGATIONS

The Trustee’s Fiduciary Duty

The Board’s fiduciary duty is a legal mandate that requires undivided loyalty and trust by the Trustee to

operate and govern on behalf of the organization, free of conflicts that could impair the organization’s

operational efficiency and growth. The Trustees are the ultimate stewards of the organization.

To ensure this public stewardship, they are required to uphold three explicit duties: Duty of Obedience, Duty

of Care, and Duty of Loyalty. If the Trustees fail to uphold these duties, they can be held personally liable to

any individual or entity harmed by their fiduciary negligence. [Note: Comprehensive explanations of

fiduciary duties are available in YAC's Standard and Optimum Versions available at

www.yanceyartsconsulting.com]

Duty of Obedience

The duty of obedience requires Board members to be faithful to the organization's mission.

Duty of Care

Care that an ordinarily prudent person would exercise in a like position and under similar circumstances.

Duty of Loyalty

The duty of loyalty is a standard of faithfulness and authenticity to the organization.

Yancey Arts Consulting: Board Development Outline [Basic] Page 7

 SARBANES-OXLEY AND IMPLICATIONS FOR NOT FOR PROFIT ORGANIZATIONS

Signed into law on July 30, 2002, the Sarbanes-Oxley Act was the Security and Exchange Commission’s
response to the corporate and accounting scandals of Enron, Tyco and others of 2001 and 2002. Its purpose
is to rebuild public trust in America’s corporate sector by requiring Board members to broaden their
oversight and disclosure on financial transactions and independent auditing procedures. Provisions of the
Act are primarily applicable only to publicly traded corporations; however, it may just be a matter of time
before similar financial oversight requirements are required for not-for-profits. Since its passing, several state
legislatures have passed or are considering legislation comparable to the Sarbanes-Oxley Act for the not-for-
profit organizations in their state. [Note: Comprehensive explanation of the SOX Act is available in
YAC's Standard and Optimum Versions available at www.yanceyartsconsulting.com]

General Overview of Sarbanes-Oxley

Sarbanes-Oxley Act requires that each member of a company’s audit committee be a member of the Board of
directors and be independent. Independent means that the director is in no way compensated for its auditing
services, and they are not participating in executive management decisions. Furthermore, a company must
disclose whether it has at least one financial expert serving on its audit committee.

Sarbanes-Oxley also requires that the lead and reviewing partner of the auditing firm rotate off the audit every
five years. The firm doesn’t have to change, but the lead reviewer must to ensure objective review. [Note:
Clarifying points are included in YAC's Basic and examples of auditing services are included in YAC's
Optimum Versions]

The auditing firm must support their findings using the “critical accounting policies and practices” that are
used by the organization, which are essentially in accordance with generally accepted accounting principles
(GAAP). [Note: Key Provisions of this Act are included in YAC's Standard and Optimum Version
available at www.yanceyartsconsulting.com]

Yancey Arts Consulting: Board Development Outline [Basic] Page 8

 Applicable considerations for Not-for-Profit Organizations

Although the financial governance and review of not-for-profit organizations will vary depending on the size

of the organization’s annual budget, all not-for-profits should follow a practice of independent accounting

and audit review for reporting on IRS Form 990 or 990-PF, as well as the basis for developing budgets and

analyzing organizational growth. Nonprofits what expend more than $500,000 of federal funds are required

to conduct an annual audit. Smaller organizations (operating budgets under $250,000) should undergo the

review of a professional and reputable accountant. The auditing firm or professional accountant should be

evaluated to ensure that they possess the requisite skills and experience to successfully complete the task.

As evidence by Sarbanes-Oxley and the tighter review of not-for-profit fiscal management practices,

regulation is encouraging organizations to operate to uphold the public trust and confidence of its supporters

and constituents. These mandates aid organizations in establishing practices that should already be a part of

its institutional practices. [Note: Clarification on mandates, provisions, and implications are included

in YAC's Standard and Optimum Versions available at www.yanceyartsconsulting.com]

Yancey Arts Consulting: Board Development Outline [Basic] Page 9

 BOARD STRUCTURE—The Officers

Board members oversee and govern the affairs of the organization, nominate and elect candidates for

membership, develop the policies of the organization that are synergetic to the mission and vision of the

organization, and perform all duties as required by the organizations by-laws. There are four key officers for

every Board structure. [Note: Duties of officers are included in YAC's Standard Version; key

requirements are included in YAC's Optimum Versions available at www.yanceyartsconsulting.com]

The Officers

Board Chairman:
Is elected as the head of the organization by the full Board. S/he is required to attend all board meetings and
shall maintains a healthy relationship between the organization, public, and donors.

Co-Chair:
Shall chair on committees designated by Chair, assume the duties of the Chair in his/her absence, incapacity,
resignation or termination.

Secretary:
Shall be accountable for record keeping of board meetings, meeting minutes, announcement of board
meetings.

Treasurer:
Chair of the Finance committee, administer fundraising goals, assist with development of organization's
budget, preserve adequate financial records.

Yancey Arts Consulting: Board Development Outline [Basic] Page 10

 BOARD STRUCTURE—The Committees

As organizations grow in size and sophistication, Boards often focus their concerted efforts by establishing
committees. Each committee, with is more narrow and concentrated focus, can better solve specific
problems, bringing their collective strategic thinking to the full Board.

Committees and ad-hoc committees are appointed, as needed, by the Chair and Executive Director. There are
two areas of Board governance from which committees are formed: oversight and operational. Oversight
Committees are: Executive, Finance, Nominating, Strategic planning, and Human Resource Committees
Operational Committees are: Fundraising, Marketing/Public Relations, Advocacy, Investment, and possibly
Audit.

There is also the Ad Hoc committee. This committee is special project driven. It is established or disbanded
as needed to supervise special projects and galas, real estate purchases, and any other ephemeral events.

[Note: Brief committee duties are included in YAC's Standard Version; comprehensive duties and
operations is included in YAC's Optimum Version available at www.yanceyartsconsulting.com]

Oversight Committees:

 Executive Committee
 Finance Committee
 Governance/Nominating
 Strategic/ Long-Range Planning
 Human Resource

Operational Committees

 Fundraising/ Development
 Marketing/Public Relations
 Advocacy
 Investment
 Audit

Yancey Arts Consulting: Board Development Outline [Basic] Page 11

 DIVERSIFYING YOUR BOARD

Diversity is generally defined as acknowledging, understanding, accepting, valuing, and celebrating differences

among people. In its simplest form, diversity equals variety. The diversity of a board is a distinctive and

powerful tool to help connect the organization's leadership to reflect the organization's constituency. The aim

is to not be an organization that is "culturally blind." The uniqueness of a diverse board will help to

strategically align the effectiveness of the leadership of the organization and match the needs of the

organization to the skills of the board. Greater diversity in the boardroom also ensures the organization's

competitiveness and proactive ability response to change. [Note: Comprehensive information is included

in YAC's Standard Version; diversity benefits are included in YAC's Optimum Version available at

www.yanceyartsconsulting.com.]

Yancey Arts Consulting: Board Development Outline [Basic] Page 12

 BOARD RECRUITMENT & SELECTION

There is a science to recruiting new Board members. This is why it is important for the Board to have a

designated nominating/recruitment committee to supervise and facilitate these efforts. Recruitment of new

Board members should be an ongoing process. Senior staff and nominating committee chair must

continually search for individuals who are interested in the organization, and satisfy the criterion established

for Board prospects.

The organization can develop a list of Board prospects from the contacts of existing Board members, donor

contacts, following social and business activities in the media, review philanthropic periodicals and other

charitable giving reports are good sources of information. Once a group of prospective Board candidates has

been identified, an effective procedure for recruiting must be established. [Note: This process is included

in YAC's Optimum Version available at www.yanceyartsconsulting.com]

The purpose of orientation is to ensure that new board members are clear about his or her duties and legal

obligations. Boards could choose a variety of recruitment methods which are included in YAC's Optimum

Version. [Note: Sample comprehensive orientation package is included in YAC's Optimum Version

available at www.yanceyartsconsulting.com]

Criteria for Selecting Board Members

Recruiting and selecting board members can be an overwhelming task. Organizations should look for:

 Commitment to mission
 Professional skills
 Leadership Qualities

[Note: Definitions of suggested criteria for evaluating a prospective member is included in YAC's
Standard version; full list of suggested criteria, clarification and leadership qualities are included in
YAC's Optimum Version available at www.yanceyartsconsulting.com]

Yancey Arts Consulting: Board Development Outline [Basic] Page 13

 BOARD EVALUATION & SELF ASSESSMENT

Board evaluations are vital assessment tools to ensure member accountability and consensus on short and

long-range goals and objectives. When performing evaluations, it is crucial that confidentiality is maintained,

and the evaluation is on the board as a whole, not an individual. The exception is the evaluation of officers,

and their ability to successfully carry out their official responsibilities. Each board member should complete

the evaluation individually, followed by a full board discussion. Evaluation areas include: [Note: Definitions

of evaluation methods are included in YAC's Standard Version; comprehensive clarification and

Sample Evaluation Checklist are included in YAC's Optimum Version available at

www.yanceyartsconsulting.com]

 Membership Accountability
 Fiduciary & Legal Accountability
 Organizational Finances & Fundraising
 Organizational Planning
 Board Growth
 Asset Stewardship

Yancey Arts Consulting: Board Development Outline [Basic] Page 14

 ADDRESSING THE UNDER-PERFORMANCE OF BOARD MEMBERS

There are a number of reasons board members are unable or unmotivated to perform. Whatever the
reason(s), the under-performing member must be addressed. The Board Chair should take the lead
in meeting with the member. The initial intent is to ensure that the member is clear as to his or her
Board responsibilities and expectations. Once clarity of responsibilities has been affirmed, the Chair
should then inquire as to the member’s commitment to fulfill these responsibilities and the expected
timeline for performance.

If the member continues to under-performance, the chair should consult the organization’s by-laws as to the
next course of action. [Note: Suggested considerations for Under-performing boards are included in
YAC's Standard and YAC's Optimum Version available at www.yanceyartsconsulting.com]

Yancey Arts Consulting: Board Development Outline [Basic] Page 15

 FACILITATING BOARD SUCCESSION & TRANSITIONS

The goal of leadership succession planning is to create opportunities for Board development and growth that

ensure organizational stability. An ever-changing economy is a prevailing reason organizations must embrace

the reality that change is inevitable to its survival. Successful planning requires the commitment of all Board

members and executive staff. Members should consider a diverse pool of candidates whose skills compliment

the current and future needs of the organization. Accurate performance appraisal of the board will enable the

organization to make sound leadership and development decisions that will continue to direct the future of

the organization. [Note: Comprehensive information is available in YAC's Standard and Optimum

Versions available at www.yanceyartsconsulting.com]

Yancey Arts Consulting: Board Development Outline [Basic] Page 16