Effective Governance and Awareness of Fiduciary Responsibility

The term "governance" represents a set of relationships between an organization's constituencies, board, management, and other stakeholders. Governance provides a structure through which the organization's goals are set, made obtainable, and evaluated. Both Congress and the Internal Revenue Service are putting greater emphasis on governance of non-profit organizations and are requiring additional disclosure of governance relationships on annual returns.

A governing board makes policy and establishes long-range objectives, strategic initiatives and goals. It establishes the benefits to be delivered, to which constituencies, and at what cost. A governing board is neither a rubber stamp for, nor a micro-manager of programs and employees, but holds management accountable for executing established policies and meeting established objectives. A board sets parameters for CEO and staff operations and allows them to operate within those parameters. It monitors performance and compliance with parameters on an exception basis.

We have helped our clients evaluate functioning of their boards of directors or trustees to ensure they exercise good stewardship, fiduciary responsibility, and appropriate oversight of management. We have helped them adopt conflict of interest policies and review them annually. We keep our clients informed of legislative, judicial, and administrative changes that may impact their governance (Sarbanes-Oxley, for example).

Good governing structures are proactive in meeting their fiduciary responsibilities, rather than simply responding to increased public oversight. Our role is to help them meet these important responsibilities.

©2008 Ronnie C. McClure, PhD, CPA