Wednesday, November 30, 2016

Governing a social enterprise issue and new perspective

Good evening friends.

Today, there are many NGOs, not for profit and social organisation exist. The prominent issue is governing of these organisation. Whether it is a society and Registration of Societies Act 1860. a public trust under Bombay Public Trust Act 1950 or not for profit company. Once founded, many issues arises such as founders want to have a strong hold over this, trustees are inactive or only trustees are working but others not working and so on. Taken from a highly experienced person's session, following is a good read if you are already part of an organisation or going to form an organisation.

3 things(3As) are very important Access Accountability and advocacy for any social organisation.

The board has to develop internal accountability management through MIS system, how they will verify by interacting with committees of the board members. Can have internal audits. This is possible when an organisation have financial accountability. This is a control mechanism. It is very important to have access of internal and external information. They have to know what is happening outside their own organsiation. What government regulations are happening, how other things are changing.

What is 7S of strategy? At the beginning of an organisation, apply the 7S.

The job of the board is advocacy because they are face of the organisation. When you have access to information then only you can act better.

How to let your organisation?

Come out of founder's syndrome and develop second line of leadership.
Lack of second line of leadership in a social organisation

Why there is no second line of development of leadership, it is due to founder's syndrome. In this, the founder want to hold power and control.
Vijay Mahajan from Basix is a best example a person who strategise avoiding founder's syndrome. He formed organisations and just left that completely once it completely developed.To avoid founder's syndrome just don't stick to one organisation, go complete out of it. Not even as a consultant.

Second is sharing power: Don't hold power only with you or only with the management trustee. Share it with your executive committee.

What an NGO board i.e. board of trustee or corporate board i.e. board of directors?
Board and its function: what is board: It is a governing body. A board of director is a body of elcted people. It is as per by laws of such trust , society and it is there because law mandates it. It should be properly defined in the by laws.

What should be the board size and mix: The board should be 5 to 12 board. They should be from different back ground from technical and non technical. The board has to be resourceful. They should be from different background to have diverse background and thinking.

example is Sahara India foundation which have maximum member from bollywood which is notb good. Take people who have knolwedge, time and very good network in board. Majlis has mix people in the board.
Why board is required for NGO?: Control, directionb, it is mandatory by law (most important). Because law want somebody responsible. Board also help in funds and to promote organisation's mission. Even it also supervises.

How you raise board trust? Mostly known people and people introduced each other, funders , founder members, expert in th field (class feedback) from maam's ppt: Self referral, Beneficairies, family, friends, colleges, place of works, donors suggstion etc. In the company it is based on the nomination committee. Company law makes it mandatory to have this. They shortlist from the people available. If you are in a board you cannot be in the board of competitors. In NGOs it doesn't happen. Sometime, the trustees pass information to competitive NGOs. Sometime NGOs do this because they want the person
Please check whether there is confidentiality clause for the board once they are in and out as a trustee or as a director.

Thumberule is take board member should be from financially sound/ stable background so they will not be greedy. It is assumption, rich can also be corrupt. Another reason is if you are economically sound, you have better networking and fund will be easier. Save the children has all affluent people in the board such as Sabira Merchant, Sunil Shetty. Management trustee decides.

What does the board does : Startup board focuses in compliance. When board member themselves work are calledf working board. The first is compliance and things are working. The board has to be evaluated on the basis. The board meeting has to meet at least once in a month and they should have short term goal. The result will encourage them to move ahead.

What type of responsibilities a 4 years old board have: It depends. They may go for strategic planning.
Sooner the board has to have delegate. They cannot work as an employee forever.
Read article for next meeting.

What about board 7 years old what they do? They should decide what you want, you want to be a policy maker or show runner. Slowly, you should move in policy making role and let staff work indepedently. Salam Bombay foundation has good supervision and working as a policy maker. They do not do micro level management with executive committee.

Board functions: These are: vision and mission , forming structure and authority whether a startup board or a matured board. Selecting CEO and Statutory auditors as it grows. Forming policies for organisation guide CEO and staff
3 duties from the law for trustees: Care, Loyalty and Obedience (consisntecy with the objective) when you do survey for your project, ask question related to this. When you do beyond these, you are in ethical domain. Law is bare minimum. Go and visit credibility alliance. The whole case against Cyrus Mistry is based on these 3 factors.
Samvedna: As a founder member, do you allow your working team to grow. Samvedna had depenedancy on founder.
Everybody has different level of working in the organisation. Someone may be passionate, someone else will be logical.
A well known education trust running university has taken Retired Income Tax Commissioner to deal with the taxation issue and Parle Chairman who is a financial wizard and has good network.

What is the boars structure: Chairperson/ President, Vice President or Vice Chairperson, Secretary, Treasurer, Committees.
There is no lifespan in trust act for trustees but in the company one can be director maximum for 9 years. You have to incorporate this in your bylaws.
A well known social organisation's has office bearers by membership who has meeting every Saturday. They are different from trustees. Trustees elect chair person.

What is the role of president/ chairperson and vice : coordinate the work and planning, managing people on board, whether work is getting accomplished and who tights control in the organisation, commuication between trust and exeuctive director who is leader of the staff. Both equation has to be good unless organisation gets affected. Example of corporate foundation which has different agenda. CEO disagreed to carry out the agenda related to land acquisition. This is due to CEO being ethical. This discrepancy is more with bigger organisation. Unilever foundation, equal opportunity organisation board wanted more men, more male hiring decision.

One minute manager , read the book.

Vice president- to assist the president and handle office when president is absent. You can decide a broad role for your office bearers.

Past president or chairperson: Sharing experience, helping in cotinuity, helping present president in role, recruitment, orientation and development, chairing nominating committee, handholding in the initial phase
Secretary: Responsible for all legal compliance, sometime nore powerful than the president. Responsible for board's records

Treasurer: Looking finance. a tresurer should have knowledge (not degree) of working finance. Chairs finance committees. Don't hire anybody as a trasurer. See what practical finance knowledge they have.

What are the types of boards: Family (patriarchal in nature, more meeting, less conflict, better control over the assets provides physical and material support, affection among the members, ). It is helpful in the formative stage but creates conflict later. As it grows, new staff finds the trustees incompetent, they know weakness of trustees so may misuse too. Under FCRA and CSR such boards are not appreciated. Family trust will not be good in compliance. When you want to join an NGO, find out family involvement in the trust.

Invisible Boards: The board which is not active except the founders, staff have never met the trustees. Advantage: Least control, fast decision making. Disadvantage is poor governance.

Staff board: Staff in the board either current staff form NGO or NGO appoint staff in the board. Example Kamani Trust. A well known institute (lecturers1, readers 1, professor 2 for 3 years). It helps in building good rapport. Disadvantage, sometime staff treat this as grievance. Solution: Agenda in advance. Lack of fresh perspective as staff is lower in position and may want to avoid.

Professional board: Funded by venture capitalist, formed by like minded people. they first work and they register when they are confident. They see some amount of corpus is there. The board is professional being run like organisation. Term is not permanent, fixed but has performance appraisal.

If you are a trustee and you are not there in meeting, e voting and skype meeting is allowed via skype.
Sponsorship is preferred over donations by the corporates.

Should board members have job description: The first purpose orient them aboout their individual roles and responsibilities, clarifying expectations, encourage accountability and to promote efficiency. Define position level whether president or anything else. Define service term. Vodafone, Barclays have external people to evaluate board members. it should have benefit (non financial), medical benefit.

How many committees are there in your organisation ? In companies it is CSR, nomination, risk management committees it is not mandatory for NGOs. an NGO can have disciplinary committee other popular committees are fund raising committee, audit commitee (temple trusts). The board rattifies the decision of committee. Unfortunately we do not utilise the board members.

Role of the committees : Making recommendation, special tasks delegated by the board, operational function, grooming future board members. That includes strengthening operational function such as branding and compliance.

Type of other committees: Executive Committee, Finance or audit committee, risk committee, nomination committee, governance committee, programe committee, Ad-hoc committee.

The NGO is divided as board and executive. You can have same people in the board and executive in initial level or they can be different. You decide what you want.

That's all for today

November 30, 2016

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