Spring 2010 - Board Fiduciary Responsibilities

1.       How is the money invested?

2.       Who is managing the funds and are they arms length from the Board of Directors?

3.       What policies are in place for donor relations?

4.       What is the organization's corporate structure?

5.       What are the revenue streams for the agency and how are they managed?

6.       Who within the organization is responsible for financial management? And who on the Board is responsible?

There are some basic things that a charity can do in order to master fiduciary excellence.  As donors  you can help your recipient organizaitions achieve success along the way by guiding them through a process like the one developed by Mike Skrypnek.

The process:

1.      Conduct a Strategic Assessment of Fiduciary Excellence

SAFE is a formal process defined by the Center for Fiduciary Excellence.  Similar to a governance or fund development audit, this assessment provides thorough review of all fiduciary aspects of investment management for an organization.  The purpose of this assessment is to reveal opportunities for improvements around financial matters in governance, lower conflicts of interest and review of all roles and responsibilities in investment management for individual in the organization.

2.     Quantify your goals

This part of the process is BIG picture thinking.  Its intention is to highlight the wish list of ultimate near term and long term goals of an organization.  These goals are then quantified into a financial value thus allowing for the matching of current assets, and fund raising programs with those defined future liabilities.  Charities can then use this as one of the many pieces of sharing their needs with their donors.

3.     Strategic Investment Policy Development

Once the organization knows the values of their goals, they can then build an investment management plan to achieve these goals. 

This plan is also something that a donor would develop when looking at their social vision and determining the resources s/he want to allocate to that vision.

4.     The "What If" Analysis

It is the donor's responsibility to find out what their investee's contingency plans look like.  Charities are NOT obligated to share this information, so as a donor this is something that you should ask.  A strong charity will have prepared contingencies for best and worst case scenarios AND tested the plan and quantifying the risks/rewards of the hopeful OR the unknown.

5.     Monitoring and Reporting

Accountability between donors and charities is what makes a strong relationship.  The same thing is between a charity and its wealth manager.  There has to be ongoing due diligence of managers, custodians, advisors, of donor dollars beyond the presentation at the AGM.  Donors should make a point of asking what this relationship looks like so that you know how your funds are being in managed.

[G1]Add Link