book

Best of Boards, 2nd Edition

by Marci S. Thomas, Kim Strom-Gottfried

April 2018

Intermediate to advanced

256 pages

8h 51m

English

Wiley

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Call to ActionConclusion
Governance in the 21st CenturyPurpose of the Governing BoardBoard CommitteesLegal Responsibilities of the BoardLesson LearnedLesson LearnedLesson LearnedIRS Form 990 and GovernanceFrameworks for Good GovernancePanel on the Nonprofit Sector Framework—Good Governance ModelLegal Compliance and Public DisclosureEffective GovernanceConclusionAppendix A—Comparison of Key Objectives of the Board of Directors With the Good Governance Framework and Questions From IRS Form 990Appendix B—Example Dashboard for Board EvaluationAppendix C—Sample Board Self-Assessment Document
Legal AccountabilityEthical AccountabilityWho is Accountable for Accountability?How to Instill Ethical and Legal AccountabilityHonest CommunicationsStrong RelationshipsInternal ControlsClear ExpectationsSkilled BoardsInvolved and Informed BoardsFinancial, Document, and Ethics AuditsCompliance OfficersResolving DilemmasWhat About WholeHealth?Conclusion
The Head GameCommunicationConstructive NormsNegotiationAssisted ResolutionConclusion
Characteristics of NonprofitsResponsibility for Financial InformationBasis of Presentation for Financial InformationCash Basis of Accounting Versus Accrual BasisBasic Financial StatementsFootnotes to the Financial StatementsFund AccountingAssetsLiquidityCash and Cash EquivalentsRevenue, Receivables, and Deferred RevenueIn-Kind ContributionsLong Term ContributionsConditional Promises to GiveEndowmentsSplit Interest AgreementsAgency TransactionsNonprofit Serves as a Conduit for Cash or Noncash DonationsNonprofit Solicits Funds for Another Nonprofit Organization (Unrelated)Nonprofit Holds Funds for Another Nonprofit Organization (Unrelated)Nonprofit Enters Into Transactions With Related FoundationsInventoriesPrepaid Expenses and InvestmentsAlternative InvestmentsProperty and EquipmentLiabilitiesAccounts Payable and Accrued ExpensesMortgages and Notes PayableNet AssetsRevenues and ExpensesConclusion
Some Risks Can Be Mitigated With InsuranceCyber Risk—A Growing ThreatRisk in a Complex WorldA Nonprofit’s Most Important ResourceRisk Management ApproachEnterprise Risk ManagementERM Component OneERM Component TwoERM Component ThreeERM Component FourERM Component FiveERM Component SixERM Component SevenExample Application of a Risk Management System to a Nonprofit OrganizationERM in Smaller Nonprofit OrganizationsRisk Management CommitteeCrisis ManagementRevisiting UncertaintyConclusionAppendix A—Risk Management Checklist

Characteristics of NonprofitsInternal Control DefinedCOSO Framework Updated for Changing TimesDistinguishing Error From FraudControls for Smaller OrganizationsElements of Internal ControlControl ActivitiesDesigning a System of Internal ControlEntity ControlsControl ActivitiesAntifraud Programs and ControlsMisappropriation of AssetsFraudulent Financial ReportingRevenue Recognition and Management OverrideControl EnvironmentFraud Risk AssessmentInformation and CommunicationMonitoringBilling Schemes, Check Tampering, and Expense FraudUse of Analytical Techniques to Identify Unusual Disbursement Transactions for InvestigationSkimming and LarcenyPayroll FraudControls Over Noncash ItemsWhen Processing Is OutsourcedCybersecurity and Not-for-ProfitsInternal Controls EvolveConclusionAppendix A—2013 COSO Framework 17 Principles—Summary
Nonprofit Organizations and Tax-Exempt StatusIRS FilingsDifferences Between Nonprofit and Commercial OrganizationsRecognition of Tax-Exempt StatusLobbyingPublic Charity or Private FoundationPublic Support Test for Charitable OrganizationsTest 1 (509(a)(1))—Compute the Public Support PercentageTest 2 (509(a)(2))—Compute the Public Support PercentageSupporting OrganizationsCharitable ContributionsFiling Form 990Unrelated Business IncomeIRS AuditsConclusionAppendix A—Guide for the Board’s Review of Form 990Appendix B—Important Filings for Tax-Exempt OrganizationsAppendix C—Governance Policies and Procedures
Moral CourageBarriers to Ethical ActionStrategies for Ethical ActionHave a Clear CompassKnow Your ObjectiveSeek Advisers and AlliesWalk the WalkUnderstand Change StrategiesPractice Considerate CommunicationConclusion
Understanding ChangeBe Clear About What You WantAssess Before You ActCreate Awareness and UrgencyCreate a Powerful CoalitionCommunicateAddress Obstacles and BlockersCreate Short Term WinsGive People the Tools to SucceedSolidify ChangesSuggestions for SonjaBe Clear About What You WantAssess Before You ActCreate Awareness and UrgencyCreate a Powerful CoalitionAddress ObstaclesCommunicateCreate Short Term WinsGive People the Tools to SucceedSolidify ChangesConclusion
Case One: A Woman ScornedPreventAddressImproveCase Two: The Indeterminate SentencePreventAddressImproveCase Three: Your TurnSustained SuccessConclusion

Content preview from Best of Boards, 2nd Edition

Chapter 6 Risk Management

Sara Beth Mitchell, the executive director of Palma Verde Food Bank put the phone down and put her head in her hands. “I can’t believe hackers would bother with a food bank!” she said. The food bank was experiencing a boom in donations and many of them were made electronically through the organization’s website. A representative from the company who oversaw the nonprofit’s website traffic found that personal information of 5,000 donors had been compromised. “I just don’t get it! Now I will have to report this to the board and the donors. Who knows what information the hackers have now. The donors will feel betrayed. This news could be all over social media in a matter of hours. How could I have prevented this?” Sara Beth picked up the phone again to call the organization’s insurance company.¹

Some Risks Can Be Mitigated With Insurance

Fortunately, the Food Bank had a cyber insurance policy. These policies can be valuable in relieving the financial burden of the hack. In addition, insurance companies have contacts that can be useful in assessing the damage and making suggestions on how to prevent further occurrences. The type of entity may not make a difference. Some hacks are perpetrated by robots that are targeting vulnerable IT addresses and are not distinguishing between nonprofits and commercial entities. One of the first things the Food Bank did was to add PayPal to accept donations. That way sensitive information is not housed on the organization’s ...