NCA Regional Conference Carnegie Abbey Club November 8, 2012 How to Add Organizational Strength and Value to Clubs throu

1. NCA Regional ConferenceCarnegie Abbey ClubNovember 8, 2012How to Add Organizational Strength and Value to Clubs through effective Boards and Committees. Ned McCrory, CPA George Zoglio, CPA, MBA Batchelor, Frechette, McCrory, Michael & Co. CPA 40 Westminster Street Suite 600 Providence, RI 02903 (401) 621-6200 www.bfmmcpa.com

4. Rhode Island State House

5. Roger Williams Statue

6. Roger Williams National Park

7. U.S. Senator Claiborne Pell

8. Mr. Potato Head

9. Green Army Men & G.I. Joe

10. Miss U.S.A 2012 – Olivia Culpo

11. DJ Pauly DJersey Shore (Reality TV Show)

12. Discussion topics • Governance concepts • Characteristics of volunteer committee and Board members • Structures and practices of effective Boards/committees • Enhancing leadership skills • Establishing boundaries between governance and management

13. Why the Need for Policies and Governance? • Fiduciary responsibility • Board may spend on average 1.5 hours per month looking at financials at other information at Board meetings. • Yet they still retain the ultimate fiduciary responsibility for oversight and governance.

14. “Committee – a group that keeps minutes and wastes hours”

15. Governance concepts • Club organizational structures • Developer owned • Corporate owned/operated • Individual ownership • Member owned • Member owned – often not-for-profit organized under state Nonprofit corporations laws – Board/committee driven

16. Governance concepts • Board/management structures • General manager model • GM oversees all department heads • GM reports to Board and related committees • Committee/department head model • Board member is assigned as chair of each club committee (house, finance, greens, golf, etc.) • Each related department head reports directly to committee chair • GOAL – effectively govern and maintain productive and positive working relationship with management

17. Characteristics of volunteers • Why do members get involved in Boards/committees • “Types” of members who seek out Board/committee positions: • Actively involved in community and possibly other not-for-profit Boards • Business owner (“hey this can’t be any different than selling furniture right?”) • Accountant/lawyer/banker (“so explain to me this 15% nonmember revenue thing one more time”) • The future new food/coffee/insurance (fill in the blank) vendor

18. Characteristics of volunteers • Many Board members do not fully appreciate the fiduciary responsibility they are about to assume • Fiduciary responsibilities to members • Quality service • Efficiently delivered • Maintaining social environment of club

19. Characteristics of volunteers • Fiduciary responsibility to regulatory bodies (IRS, state authorities) • Duty of care – be informed and prudent • Duty of loyalty – acting in best interest of club and membership • While members may join a Board with the intention of “doing the right thing” – do they know what the right thing is.

20. Structures and practices of effective Boards/committees • How many committees • Documented in Club by-laws • Size of committee/how often to meet? • Contested election? • Nominating committee? • Independent members/Matching skill set • Staggered terms/Term limits • Communication to members • Advisory or authoritative?

21. Structures and practices of effective Boards/committees • Formal written “charter” • Document “charge” or goals and objectives of committee • Specific tasks • Composition • Budget potentials and/or constraints • Advanced notice and agenda of meetings – avoid “runaway” meetings • Document and maintain minutes

22. Structures and practices of effective Boards/committees • Provides clear evidence of governance • Outcome - provides clear evidence of execution of fiduciary responsibility • Outcome – serves as communication tool as to importance of governance role (“setting the tone at the top”) • Transparency

23. Enhancing leadership skills • Board orientation • Surveys • Membership • Boards evaluating themselves, their meetings, their committees.

24. Establishing boundariesbetween governance andmanagement • That “imaginary line” where the hand off from the Board/committees to management to execute the policies • Management needs to take an active role to minimize the threat of “Board micro-management” • Factors • Trust level • Experience of management • Preparedness of management

25. Establishing boundariesbetween governance andmanagement • GM/management preparedness: • Involvement in committees • Flash reporting • Communication in between meetings • Reliability of representations • Understanding financial information • Avoiding surprises • Providing full facts, not filtered perspective

26. Thank You! How to Add Organizational Strength and Value to Clubs through Effective Boards and Committees. Ned McCrory, CPA George Zoglio, CPA, MBA 401-621-6200 nmccrory@bfmmcpa.com Batchelor, Frechette, McCrory, Michael & Co. CPA Providence, RI