Wise Giving Wednesday: Duty of Care on Charity Boards
We continue our series on the three fundamental charity board responsibilities. Last week we discussed issues related to the duty of loyalty. This time we would like to focus on the duty of care. While many consider the duty of care to cover the wise use of the charity’s resources, it also covers such activities as attending board meetings, reviewing the performance of the CEO, reading the charity’s materials, and engaging in budgeting and strategic planning activities. These principles are covered by BBB Charity Standard 1 which addresses board oversight.
BBB Charity Standard 1 requires a board of directors that provides adequate oversight of the charity's operations and its staff. Indication of adequate oversight includes, but is not limited to, regularly scheduled appraisals of the CEO's performance, evidence of disbursement controls such as board approval of the budget, fundraising practices, regular monitoring of a conflict-of-interest policy, and establishment of accounting procedures sufficient to safeguard charity finances.
BBB Charity Standards 6 and 7 address results reporting and, in part, seek to ensure that a charity has a board policy of conducting some type of effectiveness (or impact) assessment at least every two years. A written report outlining this assessment and recommendations for future actions should be prepared and shared with the board for its approval. In other words, these standards recommend that charities set defined, measurable goals and objectives, put a process in place to evaluate the success and impact of its programming, and report on the organization’s progress.
In terms of charity finances, BBB Charity Standards 8 and 9 address financial ratios. Standard 8 calls for charities to spend at least 65 percent of its total expenses on program service activities, and Standard 9 calls for charities to spend no more than 35% of contributions on fundraising. Financial oversight is also addressed in other BBB Charity Standards that call for annual financial statements to be prepared, to have an accurate report of the charity expenses in these statements, and to have a board-approved annual budget for the current fiscal year.
Of the three fundamental board responsibilities, the duty of care responsibility of board members probably takes up the most time to carry out and complete. For additional guidance on this subject see the following board responsibility publications produced by a number Attorney General offices such as Illinois, Massachusetts, New Hampshire. New York, and Oregon.
Additional guidance and recommendations on the BBB Charity Standards cited above can be found in the implementation descriptions of the BBB Standards for Charity Accountability.
Video of the Week
This week we are pleased to revisit a video interview with Beth MacNairn, Deputy Director, Health Volunteers Overseas (a BBB Accredited Charity) that works to address the global health workforce crisis by implementing programs that meet the needs of the host country and institutions, are sustainable and build local capacity. The organization states that its volunteers provide clinical and didactic education through continuing education and degree-granting programs, faculty and staff training, mentoring, education material development, and professional collaboration.
Heart of Giving Podcast
In this week's Heart of Giving Podcast, BBB WGA interviews Michael Clinton, the author of the bestseller "Roar: into the second half of your life (before it’s too late)." Michael discusses his book and explains how a person can take meaningful actions to lead a purposeful life.
We are always working with charities to publish or update reports for donors. Visit Give.org or local BBBs to check out any charity before giving. Our recently evaluated charities include:
Finally, remember to let us know by going to give.org/charity-inquiry if you are interested in seeing a report on a charity not on the list and we will do our best to produce one.