GOVERNING BODY

A person or persons with the legal authority and responsibility to set policy and oversee the operations of an organization. Generally, the governing body is a group, such as a board of directors or board of trustees. While the exact responsibilities of the governing body depend on the nature and character of the organization, the governing body has minimum fiduciary responsibilities to the organization set by statute, regulation, and case law, and typically assume responsibilities for long term planning, risk management, and evaluation and effectiveness of management.		  
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  MANAGEMENT

See ADMINISTRATION		  
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  PLANNING

The process of specifying objectives, evaluating the means for their achievement, and exercising deliberate decision making about appropriate courses of action.		  
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  POLICY

A written statement of principles, values, or intent that provides a basis for consistent decision making and guides the actions of staff, management, and board of trustees. A policy is intentionally broad in its language and application. The following is an example of an anti-discrimination policy:

"[Organization Name] shall not discriminate on the basis of race, color, religion (creed), gender, age, national origin (ancestry), disability, marital status, sexual orientation, or military status, in any of its activities or operations. These activities include, but are not limited to, hiring and firing of staff, selection of volunteers, selection of vendors, and provision of services."

In contrast, a procedure is a detailed, step-by-step description of a process. It tells the reader how to do something. Generally, policies are implemented through procedures. For example, the above anti-discrimination policy would require a detailed grievance procedure in order to operationalize it within an organization.

The governing body has the fiduciary responsibility for setting organizational policy. Therefore, policies must be approved and periodically reviewed by the organization's governing body. However, the governing body typically delegates (via policy) the responsibility for policy development to management. In owner-operated for-profit companies, the owner can act as the company's governing body, depending on the company's corporate structure.

In a public agency the responsibility for setting and reviewing policies may belong to the agency's management team, elected officials, another governmental agency, or as is often the case, a combination of the above.

  
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  EVALUATION

The review and assessment of organizational operations, programs and services.		  
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  OBJECTIVE

A sub-goal stated in operational terms, i.e., a statement that makes clear what expected results are to be measured or assessed.		  
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  SERVICE

One or more organization-operated programs or activities that have a common general objective and deploy the organization's material and human resources in a planned and systematic manner. An organization that publicly promotes or identifies itself in writing as offering a service, is licensed to deliver a service, assigns personnel and/or space to a service, or allocates financial resources to a service is considered to offer that service.		  
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  COMMUNITY

A specific group of people living in the same locality and who may share a common culture, values, and norms. Communities can also be defined by race, religion, ethnicity, age, occupation, political status, tribal affiliation, interest in particular problems or outcomes, or other common bonds. The term "community" encompasses worksites, schools, tribes, residential neighborhoods, business districts, recreational areas, and health and human service sites.		  
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  PRACTICE

Established actions or ways of proceeding in the regular performance of organizational duties. Policies and procedures often guide practice.		  
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  AUDIT

See FINANCIAL AUDIT		  
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  CONFLICT OF INTEREST

A conflict between an individual self-interest and the public good. Example: an organization that operates a day treatment program awards a food services contract to a local restaurant that is owned by a governing body member. From a legal standpoint, "conflict of interest" is a term used in connection with fiduciaries and their relationship to matters of private interest or gain to them. When used to suggest disqualification of a fiduciary from performing his or her sworn duty, the term refers to a clash between public interest and private pecuniary interest of the concerned individual.		  
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  POLICY GOVERNANCE MODEL

The adoption and use of the "Carver" model of organizational governance, which clearly specifies the roles, responsibilities, and limitations of administrative staff and board members.		  
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  ASSESSMENT

An evaluation, which utilizes professional expertise and skills in the collection and analysis of data to understand and describe the nature of service needs of an individual, family, or group. Assessment, as in needs assessment, is also used to determine priorities of program planning and service development for the organization as a whole. See also DIAGNOSIS.		  
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  LEADERSHIP

A nonprofit organization's leadership consists of its governing body, chief executive officer, and may also include its senior management. In a public agency the term refers to the agency head and administration team. The term "leadership" is not generally applied to for-profit organizations. With respect to COA standards, in for-profit organizations the term leadership applies to the owner and board of directors if one exists.		  
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  SERVICE POPULATION

A group or target population that the organization's services are designed to serve in accord with its mission, and which includes the organization's service recipients. An organization's service population may be defined by geographic location, specific problems or needs, religion, ethnicity, culture, or other factors.		  
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  INDICATOR

A described activity, event, outcome, or benchmark used for measurement in monitoring the quality and outcome(s) of service.		  
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  NEEDS ASSESSMENT

An initial survey undertaken to determine the special service needs of a defined population.		  
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  EXECUTIVE DIRECTOR

See CHIEF EXECUTIVE OFFICER		  
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  PERFORMANCE

A measure of how well an organizational system provides services to consumers. Performance is often based on key indicators, such as rates of service, cost per consumer, degree of satisfaction with services, and extent of consumer access to services.		  
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  CHIEF EXECUTIVE OFFICER

The person to whom the governing body delegates the day-to-day management of the organization and is held accountable for the organization's performance. This person may also be known as an agency head, executive director, president, commissioner, vice president, executive vice-president, administrator, superintendent, or director. 		 
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  CONTRACT

A formal written agreement between two or more parties that specifies the services, space, or products to be provided in exchange for some form of compensation. Also known as "purchase of service arrangement."		  
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  TERMINATION

See CASE CLOSING 		 
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Governance
  
Private Org Public Agency  

GOV 6: Governance Responsibilities*

 

In fulfilling its fiduciary responsibilities, the governing body or owner:

  1. reviews management’s implementation of an effective strategic planning process;
  2. reviews risk identification and management processes to prevent loss of reputation, vital resources, and ability to operate;
  3. develops and adopts policy;
  4. provides financial oversight, adopting changes to policies considered necessary based on reviews and evaluations;
  5. anticipates the need for and develops resources;
  6. reviews achievement of the organizations’ objectives through operations and services; and
  7. enhances and promotes community-organization relationships.

Interpretation: A large organization is likely to have units, committees, or a task force structure to accomplish these goals; a small organization may not. When the organization can demonstrate that the governing body or owner carries out its responsibilities effectively and thoroughly through regular meetings and clear responsibilities, implementation of the standard will be achieved.

Regarding element d), recommended practice suggests that the audit committee of the governing board operates with the authority to hire legal and other advisors if it needs outside help.

Note: Please see Tip Sheet: Governing Body Responsibilities in the Tools Index for additional assistance with this standard.

GOV 6.01

 
Governing body members adhere to the organization’s conflict of interest policy, including disclosure of any financial interest in the organization’s assets and business transactions.
related ETH 2
Note: Organizations not otherwise required to have a governing body should refer to ETH 2.03.
NA The organization is not otherwise required to have a governing body.

GOV 6.02

 

Strategic planning responsibilities include:

  1. envisioning and setting the organization’s strategic direction; and
  2. supporting an inclusive, management-directed, organization-wide long- term planning every 4-5 years.
Update: Added Third Interpretation - 06/01/10
Added Third Interpretation
Interpretation: Organizations may use a policy governance model to demonstrate that the governing body has developed the organization’s broad vision and provided oversight to the operational planning activities conducted by management. The governing body need not conduct these planning activities itself.
Interpretation: For the purposes of these standards, “long-term planning,” and “strategic planning” are synonymous. The chosen timeframes for planning cycles should be logical and will vary depending on the external environment, including social, economic, demographic, and regulatory forces.

Interpretation: For credit counseling organizations long-term planning should occur every 2-3 years.

Note: Please see Template: Strategic Plan in the Tools Index for additional assistance with this standard.
Note: Please see Behavior Support and Management Policy and Procedure Template in the Announcements section of your My COA account for additional assistance with this standard.
NA The organization is a network management entity.

GOV 6.03

 

The organization’s governing body or owner reviews and approves the long-term plan framework to ensure that planning encompasses:

  1. a review of the organization’s mission, values, and mandates;
  2. an assessment of strengths and weaknesses;
  3. measurable goals and objectives that flow from its mission and mandated responsibilities; and
  4. appropriate strategies for meeting identified goals, including consideration of the organization’s continued development and sustainability and possible need to redirect, eliminate, or expand service to respond to changing community demographics and needs.
related ETH 3,  FIN 4,  FIN 5,  GOV 2.02,  GOV 8.01

Interpretation: At least once every long-term planning cycle, the organization’s leadership should review a demographic profile of its defined service population that includes:

  1. economic indicators;
  2. gender;
  3. age;
  4. unique cultural attributes;
  5. racial/ethnic composition;
  6. religious affiliation, as appropriate to services provided; and
  7. language(s) of choice.
Interpretation: To enhance its assessment, organizations can draw upon the findings of other external needs assessments, such as those conducted by the United Way, municipal planning boards, universities, or other organizations with a community-wide focus. Demographic data should be collected within the limits of applicable law.
Note: Please enter demographic information on the organization's service population on the Community Demographic Profile.
Note: Please see Template: Strategic Plan in the Tools Index for additional assistance with this standard.
Note: Please see Behavior Support and Management Policy and Procedure Template in the Announcements section of your My COA account for additional assistance with this standard.
NA The organization is a network management entity.

GOV 6.04

 

Policy development responsibilities include:

  1. adopting policies;
  2. reviewing policies periodically and when legal requirements or regulations change;
  3. adopting any changes to policies resulting from recommendations; and
  4. evaluating management’s implementation of policies.
Interpretation: The governing body must actively exercise its policy-setting prerogative, for example, policies are periodically reviewed as a whole, and specific policy matters regularly receive governing body attention. The governing body must view policy as the governing body’s major means of providing a framework and guidance for the organization’s overall direction.
Interpretation: An organization that follows a policy governance model may not typically develop, ratify, and maintain statements known as “policies.” However, distillations of the organization’s principles, philosophies, practice, or “ends” may be considered policies for the purposes of this standard.

GOV 6.05

 

Resource development responsibilities include:

  1. establishing targets and goals; and
  2. ensuring adequate resources to support the organization’s services.
Interpretation: Organizations are required to establish resource development targets and goals. COA recognizes that not all organizations fundraise; however, fundraising is a vital means to achieving a flexible revenue base and a traditional role assumed by nonprofit governing bodies. Fundraising activities are evaluated under section ETH 3.

GOV 6.06

 
The governing body or owner understands and exercises appropriate stewardship in fulfilling financial duties and responsibilities.
related FIN 1
Interpretation: Organizations that use a policy governance model will demonstrate that the governing body has developed the organization’s broad vision and provided oversight to the operational planning activities conducted by management, whereby the governing body, itself, would not necessarily carry out these financial duties.

GOV 6.07

 

Responsibilities regarding the executive director include:

  1. appointment of the executive director;
  2. collaboration with the executive director;
  3. delegation of the authority and responsibility for organization management and policy implementation to the executive director;
  4. oversight and annual evaluation of the executive director's performance and compensation;
  5. approval of the executive director's employment activities outside of the organization to ensure they do not interfere with her/his administrative responsibilities;
  6. development of a written plan for delegating authority in the absence of the chief executive officer and/or designating an interim chief executive officer, if necessary; and
  7. evaluation of the effectiveness of its partnership with the executive director, at least every two years.
Interpretation: A written employment agreement or contract between the board and CEO can add stability to an organization by clarifying the relationship between the board and CEO and establishing each party's rights and responsibilities. This agreement may address information such as term, salary and compensation, duties of the CEO, insurance coverage, and provisions for notice and compensation in the event of resignation or early termination.

Interpretation: Recommended practice regarding element d) encourages use of a performance evaluation tool that examines many facets of the CEO’s performance, including leadership, management of the organization, working relationship with the board and staff, and management of the organization’s finances. In addition, criteria for compensation should be established consistent with industry parameters that may include: compensation paid to other CEOs in similar positions, cost of living considerations, and the total professional experience of the CEO, including advanced degrees and other experiences and skills that uniquely contribute to the success of the organization, as well as compliance with Internal Revenue Service (IRS) and Securities and Exchange Commission (SEC) and other regulations and guidelines regarding reasonable compensation.

NA The organization is privately owned and operated.

GOV 6.08

 

At least annually the governing body conducts an assessment of overall risk to the organization, including the organization's continuing ability to pursue strategic goals.

Update: Revised Standard, Added Interpretation, Deleted Note - 12/01/10

GOV 6.08 Original Standard and Note:

At least annually, the organization, with the involvement of the governing body, assesses areas of overall risk to the organization that include, but are not limited to:

  1. the continuing ability to pursue strategic goals;
  2. compliance with legal requirements, including licensing and mandatory reporting laws, fiscal accountability, and governance;
  3. insurance and liability issues;
  4. contracting practices; and
  5. any research projects that include service recipients as participants.

Note: Organizations not otherwise required to have a governing body should refer to RPM 2.

related RPM 2.01
Interpretation: This standard is connected to RPM 2.01, which addresses the assessment of risks related to legal requirements; insurance and liability; health and safety; human resources; contracting; client rights and confidentiality; finance; and conflicts of interest. In order to receive a rating of “1” on GOV 6.08, the governing body should review the results of those assessments all together, at least once a year. An organization may receive a rating of “2” as long as the governing body reviews the results of the risk assessments annually, even if it does not review them all together, as a whole, in one sitting.
NA The organization is not otherwise required to have a governing body.
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PURPOSE: Sound governance increases the organization’s viability and sustainability.
 
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