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Core Functions of the Board of Directors

holding a positive meetingThroughout the year, but most often in springtime, organisations around the country hold their Annual General Meetings. Amongst other matters, A.G.M.s provide a company’s members with an opportunity to elect the directors that will manage the company on their behalf.

For people who have not undertaken governance training, this post provides a very quick summary of the core functions of a Board of Directors. Broadly speaking, directors are collectively responsible for:

– Ensuring that the company achieves its mission and objectives as agreed by the Board. The mission and objectives should be in line with what is stated in the main and subsidiary objects of the company’s Memorandum of Association.

– Assessing and managing the risks faced by the company. The risks to be managed varies from one company to the next and may be categorised under the headings of strategic, financial, operational, governance, external and compliance risks.

– Monitoring company performance. Directors should be aware of how the company is performing at both an operational and strategic level. Tracking performance indicators, outputs and outcomes provides a means to monitor performance.

– Reviewing internal company controls. All companies should have a well developed set of internal controls to ensure good financial practices and compliance requirements are adhered to.

– Supervising the financial and budgetary planning processes. These processes help boards to make the most of the resources at the company’s disposal.

– Approving contracts, finance and investment in excess of specified thresholds. The approval process helps directors to monitor key financial decisions and contractual obligations of consequence to the company.

– Being accountable to members and external stakeholders. Directors act on behalf of the members and are required to report back to them at the A.G.M. Directors should also be mindful of the need to keep all key stakeholders informed of the company’s progress.

– Ensuring the company is managed appropriately. This is an important function, particularly where operational and management control is carried out by employees or agency staff.

– Meeting regularly as a board (as is appropriate) and working effectively in governing the company. Board members must be able to work as a coherent unit if they are to carry out the functions listed above!

It should also be noted that a Board of Directors must comply with the regulations and compliance requirements as set out in the Companys Acts.

You can learn more about the functions and responsibilities of board membership on CramdenTECH’s BoardPASS Standard training course.

Business Planning for Social Enterprises

As more and more non-profits look to diversify their funding streams, directors and executives are looking at the financial opportunities afforded by social enterprise initiatives. But moving from a grant administration set-up, to one that actively seeks out earned income streams, needs to be carefully planned. Needless to say, traditional business planning has an important role to play in ensuring that sustainable business markets are pursued. Irrespective of the business planning approach used, non-profits should seek to identify and put in place strategies that clearly play to their business strengths.

As an initial first step in the planning process, it can be beneficial for directors and executives to create a “Business Model Canvas” of their proposed social enterprise initiative. The canvas focuses attention on nine core elements, that collectively, impact on the sustainability of an organisation’s business model. Completing the business model canvas in advance of writing a business plan is helpful, as it forces boards and committees to test the assumptions upon which their business model and thinking are based. As a result, a more accurate picture of market opportunities and non-profit competencies and strengths emerge. This in turn enables a business plan to be developed, that selects the specific business strategies that can best help a non-profit to succeed in achieving its social enterprise objectives.

In preparing the business model canvas, boards and executive staff should seek answers to nine key questions:

1. What customer or social problem are your solving?
2. Why will customers buy from you?
3. How will customers access your services or obtain your products?
4. How will you acquire and keep customers?
5. How will you generate cash?
6. What assets do you require?
7. Who are you dependent on to deliver services and produce products?
8. What are the most important activities for the social enterprise to focus on?
9. Where does spend need to be concentrated?

Once directors, trustees and executives have a solid basis to answer each of the nine questions, then they are better equipped to write a business plan that can be successfully executed. The business plan will provide readers with mission critical information with respect to proposed strategy, operations, marketing and finance. Importantly, the business plan will show clearly the sustainable basis upon which the social enterprise is being built. Hence, directors and executives should view the business plan, not just as a planning tool, but also as a significant communications tool in their bid to influence stakeholders!

Business Planning for Social Enterprises presentation slides available at: http://www.slideshare.net/CramdenTECH/business-planning-for-social-enterprises

Gravity Light

At CramdenTECH we love learning about new innovations. One such innovation that has caught our eyes recently is “Gravity Light”, an LED light that is powered by the decent of a 9kg weight. The weight is pulled up by the user at 20 minute intervals. As the weight slowly descends, its store of energy is gradually released to power the LED. A simple idea, but a very powerful one, for the many poor people in developing countries who rely on kerosene lamps, candles or oil lamps to see in the dark. Aside from the respiratory problems that can arise, the economic cost to families using kerosene and oil is high, relative to their disposable incomes. The “Gravity Light” on the other hand, is environmentally friendly and costs a fraction of a solar powered lamp. Developed by industrial design company therefore.com, the Gravity Light has the potential to provide a large scale sustainable light source to poor, inaccessible regions on the planet. Well done to the team at therefore.com!