How to use technology to boost trustee compliance training

A board decision puts the organisation’s tax-exempt status in question. Inadequate documentation of expenses violates a grant requirement. A board member fails to follow email security protocol, resulting in a serious data breach.

These are examples of a charity or nonprofit organisation not being in compliance with the laws, contracts and commitment that govern not-for-profits. The risks of noncompliance for organisations are high, including potential fines. Other risks include the loss of funding, credibility and reputation. This is why board members, who are volunteers, must thoroughly understand all legal requirements and mandates to effectively make decisions for their organisations.

Board administrators play an essential a role in mitigating the risks of noncompliance by making sure that current board members receive comprehensive and ongoing training on mandates and regulations. Administrators also ensure that compliance information is part of onboarding and orientation for new board members.

The timing and quality of compliance training has serious implications for boards and their organisations. Fortunately, technology can make compliance training easier and more efficient for administrators and for both new and veteran board members.

What is the role of the board in ensuring compliance?

Charity and nonprofit boards are responsible for the continued health and longevity of their organisation. As the above examples demonstrate, straying from the rules and regulations can damage organisations.

To make the stakes even higher, mandates and legal requirements for nonprofits change and update frequently, making it even more crucial that board members stay on top of the latest information and legal interpretations.

“Don’t risk your nonprofit’s mission by being lax about compliance,” writes Greg McRay, CEO of The Foundation Group. “Staying on top of the things required of you is a key component in maintaining a healthy and successful organisation.”

“Don’t risk your nonprofit’s mission by being lax about compliance. Staying on top of the things required of you is a key component in maintaining a healthy and successful organisation.” – Greg McRay, CEO of The Foundation Group

Why do board members need compliance training?

Board members are volunteers who are attracted to governance through the mission of their organisations. They may not have legal backgrounds or expertise. They most likely do not possess detailed information on board governance. But they must know and understand compliance information so they can create strong policies and make better decisions.

Keeping compliance in mind while conducting strategic planning saves time and resources. Board members with a working knowledge of compliance issues will help protect the reputation of the organisation. A good reputation, in turn, leads to increased donor, public and community support.

Compliance training helps new board members feel confident about making decisions and weighing in on issues that come before them. Through the training, they gain an understanding of overall governance issues, such as of ethical standards, procedural rules and the scope of their authority and responsibilities.

Requiring that all board members receive compliance training fosters a culture of ethics and accountability on the board.

If a compliance issue does crop up, having a strong track record and culture of ongoing compliance training will demonstrate that the board and the organisation have been making good faith efforts to learn about and adhere to current legal requirements and mandates.

When board members are actively engaged, they are more likely to be prepared and informed about the issues at hand, leading to more productive discussions and better outcomes for the organisation.

For board administrators, the challenge often lies in how to manage and motivate a diverse group of individuals. To help, we have created a quick visual guide full of practical tips, strategies and real-life examples, specially designed to help board administrators boost board member engagement effectively. Download the “Board admin’s guide to boosting board engagement” now and start making a difference in your board’s effectiveness.

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Compliance committees

The board should consider appointing a compliance committee from among its members. This committee is charged with reviewing the organisation’s activities, processes and procedures to identify areas of organisational vulnerability. The committee also recommends changes and improvements to current processes and procedures.

The board chair or president might want to consider asking the organisation’s legal counsel to participate in these committee meetings. At the very least, counsel should be on call during committee meetings when inevitable questions pop up.

This standing committee’s focus on compliance sends a message to board members and to organisational leaders that compliance is an important topic. The committee encourages leaders and employees to make compliance a priority.

Board management software can support compliance training

A board management system like BoardEffect can support compliance training and make training more efficient for board administrators and effective for both new and longtime board members.

Information can be stored centrally and organised so board members can search for, review and easily access what they need to understand the context of the mandates and regulations. Tip: when storing key information, add a document with review questions to help guide learning and make information easier to remember and understand.

Key documents stored on your board management solution will help board members understand how regulations affect the different aspects of their organisation, from employee compensation and benefits and financial documentation requirements to social media use and data security precautions.

Secure workrooms can also be used for working groups or committees to review and discuss the implications and impact of mandates and regulations on board governance and decision-making.

Tips for effective volunteer board member compliance training

• Use a centralised repository or online platform, such as BoardEffect, for easy access to information and resources.
• Emphasise the need for board members to avoid email and instead use your board management solution, as that helps them to stay compliant and safe against cyberattacks.
• Allow board members to work through and complete the training at their desired speed but request that they inform you when they have completed it.  You can use a survey to gather in who has completed (or not!).
• As part of the training, demonstrate to board members how they can bookmark and annotate notes, and they can retrieve the information when they need it.
• Smart naming of key documents to categorise regulations, mandates and other information will help guide searching.
• Add recent internal or external audit results for board members to analyse as part of the training sessions.
• Include the board’s legal counsel in appropriate training sessions, allowing for questions, whether verbal or written.
• Provide scenarios for board members to consider and practice on. These scenarios can include potential ethical issues that the board may confront. These scenarios will help board members see the practical implications of regulation and mandate compliance.

BoardEffect makes compliance training more efficient and effective

A robust training programme offers the best protection against the risks of being out of compliance with the rules and regulations that govern charities and not-for-profits.

BoardEffect is the place to start building your programme, offering a secure, central location for documents and features to help facilitate board member training for compliance.

Store up-to-date information on regulations and legislation in your Resource Library for easy access for board members and executive leaders.

Find out how BoardEffect can assist your board with good governance and compliance. Request a demo today.