40 Tips for Association Boards

1. Incorporate under the appropriate entity structure. Consideration is required to choose the best structure to incorporate. Learn about the options, advantages and disadvantages, and costs.

2. Limit your Objects so they are your Mission. Constitutions require official ‘Objects’ or Purpose – the reason your association exists. If well written, your official Objects can be your enduring Mission statement.

3. Incorporate with a good Constitution. Articles or constitutions are the critical governing rules for an association. They are a legal document that ensures the association's governance is clear and compelling. They should not be operational. Model Rules or templates are often not appropriate.

4. Review your Constitution every few years. Association Articles or constitutions should be regularly reviewed to ensure they reflect current governance practices and operations, align with any amendments to the law, and continue to meet member needs. Governology undertakes Constitution Reviews.

5. Do not deem members. The freedom to associate is a key democratic principle and extends to not being forced to join. People or organisations must agree to be members of an association. Associations cannot decide that their members automatically become members of another organisation.

6. Aim for a Board size of 7, 8 or 9 Directors. Research has consistently indicated that the ideal Board size is around 8 Directors. This is consistently supported by experience, where Boards of this size tend to be more effective regarding Director participation, accountability, efficient decision-making and positive culture.

7. Enable sufficient diversity on Boards. It is good governance to have a range of backgrounds and perspectives among the Directors. Associations do not want to see dominance by geographic areas. Constitutions can be crafted to allow a balance of geography whilst still ensuring members are involved in electing Directors.

8. Member Directors should be a clear majority. Whilst having Directors from outside the profession, industry or cause may bring additional skills and different perspectives to a Board, limit their number. Most Directors should be elected from the membership, as they best know the sector and have passion for the cause.

9. Directors are not delegates. They have a fiduciary duty to act in the best interests of the whole association and must not make decisions based on directions given by anybody who has nominated them.

10. Have a Governance Charter. While association Boards need to follow the governance rules of the Constitution, other operational, procedural, and cultural matters need to be written into a Board Governance Charter. This practical document should be updated or confirmed annually.

11. Ensure succession planning. Whilst institutional knowledge is valuable, Boards should ensure that there are new Directors every few years. Be aware of the Directors’ experience, capabilities, and the sequence of retirements. A maximum of 10 years on the Board is typical. Form a Nominations Committee to facilitate recruitment, election and succession.

12. Stagger terms of Directors. Stagger elections so that a proportion of the total number of Directors is elected yearly. For example, have two-year Director terms with half of the Directors coming up for election every odd year and half every even year. This lessens the risk of a majority of Directors leaving at once.

13. Give potential Directors realistic expectations. While candidates should be encouraged to nominate for Board elections, all candidates should know in advance the board's responsibilities and roles and the personal skills and time commitment expected.

14. Have term limits on the Chair and other Office Bearers. In most associations with sufficient member numbers, potential new Chairs are in the pipeline. It is healthy to have a transition of Chairs to inject fresh ideas and enthusiasm – and to share the honour.

15. Aim for two Office Bearers. Associations should aim to have staff capable of presenting finances, arranging agendas and taking minutes. Finance Managers and Company Secretaries can replace the honorary Treasurer and Secretary roles. Hence, only a Chair and Deputy Chair may need to be selected from within the Board.

16. Have a Finance, Audit, and Risk Committee. A Finance, Audit, and Risk Committee is often a better option than an Honorary Treasurer, who would be redesignated Chair of this committee. This group of three or four people can work together as a team to verify financial processes and controls and minimise the risk of financial mismanagement or fraud.

17. Have a qualified or at least trained Company Secretary. The role of the Company Secretary is responsible for governance compliance - more than agenda preparation and minute-taking. A Board-appointed qualified or at least capable Company Secretary is recommended to give ongoing governance counsel. Governology can provide company secretarial services to your association.

18. Elect the Chair from within the Board. It is best if the Board chooses its leader rather than the membership, and 70% of associations do this. The working relationships in the boardroom setting mean that the Directors are best placed to make good decisions by seeing and choosing leadership capabilities rather than the members.

19. Hold elections before the AGM. Elections are fundamental to associations, as the membership decides who should be the current custodians of their organisation. Therefore, annual elections for Directors should be held before the AGM to allow every voting member the opportunity to consider the candidates and cast their vote.

20. Don’t have ‘general business’ at the AGM. The AGM agenda is set with a minimum notice of 21 days, and proxies enable members who cannot attend to direct their voting on resolutions. Therefore, don’t allow substantive items to be raised at the AGM as it impedes due process. Have an ‘open forum’ after the AGM concludes instead.

21. Have a Board accountable to others. Associations represent causes important to the members who join – and are run by the Board. In rare cases, associations have only the Board of Directors as voting members. This is disadvantageous as a principle of good governance is that Boards report to and are accountable to others.

22. Have an experienced external auditor. While some very small associations need not conduct an annual financial audit, this process is vital for most bodies as it independently verifies to members the accuracy and integrity of financial reports. External auditors should be encouraged to advise Boards on financial changes and strategies.

23. Consider paying Directors a modest amount. In associations where individuals sacrifice income earning to be on the Board, consider making some financial payment to Directors if allowed by law. Be cautious about paying an amount that makes being on the Board financially attractive or making this payment the primary reason candidates are nominated for Director positions.

24. Hire a competent Head of Staff. A turning point for an association is when it hires a management-level CEO to run the association, ideally supported by staff, rather than the Board making ongoing operational decisions. With a strategic plan, the Board will set clear expectations on what needs to be done and then should allow the CEO to achieve outcomes.

25. Governance vs Management roles and responsibilities. When an association has management-level staff, the Board oversees and confirms plans. They guide the CEO hired to run the association and make operational decisions in implementing the Board-endorsed strategic plan.

26. Be a diligent Board. When an association has a CEO and staff, the Board Directors are custodians on behalf of the members. While the CEO is accountable to the Board and empowered to implement the plan, the Board must not be complacent or trust the CEO unquestioningly. Be cautious about relationships between CEO and Directors being too personal.

27. Respect the Chair. The Chair is the key leader of the association and is first among equals. A good Chair will support and be supported by the CEO and be respected by the Board. Interactions between the Chair and CEO are critical for a successful association, and both are responsible for nurturing this relationship.

28. Hold a Planning Day. All associations need to know where they are going, as there are a range of individuals, including Directors, CEOs, staff, volunteers, supporters, and members, who need certainty on purpose, priorities, and activities. Associations must have an annual day to develop a new or update an existing strategic plan.

29. Have quarterly face-to-face Board meetings. Boards can meet too often or too infrequently. Face-to-face meetings every three months are ideal for the smooth running of a Board and to allow the CEO to make progress. Online (virtual) meetings may occasionally be required to supplement these quarterly meetings.

30. Make Plans clear and link them to agendas. On occasions, associations may over-engineer their plans through complexity. Boards should monitor the achievement of the plan, and this is best done by structuring the Board meeting agenda and management reporting to follow the plan's pillars. This way, plans cannot be overlooked.

31. Expect comprehendible and timely financial reports. Boards are the stewards of association finances. Boards need to receive timely, accurate, and clear financial reports every quarter. Interestingly, monthly financial reports may be a disadvantage as they can seem routine. Make the finances clear by using activity-based reporting.

32. Query whether matters need Board approval. Ideally, associations employ capable CEOs and have clear delegations of authority, so Boards need to constantly consider whether they need to make decisions on matters presented to them. Directors should ask – is this a governance decision or a matter for management to deal with?

33. Have appropriate minutes. Board minutes need to reflect the decisions made and the reasons for decisions but should not be a verbatim transcript nor record how each Director voted. Minutes are confidential and they can be discoverable in the unlikely situation of legal action. Minutes are best done a few days afterwards or even live at the meeting.

34. Evaluate Directors or at least Board meetings. Although it is sensitive in a volunteer environment, evaluating the Director's performance may improve Board performance if done professionally. At the least, associations should have a process for writing evaluations of the effectiveness of Board meetings.

35. Market the Board and communicate its directions. Boards must appropriately promote their role and work to give members confidence in their association. They need a positive and stable image to appeal to future potential Directors. Communiqués to members describing the Board's activities and significant decisions can enhance member support.

36. Avoid having an ‘inner Board’. Directors have one vote each and equal responsibility. Therefore, ensure that all Directors are involved in decision-making for matters requiring Board approval. This should not be delegated to a few Office Bearers who operate as an exclusive inner Board.

37. Don’t have continuous Board activities. Board meetings should be at a defined time and for a specific period. If a board performs its governance role correctly, there should be minimal ongoing emails and communications. Too much activity and emails between meetings can signal that the Board is too operational or unstable.

38. Ensure appropriate risk management. The Board is ultimately responsible for the association’s risk management policy and determining the appetite for risk. The Board should ensure that appropriate resources, systems, and processes are in place for managing and monitoring risks.

39. Train your Board to act legally, responsibly and ethically. Governology regularly provides board training on their roles, responsibilities, and best practice processes. Specific financial training is valuable, particularly for associations whose members are less involved in financial matters in their day jobs.

40. Get professional advice. Associations need quality advice on structure, governance, planning, finances, and law. Wise associations do this on commercial terms rather than relying on inappropriate volunteer advice. At times, associations seek advice on increasing income and profit, as they need strong financial equity.