Organizational Governance: Layers of Documents

Posted by Matthew Thomas

Many people find themselves lost in the variety of legal documents involved in a church or non-profit. There are three major sets of documents every organization needs to have to operate.

1. Articles of Incorporation: This is the filing with the state in which the organization has its main office which creates the legal entity that can, like a regular person

  • Buy, sell and own property
  • Receive income and make expenditures
  • Sue and be sued

Among other things.

The articles state the organization’s legal name and its legal purpose. All further documents must operate within that purpose.

2. Bylaws or Constitution: Some organizations have both bylaws and constitution where the constitution typically has greater authority and less mutability than the bylaws, which are often more policy-oriented and more easily changed.

Nevertheless, many organizations just have one or the other. The purpose of this document is to determine the means by which the legal entity (legal person) can speak. Without bylaws, state statute typically prevails. Important issues that appear in bylaws include:

Membership: who are the members of the corporation? What rights, privileges and responsibilities do they have? What criteria must be met for membership? How are they removed?

Board of Directors: How many? How are they selected? How are they removed? What criteria must they meet to become Directors? How often do they meet? What is the scope of their duties, if not the entire scope of the corporation?

Officers: who are the specific officers in the organization? How are they selected? What are their basic duties? Is there a CEO / Executive Director / Senior Pastor / Senior staff person?

Meetings: how are they conducted? How does voting take place? What constitutes the passage of a resolution?

Amendments: How are the bylaws amended?

Dissolution: How is the corporation to be dissolved? Where do its residual assets go? (If tax-exempt, they must go to other 501(c)3 compliant organizations.)

3. Policies: Policies are the way that the organization is governed. For guidance on writing good policies, see http://www.carvergovernance.com/model.htm

Design Group International has experienced consultants available to help review and design these essential documents, and guide your organization through the process of developing them. Click the link below to continue the conversation with us!

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Topics: Matthew Thomas, Design Group International, Organizational Governance, Authority, Constitution, Bylaws, Policies, Carver, 501(c)3

Organizational Governance: Initial Authority vs. Final Authority

Posted by Matthew Thomas

In the Carver model of board governance, known as Policy Governance, the model’s authors make much out of the concepts of Initial Authority and Final Authority for the board to exercise.

Boards often rightly describe their role as being the final authority, using terms like “the buck stops here,” and “we are the ones ultimately responsible.” This is quite true, and boards that forget this are reminded when things go amiss or the organization slides into stagnancy.

As true as the concept of the board as final authority is (or in some membership systems, the members or the congregation), exercising authority as final authority only, as the last action in the decision-making sequence, will significantly reduce the organization’s capacity to carry out its mission, if not completely remove its capacity to take action to fulfill its goals.

If the board is the final authority in sequence, then staff always have to run to the board with all kinds of detailed proposals, which then the board reacts to in order to process the information. This typically leads to proposals receiving the dissection treatment, and staff often come away frustrated that big new ideas get dismantled and reassembled, but poorly, in committee or board meetings.

When the board acts as the initial authority, it can shape the policies and approach to new projects, short-lived opportunities, and expansion of vision. It also will increase efficiency. By stating clearly beforehand what the values are, what the goals are, and what the priorities are, with clearly defined board and staff roles and limitations on what cannot be done and how reporting should happen, the staff are then free to operate within those constraints and be as efficient and as innovative as the policies and constraints allow. This allows for staff to use their expertise to make decisions and engage opportunities as they arise, rather than taking everything back to the board for final approval. The board still monitors performance, but only to assure compliance with what it has already said. This way, the organization is empowered to solve the big problems for which it was formed in the first place.

Design Group International has Senior Consultants that specialize in governance for non-profits and churches. Click the link below to contact us to continue a conversation about how we might work together.

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Topics: Matthew Thomas, Design Group International, Organizational Governance, Authority, micromanagement, meddling, frustration