When is it Time for By-laws Changes?

Laws are typically understood as requirements or mandates imposed on one from a higher authority, usually governmental.  Charity by-laws are laws formally imposed on a charity by its members. They are kind of like family rules.  For example the "family" decides how and how often it will identify directors, what percentage of family members constitutes a quorum and how family members must be notified of family reunions; more commonly referred to as an AGM.

At some point the family made the rules and so the family gets to change the rules.  The rules should serve the family and not the other way around. So when the family discovers that some of the rules don't serve the family anymore, the family can collectively decide which rules need to be changed and what part of that rule needs to be changed.

When I am asked if I can help a charity revise its by-laws, the first thing I want to understand is the motivation for wanting to make changes. The reason is usually because the charity has discovered that its current by-laws do not effectively serve the charity. That discovery is often made by finding out that decisions have been made that were not consistent with the by-laws or wanting to move in a direction that the current by-laws do not allow.

If your organization is considering making by-laws changes, let me offer some encouragement:

Make sure your changes serve your charity and not the other way around. Find out how you want to function before you look at making any changes. Then make the changes to serve the structure.

Keep them very basic. Often requirements are placed in by-laws that handcuff the charity and remove legitimate flexibility.

Engage a lawyer with experience in charity law. By-laws are important enough that revisions should not be left with a board committee or a consultant. Important items can be missed or some implications may not be considered.

Finally, don’t be intimidated by the subject of by-laws. Your charity is in charge, so let your by-laws serve the charity.

By-laws changes do not need to be a huge hassle. Now you can breath easier.

Value Based Fees

How does a consultant decide on a fee structure?

One way is to base it on an hourly fee. Like legal fees charged by some lawyers, a record is kept of the amount of time spent, and the client is billed accordingly.

Another somewhat similar option is to first project an approximation of the number of hours required to complete the consulting service and set that as a flat fee.

I like to consider the service being provided to the client. Let's suppose as a result of a consulting service, a mission agency has been able to resolve the conflict between its board and its leader. That organization needs to decide what that result is worth. What has the conflict and the associated distractions cost the organization? What ministry has been interrupted or worse yet what ministry opportunities have been lost as a result of the conflict? And they have not started to quantify the emotional energy spent, relationships which have been fractured and sleep that has been lost.

What is it worth to a board to have someone provide it with a model of governance that minimizes those recurring issues that never seem to get resolved? How much time does a board spend on trivial issues which result in it not spending time on the real issues?

Once a board has been able to quantify those costs, it has an idea of what the consulting service is worth.

I like to establish an hourly face time rate. Face time is the time I physically spend with the client or time I spend in conference calls or significant telephone conversations. The hourly face time rate is sufficient to provide time for the development of reports, casual conversations and a certain amount of scope creep. Scope creep can include a client wanting advice or information about something which may be related to the current project but not germane nor a part of the original consulting service. This is preferable to posting a charge for every quarter hour I spend on the phone or charging an hourly rate for developing a report.  Furthermore if a client knows they are going to be charged for every phone call or email exchange, they are less likely to call for information or clarification which may expedite the resolution of the issue or completion of the project. As such I like to develop a flat fee which allows certain parties such as the chair and the leader to have unfettered access to my time. That way neither of us feels awkward with casual conversations or coffee time connections.

My ideal fee structure is one in which client sees the result as being worth twice the cost while I am appropriately compensated.

It May Be Time For Some Conflict

The board feels it serves no real purpose other than rubberstamping the leader’s ideas.

The leader goes into a board meeting knowing there is a landmine but not knowing where it is.

The agenda and the decisions are predetermined in meetings held between the chair and the leader so that the board meeting feels like an FYI session.

The default position of the board and the leader is mistrust.

A board member resigns mid-term because “my schedule doesn’t allow me to give board matters the attention they deserve”.

The leader has every decision queried and critiqued against some invisible standard.

Leaders resign with anemic explanations for their untimely departure.

The board is disappointed with the lack of progress made by the leader in recruiting new board members.

Do one or more of these situations resonate with you? It isn’t a full blown conflict resolution circumstance (yet), so you aren’t ready for an outside viewpoint yet. But the lack of conflict may very well be the problem. Parking lot conversations and backroom deals serve to keep the conflict from floating to the surface. Or feeding a family and paying a mortgage may be a higher priority for the leader than the risk associated with resigning and finding a new job.

Refusing to ignore the problem is the first step toward dealing with the problem. Rather than taking Tylenol for the governance toothache, it may be time to call a dentist. The short term pain will be well worth dealing with the long term problem.

Kinda Doing Policy Governance®

I was hardly aware of Policy Governance® when I was serving with an organization that contemplated moving in that direction. They engaged a consultant who said he had experience with the Policy Governance model. In retrospect it appears he had experience in governing by policy, which is not close to the same thing. Policy Governance is a series of principles which are intended to be integrated as a whole. When that is not done, the integrity of the Policy Governance model developed by John Carver, becomes compromised as pieces of it are taken and added capriciously to whatever system (or non-system) is currently in place. This is a common misconception: that having a bunch of board developed policies in itself makes a board a Policy Governance board. 
 

A frequent challenge comes with the Board that acknowledges that it has adopted Policy Governance at some time in the past but it has not fully implemented the model. John Carver says that using parts of a system can result in inadequate or even undesirable performance.  Sometimes the reason for not carrying through is because of an incomplete or inadequate understanding of the model. This can result in a tried that- didn’t work perspective. Another reason for aborting or abandoning Policy Governance is the lack of discipline on the part of the board to follow through on the rigorous monitoring of the limitation polices imposed on the leader. There can even be a failure on the part of the board to review its own policies which it previously agreed to abide by.

I enjoy working with these organizations, because they have enough of a taste to at least consider Policy Governance and therefore together we can build on that foundation. If you are a ministry like this, I would love to opportunity to connect with you.

The Ideal Consulting Client

Recently I was challenged to consider the question,  “What is your ideal consulting client”. The answer should have rolled off my tongue, seeing that consulting is what I do with the bulk of my time.  But it didn’t. So I began to search for the answer by looking at the things I value.

My book, A Guide to Governing Charities won the Canadian Leadership Book of the Year in 2012. On occasion I have been with a friend who has introduced me to someone as an award winning author. After the obligatory congratulations are expressed, the question is asked, “So what is the book about”? “It’s about governing charities” I mumble. The immediate reply is something like “it sounds interesting”, followed by the details of their visit to the vet so their chihuahua could be treated for a blocked intestine.

The only thing that my consulting services to boards and vets working with constipated chihuahuas have in common is a felt need. Something is happening or not happening resulting in a lot of noise but little progress. Potential clients do not see my services and say “Wow, I would like that.” It is more often fuelled by a problem that does not appear to have an easy solution.  My services are only of interest and value to leaders and directors of churches and mission organizations or those who influence them. So engaging ideal clients within an already limited demographic is somewhat challenging, but not unheard of.  After all you are reading this blog.

Governance issues are seldom seen as a problem in themselves. They evidence themselves in other ways such as dissatisfaction with the leader or directors feeling irrelevant. But boards may not see this as a governance issue.

So my role is to help the potential client describe the problem and then describe the solution in a way that can be measured or stated in relation to how a similar event in the future would be improved. Things will be better because this won’t happen or that would be handled in a different way.

The ideal client is the board of a mission agency, church, school or camp that is not satisfied with where it is and wants to move from where it is to where it wants to be.