Everyone should have an understanding of the board’s fiduciary duties. Whether you are an aspiring board member or a coach, you must understand what living up to those duties requires and how it serves the club business overall.
Sometimes, on the outside, decisions seem to be unreasonable or rash. What parents and coaches need to understand is more times than not, there’s more to the story. Often information can’t be divulged, but ultimately a board has duties to ensure the club is managed in a responsible manner.
Listen to this week’s podcast to understand more.
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TRANSCRIPT
00:00:03 Introduction
This is the Your Sports Resource podcast, where each week you’ll learn actionable strategies that you can implement, so the operations of your club support your coaching staff and the direction of your organization. We are committed to excellence in youth sports leadership. Let’s get started.
00:00:26
Hello and welcome everyone to the Your Sports Resource podcast.
00:00:31
Today I want to talk about the fiduciary responsibilities of the club board.
00:00:38
I know it’s really exciting stuff, but it’s important to understand.
00:00:43
Whether you’re a board member and really aren’t sure how you’re supposed to make decisions, or if your coach and think you know it’s just a bunch of parents sitting around trying to make each coaches life miserable.
00:00:56
It’s important for both sides to truly understand what the actual duties of a board member are.
00:01:03
There are three duties that a board must follow as a non-profit business.
00:01:08
They are the duty of care, duty of loyalty, and duty of obedience.
00:01:14
These are the three critical principles that govern the behavior of the board.
00:01:19
These principles may play a crucial role in ensuring that, your club is managed in an ethical and responsible manner and that the organization’s resources are used for its intended purpose and mission.
00:01:33
I want to try to break each of these down and hopefully make them more clear to you. Make more sense to you.
00:01:40
The first one is the duty of care.
00:01:43
This requires board members to act with duty of care and diligence in the management of the club’s assets, including facilities, people, and goodwill.
00:01:55
This means that the board members must exercise reasonable care in the performance of their duties and use their knowledge, experience, and professional judgment to make informed decisions about the use of these resources.
00:02:11
This is why I pushed my clients really hard to strive towards finding board members with specific skill sets. Managing the clubs’ assets from a financial perspective is an easy one to understand and it’s an easy skill set that you need to recruit for.
00:02:29
But I want to say that. It’s not only you know the boards’ use of money, it’s also when the head coach or the swim school director have autonomy over their budget as they should, right?
00:02:42
It’s how they actually use or don’t use their budget right?
00:02:48
So just because the head coach or the swim school director has that autonomy, it doesn’t mean that they don’t have oversight to ensure proper use of those funds is taking place, and that comes from the board.
00:03:02
Another area or example might be overseeing the maintenance of the facilities and ensuring that they are adequately insured against potential risks.
00:03:12
And yet another example could be ensuring that they hire the right people who can live up to the specific roles of the club, and to ensure that those employees receive proper training, feedback, and support in those roles.
00:03:28
This protects the club’s reputation, and I would even say it emboldens it because the board is ensuring proper care of its people.
00:03:37
Duty of loyalty is next.
00:03:39
This requires board members to prioritize the interests of the nonprofit over the personal interests or the interests of any other individual or entity.
00:03:51
Board members must avoid conflicts of interest and make decisions that are in the best interest of the nonprofit.
00:04:00
This means they must act in good faith and not use their position for personal gain.
00:04:07
For example, if a board member has a financial interest in a company that the nonprofit is considering doing business with, they must disclose this conflict of interest and recuse themselves from the vote.
00:04:19
Alternatively, if board member, if a board member is considering taking on a new opportunity that could conflict with their responsibilities to the club.
00:04:30
So, you signed up to be the President for two years and now you want to throw your hat in another ring.
00:04:35
They must weigh whether or not this opportunity is in the best interest of the club before making a decision that may conflict with their current role.
00:04:44
Meaning you signed up for two years, you obligated for those two years so looking elsewhere or doing work, work elsewhere if it conflicts with your current role.
00:04:55
Well, you have to make a decision to probably say no.
00:04:59
This is often where the public side of decisions gets convoluted and let me explain that.
00:05:07
So, what I mean by this is that the board has to make decisions for the entirety of the organization, and sometimes that means moving a prominent staff member along.
00:05:18
We see it all the time.
00:05:19
It shows up in swim, swam and the rumors begin, but what isn’t seen is the actual evidence behind making the decision.
00:05:27
Because really and often legally, they can’t disclose that kind of information.
00:05:32
First of all, both sides want to try to part ways on good terms and in hopes that both have gained some knowledge and experience through, you know, the departure.
00:05:42
I’m not saying that boards don’t make bad calls, but what I am saying is that boards aren’t always making bad calls when it comes down to the coaches and, let’s be honest, it’s more often than not that boards let staff get away with poor behavior and not meeting expectations much longer than they should because they don’t want to be seen as a finger-wagging parent.
00:06:04
What people fail to realize is that no board wants to be put in the position of making really difficult decisions.
00:06:11
But ultimately, they are the leaders of the business, and they have a duty to protect the organization as a whole.
00:06:18
That’s the duty of loyalty.
00:06:22
Also, as an aside, we have a tool on our website regarding how to make decisions and what constitutes a conflict of interest, and it’s a really good source and a good decision tree to ensure you’re on the right path. You can find that on yoursportsresource.com under tools.
00:06:40
The final duty is the duty of obedience, which requires board members to ensure that the nonprofit complies with all applicable laws and regulations and follows its own by-laws.
00:06:53
This means that the board members must be familiar with the organization’s governing documents, understand its stated mission and purpose, and be aware of any changes in the law that could impact the club. They must take appropriate action to ensure that the club remains compliant.
00:07:11
Which you would think would be common sense, but I’ve seen too many clubs who don’t keep up with their secretary state filings or who aren’t operating in accordance to their own by-laws and those should be pretty simple and straightforward actions.
00:07:27
A different example is that boards are responsible for ensuring the club’s fundraising activities comply with all relevant laws and regulations.
00:07:37
Now that could be state or federal, but it could also be in according to you know USA Swimming rules.
00:07:43
Another area is ensuring that the club’s financial statements are accurate and transparent and that they are in compliance with any and all reporting requirements, you know with the IRS and with the state.
00:07:5
It could even be as simple as making sure that the right licenses and certificates are had in order to sell food at a meet, right?
00:08:03
All of this is straightforward and boring stuff, but some of the compliance items can really jeopardize your club remaining in good standing as a nonprofit if they’re not kept up with.
00:08:16
Alright, real quick, I just want to ask a few questions are you feeling like your staff and coaches are stretched really thin, that they are struggling to meet expectation and there seems to be more and more tasks falling through the cracks?
00:08:31
Getting back on track is something that we at Your Sports Resource can help with. Through optimizing your structure, we come in and do a deep dive on your staff and your processes and help you build the structure that works both for you and solves your problems.
00:08:44
Find out more on yoursportsresource.com/consulting and book a free consultation call honestly, there’s no pressure. We just want to help the swimming industry and swim clubs such as yourself.
00:09:01
OK, so just to wrap up real quick, it’s important that those who want to be a board member and the staff truly understand the role of the board and their duties.
00:09:13
If you’re on a board or considering being on a board, you have to know what you’re walking into.
00:09:20
I say it all the time. This is not just some kids’ sport, it’s a business first and foremost, and the same goes with the staff.
00:09:28
You may not agree or understand why decisions are made and that might be as simple as it can’t be divulged to protect employees.
00:09:39
So, if you understand their duties, then you could probably get your mind wrapped around that decisions are made that you may not like, but that you don’t have all the information for.
00:09:52
The duty of care, loyalty, and obedience are the three fundamental principles that guide the behavior of board members in nonprofits.
00:10:02
By understanding and following these principles, board members can ensure that the club is managed in an ethical and responsible manner in its resources are used for its intended purpose and mission.
00:10:15
By fulfilling these duties, board members can help the club achieve its goals and serve its members effectively.
00:10:22
Thank you for listening today and please subscribe, rate, and review this podcast so we can grow our audience and help other swim clubs.
00:10:30
As always, you can find more information on our website yoursportsresource.com. Thanks for spending time with me today.
