A “nonprofit corporation” is a legal term. This status is given by state and federal government to a corporation that fits a specific set of criteria. When credited with the term “nonprofit corporation”, the company then exists for the benefit of, and is theoretically owned by, society. The community owns the nonprofit company, and the company exists to serve the community. Charitable pharmacies are always organized as a nonprofit corporation.
But companies require leadership if they are to be successful. Standing in the place of the community’s ownership of a nonprofit is an acting governing board. Therefore, the governing board is the legal “caretaker” of nonprofits, serving on behalf of its owner, society. A governing board has the responsibility to manage a nonprofit corporation, its vision, its daily work, its finances and the completion of its outcomes. Typically, members of a nonprofit board are volunteers and not paid for their volunteer services. Instead, they meet, decide, serve, and operate as community volunteers, for the benefit of the community, responsible to the community.
A governing board works with the staff to achieve the mission of a community charity pharmacy. While the Board of Directors, or Governance Board, is the final authority over a nonprofit corporation, the board does delegate a specific set of activities to the staff and the staff relies on the board for its critical leadership role. That delegation can be summarized as the board behaving as the legislative, judicial and strategy role of a company (setting policy, establishing vision and creating clarity when there is disagreement). In turn, the staff should behave as the executive branch, executing the work of the company.
A governing board is responsible for all activities of a nonprofit corporation; however a few roles stand out with particular focus for board members as the primary role of a board of directors:
- Mission– It is the role of the governance board to make sure that the community charity pharmacy is working toward and achieving its mission, and doing so in a way that ensures efficient stewardship of resources. That means setting goals, reviewing progress on goals, and holding the community charity pharmacy accountable to the work. The mission of the organization is a legal statement, with the nonprofit status awarded in part due to that mission. The board protects the organization and serves society by working toward the completion of that mission.
- Compliance– Good organizations keep their promises and do the work in the right way. It is the role of the board to make sure that the community charity pharmacy is behaving in a way that is ethical, that all staff members are working under the authority, and within the ethical guidelines, of the organization. This is a critical role for all healthcare organizations, especially those that deal with expensive medications, valuable patient medical histories, and large sums of vendor and funder resources.
- Policy– It is the role of a governance board to establish and then memorialize policy for a community charity pharmacy. Policies can be organized as formal statements, such as a Standard Operating Procedure or a staffing policy. But policy can also refer to best practice or mundane management decisions, such as the practice of holding a monthly board meeting on a certain recurring date and time. Sound policy creates safety, efficiency, and risk reduction for a community charity pharmacy.
- Relationship network manager – Community charity pharmacies require a massive network to run. Vendors, suppliers, patients, donors, volunteers – a typical community charity pharmacy requires many hundreds of contributors if it is to be successful. It is the role of the board of directors to cultivate relationships with the community, and to honor each member of the network in the appropriate way. Tools used in network management include annual reports, on-time IRS filings, board minutes, events to celebrate successes, and outreach. The board of directors operate as ambassadors to the community, bringing in resources and maintaining connection.
- Funding– It is the role of the board of directors to ensure that the funding for the enterprise is available for the work to happen. Often staff members are hired to assist with the work of fund development (e.g: grant writers, event planners, development coordinators). However, it is the responsibility of the board of directors to plan for the cost of the work, and to make sure there are enough dollars to do the work. And if there are not enough dollars, it is the responsibility of the board to address closure, mergers and dissolution.
- Volunteers– While it is the volunteer role of the board of directors to guide a community charity pharmacy, the board of directors also serves as a volunteer base of support, assisting the company in day to day operations, and filling gaps where the staff cannot.
- Strategy– Finally, it is the role of the governing board to identify strategic direction and to move toward that strategy in a way that is plausible and efficient. Key to the success of a community charity pharmacy is the ability of a board of directors to identify strategy and then work to accomplish that strategy.
Accepting a role on a board of directors for a community charity pharmacy has consequence. Not only are all the roles listed above requirements for a board member as they serve in their collective leadership capacity. Board members also have requirements for their individual behavior, which is: to act in a way that has fidelity with the role of caretaker of a community-owed effort. Outlined by the National Council of Nonprofits, board membership includes the following individual duties:
- Duty of Care:Take care of the nonprofit by ensuring prudent use of all assets, including facility, people, and good will.
- Duty of Loyalty:Ensure that the nonprofit’s 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).
- Duty of Obedience:Ensure that the nonprofit obeys applicable laws and regulations, follows its own bylaws, and that the nonprofit adheres to its stated corporate purposes/mission.
Creating a Governing Board:
Building a board of directors is as much art as science. Most nonprofits create their board over the course of several years, concurrently building strong relationships while they grow the capacity for effective board management. The goal is to quickly have in place a small community of capable leaders (7 to 19 members, depending on the need of the community charity pharmacy) who are a joy to work with, and who effectively adjudicate their responsibilities as a board.
Building a board of directors is difficult work. It requires a great number of responsible and ambassadorial leaders to come together for a clear goal, and to be ready to compromise their own interests for the benefit of the community. While creating a board is complex, a key success factor is to have in place a leader who is adept at balancing vision for the creation of the effort, with effective people skills. The champion of the board will be responsible not only for bringing a group of like-minded leaders together, but also to create the kind of vision focus and behavioral norms for the group to be effective as a collaborative body. Some key roles include:
- Board members as non-experts– Board members have a role. Place board members who can fulfill that role. Do not be bashful to insist that board members are committed to the work, follow through on assignments, and are pleasant to work with. Board leadership means working with people over the course of months and years in complex projects. Emotional maturity, reasonableness, and communication skills are required of board members if they are to complete such difficult work in a way that is satisfying to the culture of the group. A board member does not need to be expert in the details of pharmacy management. However, they should be a learner – a learner of the organization, a good listener when working with others, and a leader humble enough to ask questions when they do not understand detail. A learner is a person who can behave in a way that promotes excellence, even when they are not excellent at such a specific topic as pharmacy operations.
- Board members as experts – It is standard practice for board members to behave as topic experts. Since the board of directors operates in a role as experts, the placement of high quality leadership onto the governing board is a top concern. Specific valuable assistance for a community charity pharmacy includes filling roles such as: attorneys, financial experts, CPAs, human resources and management experts, lobbyists, and industry leaders. Finally, consider placing leaders who are skilled in the topics important to a pharmacy, such as formulary design, pharmacy operations, and business management.
When building a board of directors for a community charity pharmacy, consider using the process of filling the officer positions as an opportunity to empower co-laborers of specific skill and integrity into places of influence. A specific concern in creating a board of directors is to place the best board officers in their respective roles of Chair, Secretary, and Treasurer. Some suggestions for each include:
- Board Chair– The role of the board chair is specifically to serve the needs of the board. This means that the Chair is responsible to cultivate the effectiveness of the board of directors, and to manage decision making. Rather than being the sole driver of strategy and action, a board chair’s role is more defined as being the ambassador among the board, and the leader of board effectiveness in creating and defining strategy. Some keys for the board chair roles include: setting and chairing meetings, surfacing the values and vision within the board, setting the agenda that will identify strategy, and reviewing and addressing the behavior of the CEO and other board members.
In a statement, the board chair is responsible for the board’s effectiveness, as the CEO is responsible for the staff’s effectiveness. Therefore, selection of the board chair should consider questions like: Is this person responsive and able to fulfill the duties of the board chair? Does this person have the necessary balance between mediation and management, with the skills to create bridges to others, while moving the group forward? Is this person capable of taking responsibility for themselves and that of the board? Is this person pleasant and easy to work with?
- Secretary– The role of the secretary is to help create, and then safeguard, the decisions of the board and to be responsible for all filings required of a board of directors. More than taking minutes, the secretary can be helpful to the board chair and the CEO in moving a board to definitive, actionable decisions. The secretary is also central in communication and notices, issues likely addressed by a community charity pharmacy’s bylaw. Finally, the secretary is responsible for keeping records, presenting, and getting approval of the decisions which have been made.
In placing a secretary, some questions to consider are: Is this person organized? Is this person ethical? Is this person equipped with the necessary abilities to move a room to a clear decision, actionable for the staff? Is this person pleasant and easy to work with?
- Treasurer– The primary role of the treasurer is to oversee the financial position of a community charity pharmacy, being the representative of the governing board on all matters that are financial. In day to day practice, this duty may include assessment and presentation of the finances of the company (for a large nonprofit), or may be as detailed as completing the actual company bookkeeping for smaller organizations. The role of the treasurer varies by corporation and is likely outlined in the corporation’s bylaws. However, it is the role of the treasurer in assuring that all dollars are stewarded in an effective and ethical way.
In placing a treasurer, some questions to consider are: Is this person organized? Is this person ethical? Is this person equipped with the necessary abilities to assess and communicate the financial position of a community charity pharmacy? Is this person pleasant and easy to work with?