Page 24 - C&A's Nonprofit Board Guide

BOARD
COMMITTEES Powers – The committee can recommend and/or

approve compensation amounts for the executive
employees. The directors can use a compensation
consultant or benchmark compensation amounts Purpose – To oversee the organization’s corporate
compliance program and related policies and
T here are generally two types of committees; An extension of the finance for executives of other similar organizations to help procedures. The committee also ensures sufficient
determine compensation amounts.
committees of the Board and committees
committee is the audit committee.
of the organization. Committees of the This committee’s responsibility is to resources are available to carry out the corporate
Board have the ability to take action on behalf of the select an independent audit firm to conduct The NPRA prohibits the involvement of the person compliance plan.
Board, while committees of the organization cannot. the audit, oversee the audit process, accept the that will receive the compensation from being Powers – The committee reviews the policies
In deciding how to structure your committees, audited financial statements, and report findings to present, or from participating in the deliberation and procedures that involve the code of conduct,
remember that a committee of the Board can only the Board of Directors. According to the NPRA, and voting on said compensation. corporate compliance plan, and the process for
be made up of Board members (must have at least there are additional requirements for an audit reporting concerns by employees and vendors. The
three) while a committee of the organization does not committee of organizations that have over $1 million NOMINATING COMMITTEE committee also reviews and evaluates the results of
need to made up exclusively of Board members. in annual revenue. These requirements are to have compliance audits, as well as management’s plan of
discussions with the auditor prior to and after the Purpose – To ensure vacant positions on the Board action to respond to the audit findings.
Committees of the Board are an important extension audit. Prior to the start of the audit, the discussion are filled and to develop Board succession plans.
of the Board of Directors and carry out specific should focus on the scope and planning of the audit, DEVELOPMENT COMMITTEE
functions that are vital to the organization. The and upon completion of the audit, the results of the Powers – This committee is responsible for seeking
organization’s bylaws include the committees to be audit. Results of the audit include identification candidates for recommendations to fill vacant seats Purpose – To establish a plan for fundraising
held by the organization and can include a provision of material weaknesses in internal controls, any on the Board, as they occur. This is an important activities so that sufficient financial resources are
for the establishment of additional committees as restrictions on the scope of the auditors’ activities function for the organization, as new Board available for the organization.
needed. As with Board of Directors’ meetings, each or access to requested information, any significant members have a significant impact in the future of
committee must maintain minutes for each meeting disagreements with management, and the adequacy the organization. Powers – The committee can develop and
held by the committee and should hold meetings of the accounting and financial reporting process recommend fundraising plans for approval by the
as often as stated in the organization’s bylaws. The of the organization. This is applicable for financial EXECUTIVE COMMITTEE Board. Fundraising plans can include establishment
committees report to the Board and typically do not statement audits, government audits, and pension of Board-designated funds, determine the need to
have the authority to exercise any powers of the audits. To the extent that an organization has an This committee usually consists of the Board raise capital for a specific project, or create a new
Board, unless stated otherwise. The New York State internal audit function, this process should also be officers (President, Vice President, Treasurer, or fundraising event. The committee can monitor the
Nonprofit Revitalization Act (“NPRA”) focused monitored and directed by the audit committee. Secretary) and can include members of the Board. fundraising plan to ensure activities are progressing
on certain Board committees to improve overall in the direction intended.
corporate governance of nonprofit organizations. An investment committee can also be an extension Purpose – To manage the direction of the Board and
The most common committees of the Board are of the finance committee. For those organizations assist in creating the agenda for Board meetings. In addition to the above committees, the Board of
summarized below. that have significant amounts of investments, Directors can also create ad-hoc committees. These
whether for general operations or an endowment, Powers – This committee can meet and make committees are created for a special purpose for a
FINANCE COMMITTEE this committee can be responsible for developing decisions on urgent matters that come up between certain period of time (i.e. committee established
an investment policy that conforms to the goals of scheduled Board meetings. The bylaws will include to organize a major fundraising event or capital
Typically, the Board Treasurer is the Chair of the the organization and ensures compliance with the the authority that this committee has over decision- campaign project). When the purpose or goal has
finance committee. New York Prudent Management of Institutional making on behalf of the Board. been met, the committee will then dissolve. Having
Funds Act (“NYPMIFA”), later discussed on a few committees creates the opportunity for
Purpose – To take responsibility and oversee page 45. recruitment of new Board members. As committees
the financial performance and reporting of the COMPLIANCE COMMITTEE typically meet fewer times during the year than the
organization. COMPENSATION COMMITTEE
This committee is highly recommended for health Board, individuals can first serve on a committee
Powers – The committee reviews and recommends Purpose – To establish a compensation policy and welfare organizations. Such organizations that before making the commitment to serve on the full
Board.
the annual proposed budget, budget modifications, for determining compensation amounts for the receive federal and state funding are subject to more
and financial/accounting policies and procedures. organization’s executive employees. regulations over the programs that receive such
The committee also monitors the actual-to-budget funding. This committee is made up of directors
operations. In addition, the finance committee and meets with the Corporate Compliance Officer.
should be responsible for ensuring the organization’s
tax filings are filed timely and reviewing the internal
controls that are in place at the organization.
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