9 Essential Tips for Taking Minutes
Creating board minutes is the "flossing" of corporate governance: essential for good health, but so easy to overlook and a real pain in the butt to do. So this blog entry is probably not going viral.
However, if you are an officer or director of a nonprofit, board minutes will be the primary, if not sole, piece of evidence upon which you will rely if any court or regulator questions whether you fulfilled your fiduciary duties to the organization. Minutes will be your shield against personal liability if the proverbial stuff ever hits the proverbial fan. Whether they will prove a bulwark or a sieve is up to you.
Of course minutes have other purposes -- reference material for past actions, a historical record to orient new directors, etc. -- but they have no greater purpose than evincing that a board has made informed decisions after engaging in robust discussions.
Ironically, people make drafting minutes harder than it needs to be. If you keep a few things in mind, accomplishing their purpose should be no great task.
As a threshold issue, I should clarify some oft confused terminology that affect minutes: motion, action, and resolution. A "motion" is the process by which an item for board "action" is proposed, which results in a "resolution" if the motion is seconded and passes by a majority vote of directors constituting quorum.
1. The Basics - all minutes should record:
Date & time of meeting
Place of meeting (if by teleconference, state so)
Type of meeting (i.e., regular or special)
Directors in attendance and directors absent
Others in attendance
Existence of quorum
Motions made
Brief account of debate
Voting results
Resolutions adopted
Brief account of informational reports
Action steps for follow up
Time meeting ends
Signature and verification of corporate secretary
2. Minutes should NOT be verbatim transcripts of meetings.
Creating transcripts is the most common mistake, which is understandable. Given their importance, the responsible person fears that he or she will leave something out. But capturing everything said during a meeting is not only near impossible, it is ill-advised as well.
Why? Because directors should discuss matters without fear of being quoted (or misquoted) in the minutes. You also do not want to risk recording a fact or figure that is inaccurate. This is particularly true with financial information, which, if inaccurately recorded in the minutes, will create confusion as to what information the board actually received and acted upon.
The goal is to accurately summarize the major points discussed during the meeting. Take, for instance, a CFO's report to the board and review of the year-end financial statement. Pages and pages could be spent addressing every line item discussed, citing every figure presented, and quoting every director who had a question. Instead, the following hypothetical minutes would perfectly suffice:
"The CFO reviewed the FY 2013 Audited Financial Statement with the board, including the income and expenses for the year, the outstanding debt, and the changes in net assets. In response to questions from the board, the CFO explained the reasons for the drop in corporate donations, discussed alternatives for the fixed income portion of the investment account, and the reason for budgetary deviations in staffing. The board discussed each issue and requested the Chief Development Officer provide a report at the next meeting for improving corporate donation levels and the Human Resource Director to reassess the staffing plan for the upcoming year and report back. The CFO requested that the board increase his check-writing authority from $500 to $1,000 without requiring a countersignature from the CEO. The CEO stated her support for the increase. The board discussed and concluded that it would improve efficiency.
"MOTION: A motion was made to authorize the CFO to sign checks in amounts not to exceed $1,000 without requiring a counter-signature from the CEO. It was duly seconded and, after discussion, passed unanimously."
A reader would understand exactly what was discussed, the minutes reflect an engaged board, and everyone knows what the board has approved and wants done before its next meeting. Yet, because it is not a transcript, it's just two paragraphs long. Sensitive data, like the corporate donation levels, are not disclosed, but can easily be found in the referenced Audited Financial Statement. By not quoting the actual data, the potential for mistakes and confusion are eliminated.
3. The Exception -- record motions for corporate action verbatim.
There is one exception to the "no verbatim transcript" rule: motions. When a motion is made and seconded, the chairperson should explicitly state the motion for the record. Not only does this help the note-taker capture the exact wording, but it ensures the directors are clear on the motion before voting, and provides an opportunity to tweak it, if necessary.
4. Assign a good note-taker.
The Corporate Secretary is the "keeper of the records." The important job, however, is the meeting note-taker. It does not need to be the Corporate Secretary, nor should it be if the Corporate Secretary will be actively participating in the meeting. When assigning the task of note-taking, avoid identifying the lowest ranking staffer in the room and throwing them a legal pad. Instead, find someone who is organized, neat and attentive. Train them on what is needed from their notes. Ideally, their sole responsibility will be taking notes.
5. Know the action items and accompish them.
Every agenda should clearly state the meeting's "action items" -- i.e., the items that require board action. Make sure the agenda is followed. The board's most important function is to vote on these action items so that their decisions can be implemented. The minutes should reflect that the motion was made and seconded, and should state the voting outcome. If the vote is not unanimous, the "yeas", "nays" and abstentions should be identified by name. As illustrated above, make the motions easy to find and set them in their own paragraph.
6. Let the minutes control.
The minutes should be the sole corporate record of meetings. After they are adopted, all notes and other recordings of the meetings should be destroyed.
7. Avoid making audio recordings of meetings.
It is tempting, but the knowledge that they are being recorded can chill directors' discussions.
8. Use certificates of resolutions to create separate records for third-parties.
Some third-parties -- most often a bank or other lender -- require evidence of a board resolution before conducting business with a nonprofit. For instance, if a board wants to authorize its executive director to open a line of credit at a bank, the bank will require proof of such authority. A "certificate of resolution" is a written statement certified by the Corporate Secretary which provides this proof, while avoiding disclosure of the entire minutes.
9. Review and approve minutes in a timely manner.
Circulate the minutes prior to the next board meeting so directors can review and consider them ahead of time. The directors should move to approve the minutes at the following meeting. If a change is requested by a director, the board should discuss it. If the change is acceptable to a majority of the directors constituting quorum, then the motion to approve should state the change. However, such changes should only correct factual inaccuracies or omissions. The Corporate Secretary should then ensure that the change appears in the official minutes recorded in the minute book.
If you have made it this far, I am both honored and a little surprised. I must have, against great odds, effectively conveyed the importance of a topic often overlooked, yet essential to protecting yourself and the organization you serve. Or else you're related to me. Either way, thanks for hanging in there.