Well organized and productive board meetings are vital to the success of any nonprofit.  Just as each board member should understand their duties and responsibilities for service on a board, they must also understand how they must function as a team during board meetings.  Much of the structure of a board meeting is outlined in an organization's bylaws.  However, best practices would suggest a higher level of governance than required by most states (i.e.,at least four board meetings per year, etc.).  In order to meet this best practice, members of the board must understand their roles and provide constructive and thoughtful participation based on their diverse skills and knowledge.

Regular board meetings are essential for good governance. Board meetings should be scheduled on a periodic basis in accordance with the organization’s bylaws. While most states require only one meeting per year, best practices suggest a minimum of four meetings per year. On a regular basis, solicit from the board the most convenient day and time to hold board meetings and then schedule them as far in advance as possible. Allow adequate time to fulfill the objectives of the meeting. If a specific agenda item takes more than the allotted time, table it until the next meeting and form a small committee to research the issue and bring recommendations to the board for full review and approval.

Pre-meeting:  Preparation is key to a successful board meeting. Assembling and distributing in advance (two weeks) a package containing the agenda and background materials will help members fulfill their fundamental duty of care. To assist each member in focusing on the issue, the executive director may want to include a memorandum identifying the issues for discussion and what will be required of the board (i.e., approval or discussion only).

During the meeting:  Establishing ground rules for conducting board meetings can ensure that differing opinions are heard and respected. For example, the chairman should encourage members to be vocal, but to be professional and collegial, and make it clear that speaking out of turn or personal remarks will not be tolerated. Also, rely on staff for information and bring in experts to add an outsider's perspective, especially for particularly contentious agenda items, or for legal/financial advice. Avoid overly structured and procedural meetings. Allow time for open discussion and deliberation.

After the meeting:  It is important to keep communication to the board open after the meetings. Within 48 hours of the meeting, the executive director should send board members a list of assignments made during the meeting as well as a draft copy of the minutes. As needed, the executive director should monitor progress or offer assistance to make sure that assignments are on track for completion before the next meeting.

Agenda

An agenda keeps board meetings focused and productive. Every board meeting should have a carefully prepared agenda with a mix of routine matters and items that require careful deliberation, backed up by concise background information. Each agenda item should specify the:  topic, time allotted, name of the board member who will present the topic and any outside speakers, and the action is required by the board (approval/disapproval, discussion).  Following is a sample agenda format:
 

NPC Name

Date, Time and Location of Board Meeting
Presiding: Chairman James Hancock, MD

Time	Topic	Presenter	Documentation	Page	Action Item or Discussion
5:45 pm to 6:00 pm	Minutes of January 15 Meeting	Dr. Hancock, Chairman	Draft Minutes	2	Approval/ Disapproval
6:00 pm to 6:15 pm	FY 2003-2004 Operational Budget	Dr. Abrams, Treasurer, Jon Adams, Accountant	Draft Budget	6	Approval/ Disapproval
6:15 pm to 6:30 pm	IRB Support	Dr. Smith	R&D Request	9	Approval/ Disapproval
6:30 pm to 7:00 pm	Proposed Clinical Research Center	Dr. Hilliard Draft	Business Plan	11	Discussion
7:00 pm	Adjourn

Board Calendar

An annual board calendar serves as a useful reminder to ensure that certain items are placed on the agenda for annual board review and approval in time to meet compliance or best practice deadlines.  There are certain activities that every board needs to perform on a regular basis. Assigning each activity to the appropriate month and board meeting will help the board ensure that all of its legal, financial and best practices tasks are accomplished in a timely manner. Items that might appear on the calendar include:

Filing requirements

• IRS Form 990: Every VA-affiliated nonproft must file a federal Form 990 with the IRS annually. [Note: The IRS requires submission only for nonprofits with annual revenues over $25,000. However, VHA Handbooks 1200.17 and 1400.2 require all VA-affiliated nonprofits to submit annually.] Form 990 must be filed on the fifteenth day of the fifth month after the end of the fiscal year. For example, if the fiscal year ends on December 31, file the 990 by May 15.
• IRS Form 990-T: Each organization engaging in unrelated business activities must file Form 990-T with their IRS Form 990 and must pay unrelated business income tax. Check the IRS website for what constitutes unrelated business income.
• Annual Report to VA: On June 1 of each year, each NPC must submit an annual report to the VA. The board should ensure that proper resources (i.e., personnel and financial) are allocated so that the annual audit and subsequent IRS documentation are completed in a timely fashion so that the annual report to VA may be filed in a timely manner. 
• Fundraising registration: Each state has its own regulations for charitable fundraising so check state compliance requirements for the deadlines. If an organization raises funds in any state where it is not incorporated, it also must register in that state and file an annual renewal or financial report.
   

Other state filings: [Note: check with the NPC accountant for full list of state requirements.]

• Employee payroll: All nonprofits must withhold employee federal income and Social Security/Medicare taxes and submit payments on a regular basis. Non-compliance can result in heavy penalties. http://www.irs.gov. In addition, most states have state income tax and unemployment taxes that must also be paid in a timely manner. Federal grant reports: Recipients of federal grants usually have to file specific annual reports. Check the original grant agreement or contract.
• Executive Director: On an annual basis, evaluate the executive director’s performance and set goals for the following year. Also, on a periodic basis, the board should review the executive director’s compensation and document compliance with the IRS excess benefit regulations. See http://www.irs.gov for information on intermediate sanctions. 
• Conflict-of-interest policy: In accordance with VA Handbooks 1200.17 and 1400.2, each member of the board must follow federal conduct and conflict of interest policies. However, the board may also decide to implement a separate COI policy that requires annual disclosure.
• Annual audit: The board should ensure that the audit is performed in a manner that allows sufficient time for the board to review the annual audit and management letter prior to the deadlines for IRS Form 990 and the annual report to VA.
• Operational Budget: On an annual basis, approve an operational budget for administering the NPC. At each subsequent board meeting, board members should compare actual expenses against the budget.
• Policies and Procedures: On a periodic basis (at least every three years), review and approve the NPC’s operational, financial and human resource policies and procedures and ensure that they are in compliance with federal, state or local laws. (i.e., travel reimbursements are consistent with an IRS accountable plan, etc.)
• Insurance policies: On a periodic basis (annual), review the organization’s insurance policies to ensure that the type and level of coverage are adequate for the organization’s activities and property.
• Bylaws: On a regular basis (every three years), review the organization’s bylaws to ensure that they reflect the way they in fact conduct business as well as any changes in the environment of the organization or relevant laws.
• Self assessment: On a periodic basis (every other year), board members should evaluate their performance as a whole and as individuals. This evaluation process is important to judge what the board is doing well, where the board can improve and how the board can better communicate with each other and with the community it serves.
• Mission and Strategic Planning: On a periodic basis (annual), review the written mission statement of the organization to ensure that it is current and in line with its long term plans. Review of the mission is extremely important to remind the board and staff of the organization’s purpose. Asset accounts: In accordance with VA Handbooks 1200.17 and 1400.2, the board must guarantee the safety of the NPC’s assets. Therefore, the board should ensure that funds are held federally-insured accounts - backed by the full faith and credit of the US government.
• On a regular basis, the board should review the signatories on the asset accounts to ensure that the signatories are current.
• State and local requirements: As needed.

Consent Agenda

A consent agenda is a time saving tool that groups together routine items and resolutions under one agenda item. Items included in the consent agenda require no discussion before voting and all are approved in one vote. However, at the request of a board member, an item may be removed from the consent agenda and added to the regular agenda for separate discussion. Items often included in a consent agenda:

• minutes from a previous board meeting
• factual reports
• minor operational changes
• routine document updates

The topics and documentation for items in the consent agenda must be distributed to board members well in advance of the board meeting. Board members must contact the chair before the meeting if they wish to have any items removed from the consent agenda.

Board Meeting Minutes

The primary purpose of board meeting minutes is to create an official record of the events that transpire during a meeting.  Minutes also demonstrate that the board is fulfilling its duty of care. Minutes are legal documents that represent the actions of the board, and they carry significant weight with courts and investigating agencies.  As a result, the board should be sensitive to what is included and how board deliberations are presented.  Write them as if they will be published in the New York Times.  They should not be a transcript of the meeting but should be detailed enough so that those not in attendance can understand what occurred.

An important and positive element of minutes is that they provide an opportunity for the organization to create a record of conscientious compliance with its multiple legal obligations. For example, minutes that reflect review and approval of the annual operating budget and quarterly financial statements would support the contention that the board is fulfilling its responsibility to ensure the financial integrity of the nonprofit. In addition, a description of board review and approval of the annual IRS Form 990 and audit, along with direct interaction with the auditing firm, would demonstrate that the board provided oversight of funds held in the public trust. A notation that the board conducted its annual review of insurance coverages would show that the board was diligent about risk management and protecting those involved in the nonprofit and its property.

Process:  To assist with well prepared board minutes, NPCs should consider how they prepare for a board meeting.

• Before each board meeting: about 20-30 days before the board meeting, a request for board meeting topics should be sent to all board members.  Then about 10 to 15 days before the board meeting, the board chair and executive director should confer on topics to be addressed during the board meeting.  The chair and executive director should then work together to gather and prepare enough documentation for board members to make well-informed decisions.  About 5 to10 days in advance, boards should be provided with the agenda and all supporting documentation.  This may include recommendations and any reasonable alternatives.  Board members should review the materials and come to the board meeting prepared to discuss each issue before making decisions.
• During each board meeting:  Time should be allowed for discussion, questions, evaluation and consideration before taking action.  Serious matters warrant greater attention and deliberation, and this should be reflected in the minutes.
• After the board meeting:  Board minutes should be written and distributed immediately.  Board members should respond with comments and corrections as soon as possible while the meeting is still fresh in their minds.  Each board member has an obligation to carefully review the minutes of each meeting for accuracy. Members who disagree with the draft minutes should bring their objection(s) forward prior to approval of the minutes at the next board meeting.

Minimum requirements:  At a minimum, minutes should include the following:

• Name of the organization
• Location, date, and start and end time of meeting
• Type of meeting - regular or special
• Board members present (in person or by speakerphone if allowable under state corporation laws) and absent
• Other individuals present during the board meeting (i.e., staff and guests)
• Existence of a quorum (minimum number of board members entitled to vote that must be present at a meeting before any business can be transacted legally) 
• A brief description of each agenda item and the action taken by the board on that item; note any recusals or abstentions; note dissenting votes upon request of the board member
• A notation about any actions that require follow-up by the board or staff

How much information should be included?  It is not necessary, nor is it advisable, to record the name of the person who makes a motion or seconds it, or who votes for or against it. This is because in the event of a lawsuit, it provides the plaintiffs with details about who supported or opposed the action. Recording the names of the board members who voted for or against a motion provides a ready list of potential witnesses for one side or the other and suggests divisions within the board. After the board has made its decision, it is better to present a united position on a decision.  However, in an effort to maintain transparency for conflicts of interest, abstentions or recusals should be reflected in the minutes.  Also, upon request a board member who disagrees with the outcome of a vote may have his/her name noted in the minutes as a dissenting voter.

Absence from the meeting:  Board members’ absence should be noted in the minutes.  Board members should be aware that their absence from a meeting of the board does not relieve them of their duties of care, loyalty or obedience.  Nor does absence relieve the board member of the consequences of the actions of the board.  A board member may be held liable for actions taken by a board even when that individual board member was not a participant in the deliberations or the vote.  Note: If a board member notifies staff in advance that he/she will not attend a meeting, being "excused" does not alter the fact that the board member was absent.

Sending a proxy:  Some states allow voting by proxy and any proxy votes should be recorded in the minutes.  A proxy provides someone else with instructions to vote on behalf of the regular board member on a specific matter.  Where allowed, this is a very narrow authority and should not be construed as a means to delegate board member responsibilities.  Board members may not delegate their responsibilities to others by sending someone to attend a board meeting in their place.

Because NPCs must have statutory VA directors on the board (i.e., MCD, COS, ACOS/R and/or ACOS/E), NPCs may wonder whether individuals serving in an “Acting” capacity may fill in for these statutory positions.  Whether they may depends on the facts and circumstances of each situation.  For example, it would not be appropriate for an individual who is filling-in for the MCD while the MCD is on travel or annual leave to actively participate in a board meeting.  However, it may be appropriate when the MCD is detailed to another facility for an indefinite period that is likely to encompass several board meetings or it is unlikely the MCD will return.  It also may be appropriate if the position is vacant due to a retirement or permanent re-assignment.  It the position has been officially assigned by VA to someone in an acting capacity, that person may serve in one of the statutory VA positions. Feel free to check with Regional Counsel if uncertain.

Permanent record:  Some organizations record board meetings. The purpose should be only to provide a reference point if there is disagreement over an item in the draft minutes. As soon as the minutes are approved by the board, the minutes become the legal record and the recording should be destroyed.  Approved minutes should be kept in a safe place with other permanent records of the corporation.

Sample Minutes:

• Sample Minutes

Quorum

Before conducting business, the board must be certain that it has reached a quorum. A quorum is generally defined in the bylaws of the organization and indicates the number of members that must be present to have a legal meeting. If no provision for a quorum is indicated in the bylaws (which should follow state law), then state law or common law determines how many members need to be present during a meeting. If a quorum cannot be reached, the meeting should be adjourned immediately. Any actions taken in the absence of quorum are void. Check with state law to determine the consequences of “breaking” a quorum (i.e., a quorum was present at the beginning of the meeting, but a member has to leave half way through the agenda).

Executive Sessions

Executive sessions provide an opportunity for the board to meet in “private,” as is sometime necessary to discuss personnel issues, alleged misconduct, financial issues with the auditor, security issues, or other matters that are confidential. Executive sessions are restricted to board members only and should only cover the items for which the executive session is held. When the issues has been discussed and resolved, then the board should return to the normal meeting. The action decided by the board should be reported in the minutes, but may want to be phrased in a way that is sensitive to the fact that the minutes are a public document.

Proxy Voting

Attendance at board meetings is a commitment board members make when they accept an appointment to the board. Although proxy voting may be common in the corporate world, in large organizations or on for-profit boards, proxy votes are not appropriate for nonprofit boards. A proxy is a legal document signed and dated by a board member that gives his or her right to vote to another board member.

NAVREF strongly discourages use of proxy voting. Even a limited proxy where the vote is given for a particular board meeting or a specific issue and directs the proxy holder to vote for or against the motion, is an abrogation of the board member’s duty to be informed on matters before the board and to vote accordingly. Without attending the meeting or participating in the discussion leading up to the vote, the board member who gives a proxy votes without adequate information. Also, responsibility for actions of the board cannot be assigned to the person holding the proxy. A board member who uses a proxy may be held responsible for an action he or she may in fact not support.