duties of the board - kenyasacconet.org

1 1 DEVELOPMENT BEST PRACTICES IN SACCO SUPERVISON The board of directors is elected by SACCO membership during the annual general meeting (AGM) and reports to the general membership. The board members usually serve on a voluntary basis. The board consists of an odd number of directors; the number is normally not less than 5 or more than 9 directors. The board of directors is part of the overall management team that includes a supervisory or audit committee and a credit committee, if the function has not been delegated to professional loan officers or a technical credit committee. The board of directors has the ultimate decision making authority and responsibility for directing and controlling the affairs of the SACCO and providing effective and efficient management of overall operations. The board approves policies that direct operational management and delegate the necessary authority to staff so they can fulfill their job responsibilities. A manager / General Manager/CEO is in charge of daily operations.

2 The board supervises the manager who reports directly to the board . board members have a fiduciary responsibility to their membership. That being said, board members should have a background in business or management. Each board member should be able to assess the financial condition and the operational quality of the SACCO. The board should not be reliant on operational management to interpret financial data and other information received. The board must be independent and able to question management about issues they do not understand or are unclear. Each board member should fully understand their duties and responsibilities. They should receive and review a written job description just as an employee would. The duties and responsibilities should be clearly stated in the job description given to all perspective board members so that expectations are perfectly clear. The following information should be included in the job description of a board member. board of Director Job Prerequisites Each board member must be a member of the SACCO and capable of the following so that they are an active and effective part of the board : Ability to read and interpret financial statements; Basic understanding of laws governing the SACCO; Knowledge of risk measurement and effective management; Knowledge of and a commitment to SACCO philosophy; Familiarity with asset liability management; Familiarity with lending and collections; Familiarity with marketing concepts; board of Directors duties and Responsibilities 2 Ability to work as part of a team; Able to commit enough time to successfully complete all of the job duties and responsibilities; and Strong oral communications skills.

3 Specific duties and Responsibilities These duties and responsibilities should be reviewed not only by prospective board members, but no less than annually by all board members at the meeting immediately following the AGM and the review so noted in the board minutes. The duties and responsibilities of the board include: Attend monthly board and committee meetings, the annual general meeting, any special membership meetings, and the annual planning seminar. Reconvene monthly meetings at a later date if a quorum of the board is not present. Provide input and participate in decisions of the board . Read and evaluate monthly financial reports and other board materials before the meeting. Ensure the SACCO complies with all applicable legislation. Act on all membership applications, either directly or through the appointment of a membership officer. Approve SACCO policy, financial statements, the annual budget, and the business plan. Work with management to develop short and long range planning based on objectives that meet member needs, reflect SACCO philosophy, and assure sound operation.

4 Perform an annual written appraisal of the manager based on goals established in the budget and business plan. Determine the minimum ownership share requirement and the maximum amount of shares that may be owned by one member provided that no member shall hold more than 10% of the total shares amount. Authorize the appropriate investment of SACCO funds. Determine from time to time the services, loan interest rates and terms, deposit interest rates and terms, and types of deposits and loan accounts that the SACCO shall offer its membership. Authority to declare a share dividend at the AGM only after all expenses and mandatory payments have been made and regulatory requirements met. Designate a safe depository for surplus funds and investment. Approve any external borrowings of the SACCO. Employ, establish compensation and duties of the manager, and terminate the manager with due cause. Ensure the safe preservation of the SACCO s books and records. Assess the adequacy of insurance of SACCO assets.

5 Authorize the manager or such other persons as may be agreed upon, to sign all official documents on behalf of the SACCO. Authorize the writing off of uncollectible loans and their removal from the books. Approve loans to directors, committee members, and the manager by a simple majority vote when the loan exceeds the shares and savings of the director, committee member, or manager. Propose amendments to the SACCO bylaws, subject to approval by the regulatory authority. Plan and reside over all annual and special meetings. 2 Report to the AGM on the activities occurring since the last annual meeting, the annual budget, and proposed use of profits for the fiscal year. Determine the physical security needs of the SACCO. Ensure that the monthly board minutes and any board committee minutes are in writing and prepared within 10 days of the respective meeting and verified by the secretary and the presiding officers of the meeting. Such minutes shall contain the names of members present, the date, time, and place of the meeting and a record of material discussions and all decisions made.

6 Appoint specific committees and task forces as may be necessary to improve the administration of the SACCO and its services. Ensure that the SACCO s supervisory and credit committees are fulfilling their duties and responsibilities. Fill vacancies on the board , credit, and supervisory committees until the next AGM. Keep the business of the SACCO and its members confidential. Disclose all conflicts of interest with any SACCO business and refrain from voting on issues related to the conflict of interest. Remain current on all credit obligations with the SACCO. Represent the SACCO in the community. Promote the SACCO and its services as appropriate in day to day interactions. Upon reading their job duties and responsibilities, each potential board member should date and sign that they have read the document. Their signature implies that they will perform the duties and responsibilities to the best of their ability. The signed document should be retained in the perspective board member s personal file and should be available for review by regulatory authorities.

7 In addition to reviewing their duties and responsibilities each perspective board member, prior to the AGM and election, should provide their resume or CV to the nominating committee. This information should be retained in their personal file and made available to the membership prior to the election so that each voting member can cast an informed vote. The background information of most interest to the voting membership includes: Professional background; Education; Prior service on a board of directors; and Any special skills in the areas of finance, business, marketing/public relations, legal, technological, fund raising, etc. LEGAL RESPONSIBILITIES OF THE board Under well-established principles of nonprofit corporation law, a board member must meet certain standards of conduct and attention in carrying out his or her responsibilities to the organization. These standards are usually described as the duty of care, the duty of loyalty, and the duty of obedience.

8 1. Duty of care describes the level of competence that is expected of a board member, and is commonly expressed as the duty of care that an ordinarily prudent person should exercise in a like position and under similar circumstances. This means that a board member has the duty to exercise reasonable care when he or she makes a decision as a steward of the organization. 2. Duty of loyalty is a standard of faithfulness; a board member must give undivided allegiance when making decisions affecting the organization. This means that a board member can never use information obtained as a member for personal gain, but must act in the best interests of the organization. 3. Duty of obedience requires board members to be faithful to the organization s mission. They are not permitted to act in a way that is inconsistent with the central goals of the organization or the laws that govern nonprofit activities. A basis for this rule lies in the public s trust that the organization will manage donated funds to fulfill the organization s mission.

9 PERSONAL CHARACTERISTICS TO CONSIDER Listen, analyze, think clearly and creatively, work well with individual people and groups Prepare for and attend board and committee meetings, ask questions, take responsibility and follow through on a given assignment, contribute personal and financial resources in a generous way according to personal circumstances, open doors in the community, evaluate oneself Cultivate and solicit funds, cultivate and recruit board members and other volunteers, read and understand financial statements, learn more about the substantive program area of the SACCO. Honesty; sensitivity to and tolerance of differing views; a friendly, responsive, and patient approach; community-building skills; personal integrity; a developed sense of values; concern for your nonprofit s development; a sense of humor Sample Job Descriptions for board Officers CHAIR OF THE board Oversee board and executive committee meetings Serve as ex officio member of all committees Work in partnership with the General Manager to make sure board resolutions are carried out Call special meetings if necessary Appoint all committee chairs and with the General Manager.

10 Recommend who will serve on committees Assist the General Manager in preparing the agenda for board meetings Assist the General Manager in conducting new board member orientation Oversee searches for a new General Manager Coordinate the chief executive s annual performance evaluation Work with the nominating committee to recruit new board members Coordinate periodic board assessment with the General Manager Periodically consult with board members on their roles and help them assess their performance VICE CHAIR OF THE board Attend all board meetings Serve on the executive committee Carry out special assignments as requested by the board president Understand the responsibilities of the board president and be able to perform these duties in the chair s absence Participate as a vital part of the board leadership SECRETARY OF THE board Attend all board meetings Serve on the executive committee Maintain all board records and ensure their accuracy and safety Review board minutes Assume responsibilities of the chair in the absence of the board president, and vice president Provide notice of board meetings and committee meetings when such notice is required TREASURER OF THE board Maintain knowledge of the organization and personal commitment to its goals and objectives Understand financial accounting for nonprofit organizations Serve as financial officer of the SACCO and as chair of the finance committee Manage, with the finance committee, the board s review of and action related to the board s financial responsibilities Work with the chief executive and the chief financial officer to ensure that appropriate financial reports are made available to the board on a timely basis, and assist the chief executive or the chief financial officer in preparing the annual budget and presenting the budget to the board for approval.