Episode 6 – Nonprofit Code of Ethics

Your Sports Resource

Exploring the Nonprofit Code of Ethics, Renata delves into board members’ core responsibilities during their tenure in this episode. In youth sports, most feel they don’t have much responsibility in the ways or direction of the organization. Renata explains that couldn’t be further from the truth in fact, as a board member you are liable for the health of the organization.

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00:00:03 Introduction

This is the Your Sports Resource Podcast, where each week we’ll discuss 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.


Hello everyone! Renata here. In today’s episode, I want to talk about the overarching responsibilities that every nonprofit leader must recognize and be responsible for.


Today’s focus is for the nonprofit board and the reason why I believe this is important is that in youth sports Boards are made up of parents typically, which is not a bad thing at all. However, as you know, I constantly push that as long as they have the skillset and the capacity needed, that’s perfect.


The other side of this, though, is that the board members must understand their fiduciary responsibilities. Now for clarity, because for some reason some people equate the word fiduciary to finances, which finances can be a part of it. But that’s not the only element of fiduciary responsibility.


So, if I were to give you a definition, a fiduciary is a person or organization that acts on behalf of another person or persons putting their interests ahead of their own with the duty to preserve good faith and trust.


Now that’s a massive sentence. So, let me read it one more time.


A fiduciary is a personal organization that acts on behalf of another person or persons putting their interests ahead of their own with a duty to preserve, good faith and trust.


Now, this is important for nonprofit leaders to understand. While you have a duty to meet expectations for delivery of work and tasks. So, what’s on your responsibility as far as an officeholder, you also need to understand that you have responsibilities to your membership and these responsibilities are things that you will be held accountable for it in the public eye and it actually means that you, as the board member, are responsible for the health of your organization.


Now in an article on the National Council of Nonprofits website. They broke these duties down into three areas, and those are the Duty of Care, the Duty of Loyalty, and the Duty of Obedience.


Now what I’m going to do is I’m going to break these down from a Youth Sports Club perspective, so it’s easier to understand. What would be good is for you to work through or judge how you and your board members are performing against these three different duties.


So, let’s start with the Duty of Care. This is to take care of the nonprofit by ensuring prudent use of all assets, including facility people and goodwill.


Now, this is probably a duty that everyone should follow, right? Whether you’re a nonprofit or not, I love the statement “prudent use of people and goodwill.”


So, let’s break this down even further. And of course, the first one is going to be financial, but this is really the only financial statement all the way through that I’m going to make.


So that means you must oversee the financial affairs and ensure the club stay solvent. So, every board member is responsible for this. So, my very, very strong suggestion is that you and your board must absolutely know and understand your budget.


I don’t care if you have a Finance Committee or not. You, as a board member, when you’re making voting and you’re voting on issues you’d better understand your budget. If it’s confusing, then you need to ask your Treasure or your Finance Committee to show the budget or present the budget in a way that it’s easy to consume and understand.


And if you make reviewing the budget a matter of practice so every month, then you as a Board Member can make well-informed decisions. I’ve seen way too many clubs whose board has no interest in knowing or understanding their budget, and that’s a big mistake because you’re accountable for the decisions that you make.


Okay, let’s keep going on Duty of Care. So, you need to minimize the risks associated with the club activities.


You need to recruit and empower and maintain and recognize your club volunteers. You need to ensure staff understand their roles and responsibilities and are held accountable and celebrated for doing the right thing, and then have a succession plan for all roles and positions within the club.


So, are you minimizing risks? Are you ensuring that you have set your volunteers and staff up for success? What about accountability?


A big struggle area for clubs is that they operate out of fear. They allow poor behavior from staff and volunteers because they’re afraid they won’t be able to replace them or fill that position.


My question to you is at what cost, at what cost to you does it allow subpar or poor behavior to continue right? So where does your club rate in regard to their Duty of Care?


Now, let’s move on to the Duty of Loyalty. So, this is to ensure that the nonprofits, activities, and transactions are first and foremost advancing its mission, recognize and disclose conflicts of interest, make decisions that are in the best interest of the nonprofit corporation, not in the best interest of the individual, board member, or any other individual or for-profit entity.


That’s a mouthful there. So, what this mean if we were to break this down. That means you need to define and deliver on the club’s mission and vision, and values, and behavior. And set strategic goals and objectives, right? So, your Duty of Loyalty to your membership is to elevate and move your club forward.


You need to ensure the sustainability of the club for your staff, your members, your volunteers, your facilities, your community, reputation, and financial sustainability.


You must ensure the competitive and social needs of Members are met and collect, protect, maintain and hand over all critical club information year after year. And lastly, provide complete and transparent communication to your club members.


So, continuity and sustainability are really key, and a common theme of boards in youth sports is that there is high turnover is just a nature of the industry.


So, if you want to assist your club and put them in the best situation, then you need to make sure that your people that are on your board and your lead volunteers and your staff. That they put their work, their contacts, their processes, all of that is documented in some way. It can be video recordings, it could be actual word documents or Google Docs, but it doesn’t matter how it’s done, it needs to be documented and stored somewhere. So, when a new person comes on, there’s not a lag in their opportunity to add value.


When there’s a gap that means, the new person is trying to figure things out. Their trying to clean up a mess or trying to understand where they’re supposed to go and the chances of them not being jaded and sticking around are pretty slim.


One other thing to consider is that are you looking out for all of your members or just a select few, right? So, when I said, ensure the competitive and social needs of your members are met, that meant all of your members, so you need to make sure that those who are not in the elite status also have opportunities to compete and test themselves.


Right, so the board guiding principle should be looking out for all the membership as a whole. So, where does your club rate with regards to the Duty of Loyalty?


Now I’d like to take a moment to talk to you about how you can improve the direction of your organization and how the board and the head coaches can work together.


Sometimes clubs need an objective individual to work with them to pull things together. My consulting services do just that. My approach to working with Youth Sports Clubs is to work in a way where you have a game plan to implement right away.


I stay away from theory. Fluff drives me insane. I’m there to work and to ensure that your club could move out of old mindsets and sameness. And move into running the club like the business that it is. Together we can move from surviving to thriving with options.


Send me an email and we’ll schedule a no-obligation call where we can discuss your areas of concern. That email is info@yoursportsresource.com  one more time, info@yoursportsresource.com


The final duty is the Duty of Obedience. Now obedience has a negative connotation, but it is important, and it’ll be more clear when I explain it.


So, the Duty of Obedience is to ensure that the nonprofit obeys applicable laws and regulations. Follows its own bylaws and that the nonprofit adheres to its stated corporate purposes and mission. So, what does that mean?


That means you comply with all of your state and federal legislation, articles of incorporation, or charitable standing, filing the yearly required documentation, member protection, or Child Safety Fundraising and Sponsorship practices, Food and drink licensing. Things like that.


You also need to follow your own bylaws in your policies and or procedures. You know it would be really nice as if every board member knew their bylaws. I’m sure you find that a funny statement. But I know a lot of clubs say, oh we give every board member a copy of their bylaws, but when I work with clubs, I can tell you I’ve yet to have one that really understands their bylaws from top to bottom. There might have been one or two, but most people have never even looked at them. They don’t even read them.


So, my question to you is, have you read them? If you haven’t go read them. You need to understand them. When was the last time they’ve been reviewed and adjusted to be fit for purpose for today? Do you know how you’re supposed to be meeting with all of your membership and how often? Do you know what the real voting rules are?


If you haven’t reviewed your bylaws in many years, I bet there is no accounting for online meetings which we’ve been thrust into after this COVID or deal with the last two years. Do you understand your filing responsibilities to ensure that the charity is in good standing with the state?


None of this is difficult. But there’s parameters and targets that you must meet. So, make sure that you have the right person in charge and assigned to take on this task to make sure that you meet all the specified dates, especially with your state and federal and even your sports governing body to make sure that they’re meeting all those deadlines.


So, my point in going through the Duty of Care, Loyalty, and Obedience is so the board and the leadership of the club understand that their obligations are more than just getting together once a month.


And I’m not trying to reduce the listener, but in my experience, boards are really not functioning at a high capacity. Most members are just there to fill a seat, which is a shame. It is. It’s a real shame because a board member’s action can have just as much of an impact on an athlete that a coach can have.


But whether you’re fully engaged or completely apathetic about the whole situation, you are accountable for ensuring these duties are met. If there’s trouble. These statements are what you will be held accountable to, and some come with pretty hefty fines in jail time. Now I’m not saying that to scare you, but I just want you to understand.


It’s important to get familiar. Know, your obligations and step up to deliver for your club. If you are in a seat in and aren’t adding value to that Board, please give up your seat for somebody else. Your membership does deserve that.


For those of you who are kicking button crossing forward. I am so excited for you. Make sure your board understands these duties and responsibilities. So, you can continue to deliver at a really high standard.


Okay, that’s all for this week. Thank you for listening. And please subscribe, rate, and review this podcast so more can hear about how they can improve the leadership of their Sports Club.


In upcoming episodes, I will talk to you about recruiting volunteers and how to have a successful outcome when working with a consultant. You can find more resources on yoursportsresource.com.


Thanks for spending time with me!