Posted in Governance

BACon Blog - The Most Boring (And Most Important) Part of Your Association’s Governance ReviewI know… the words “legal review” and “governance review” are the most boring words in the English language. You can feel your head starting to nod as you begin reading this article.

WAKE UP! Any review of your association’s governance should begin with a legal review.

Every association should conduct a review of its governance on a regular basis. The most obvious reason is to ensure that the association is being run as efficiently and effectively as possible. Association leaders also want to clarify the decision-making process for its governance entities, enhance transparency and trust, focus on leadership development, make the best use of your volunteers, and address other important goals to guarantee that your governance is working as well as possible.

But before you dive into the review of your governance, you need to stop and take the first step: conduct a legal review of your governance. Conducting a legal review of your governance will ensure that member and staff leaders are informed about the legal requirements of your association’s articles of incorporation and your bylaws. The legal review will answer critical questions about your association, including:

  • Who has the authority to amend your articles of incorporation and your bylaws?
  • What is the relationship between the Board and other parts of the association, such as state chapters?
  • What is the legal role of your elected leadership positions?
  • Who elects the members of the Board of Directors?

Another reason you should conduct a legal review of your governance is the increased scrutiny that is being directed at nonprofit governance. Some of the scrutiny is due to the inadequate functioning of corporate boards. The response to this poor performance was the Sarbanes-Oxley Act of 2002. This law mandated various reforms to improve corporate responsibility, enhance financial disclosures and fight corporate and accounting fraud. Although Sarbanes-Oxley is aimed at for-profit corporations whose stock is publicly traded, the governance issues underlying Sarbanes-Oxley are very relevant to nonprofit corporations.

The Internal Revenue Service and the United States Congress continue to be focused on corporate responsibility for both for-profit and non-profit corporations. And the recent IRS abuses regarding targeted scrutiny against conservative non-profit corporations will ensure that this issue remains in the headlines. Every association needs to ensure that they are compliant with all the legal requirements associated with their governance.

Once you have conducted the legal review, you will be ready to move forward with the overall review of your governance. The legal review will help to identify any issues that you might need to address as part of your governance review, notably any items where you are not in compliance with your governance legal requirements. This will allow you to dive into your governance review knowing the answers to critical legal questions about your governance entities and process. It will also ensure that you do not waste resources on a comprehensive governance review without knowing exactly where you stand from a legal perspective.

So… congratulations! You made it to the end of this article without your head banging on your desk as you drift off to sleep. And now you know how to begin your association’s governance review… with a legal review.

John Barnes is President of Barnes Association Consultants. Barnes Association Consultants helps association Boards and CEOs address the wide range of challenges and opportunities facing today’s association leaders. Barnes Association Consultants helps association leaders make their associations better. 

John can be reached at johnbarnes@barnes-consultants.com or 703.321.6866. For more information about Barnes Association Consultants, go to barnes-consultants.com.