The Perkins Law Five-Finger Philosophy of Nonprofit Board Composition
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Transcript of The Perkins Law Five-Finger Philosophy of Nonprofit Board Composition
The Perkins Five-Finger Philosophy of Nonprofit
Board Composition
November 30, 2011
Key Issues for Nonprofit Board Members
• Who owns the organization?• What are my legal duties to the organization?• What are the three most likely sources of
trouble for my organization?• What is D&O coverage and why do I care?
Sources of Trouble
• The IRS• The State Attorney General’s Office• The Disgruntled
The Ultimate Nightmare for aNonprofit Director
• Imagine you’re a director or officer of The Second Mile Foundation
• PA Governor Tom Corbett says, “I need to know what the board members knew.”
• Organization (founded in 1977) is basically in wind-up mode at this point.
Other Recent Examples of Nonprofit Troubles
• New Caste Youth Football Program—Managers investigated by state AG for misuse of funds, state police involved, criminal charges filed.
D & O Coverage
• D&O = Directors and Officers• Protects against breach of fiduciary duty
claims• Biggest benefit: Covers legal fees and costs of
defense
The 5-Finger Philosophy
The Concept: Every person on your board of directors (including YOU) fits into one of five categories, each resembling one of the fingers on your hand.
Benefits of the5-Finger Philosophy
• Maximize Effectiveness of Current Board• Better Recruiting and Retention• Self-Actualization (Abraham Maslow)
AN IMPROVED, HIGHER FUNCTIONING NONPROFIT ORGANIZATION
The Index Finger
• The most important
• Need at least 1-2 on your board
The Thumb
• Reliable• Loyal• Hardworking• Perfect candidate for
corporate secretary or treasurer
The Ring Finger
• Inconsistent participant• Flashes of brilliance and
passion• Potential leader• Underutilized asset
The Pinky
• Poor attendance• Minimal input at meetings• Minimal activity• Nonfactor
The Middle Finger
• Type A personality, argumentative, uncooperative, narcissist, controlling, patronizing, etc.
• The trouble with these people• What do you do?
The Worksheets
• Evaluate Your Board RIGHT NOW• Take Extra Worksheets for Your Colleagues• Make It Part of Your Annual Nominating or
Strategic Planning Process
What Happens Next?
• Address Current Problems• Improved Engagement Levels• More Strategic Succession Planning• Better Leadership Development
You Are Now a Guru on Assembling an Effective Nonprofit Board of Directors!
_________________________4870 Sadler Road, Suite 300
Glen Allen, VA 23060
Phone: 804-205-5162
Email: [email protected]