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W W W. M A I N E B I Z . B I Z 25 M AY 2 7 , 2 0 1 9 C ongratulations, you have just been asked to join a board of directors. If you have never been a board mem- ber before, the chances are that you are in for an interesting and reward- ing experience. If you aren't totally familiar with the organization — perhaps you only know that someone you respect is a part of the organiza- tion — don't let that lack of detailed understanding stand in your way of exploring further. Fortunately, depending on its mis- sion, the organization's size and whether or not it is publicly traded, much of the key information about the company may be readily available online. ere are some key issues you might want to address before you say "yes." 1. How established is the organiza- tion? Is it new or one with a proven track record? Is it a for-profit organiza- tion? If so, how well do you understand its products and its business proposi- tion or purpose? Do you know any members of management and their reputations? Where will the initial and ongoing funding come from? It is vital that you understand how it makes money in order to help evaluate its viability? What are the key drivers of cash flow and profitability? In order to understand the finan- cials you will need the current balance sheet, income statements, retained earnings, statements of cash flows and the latest audit report. And, by the way, the footnotes are important. 2. Ask for a copy of the organiza- tion's business plan. Does it also have a longer-term strategic plan? What is the vision of the company? Flowing from the organization's mission are the organization's key objectives and strategies used to reach those objectives. Does the business plan clearly outline the connections between the organization's mission, goals and the bottom line? 3. Is it a stock corporation or not- for-profit? With a stock corporation, are you required to purchase any of the organization's stock or make any other financial contribution as a pre-condition to joining or remaining on the board? If it is a not-for-profit organization, these same questions are still pertinent. What is your expected "donation" each year or does the organization have the common philosophy of "either give or get" a certain dollar amount of contributions? 4. What type of new board member orientation program is offered by the organization? Many organiza- tions ignore this important first step for new members and leave them to fend for themselves and absorb the organizational culture. It also inhibits new members from contributing fully because they don't really understand what is going on with particular issues and may be too embarrassed to ask or, in the worst case, become disil- lusioned with the organization and resign as a result. 5. What insurance programs are in place to protect the organization — and you — in the event of a mistake such as a product liability issue? Don't make the assumption that you are always free from potential liability if your organization is a nonprofit. While many state laws provide an exemption from liability for nonprofit board members who are volunteers, federal laws may not. Does the orga- nization you are considering have liability coverage for directors and officers? Even with that coverage the details are important. ings can hap- pen to cut down the available cover- age. For example, is there any provi- sion for "side A" coverage that helps to insure the director will get paid in the event the organization's cover- age limits are somehow exceeded? Don't make the assumption that the existence of a directors-and-officers policy provides total coverage. e organization's financial officer should explain the coverages and how they protect you. You should consider these questions before you decide to move forward with your commitment. I hope you will decide to say "yes." Wa r d G r a f f a m w a s t h e founding chairman of the Maine International Trade Center and was chairman and CEO of UNUM UK. He has served on numerous boards. He can be reached at wgraffam @ aol.com B Y W A R D G R A F F A M H OW TO Evaluate offers to join boards before you accept High-tech manufacturing demands more than a typical building. We built Enercon's home in Gray to stand as a reflection of its industry stature —a technology leader. At Sheridan, this is how we build on our promise. W W W . S H E R I D A N C O R P . C O M ENERCON TECHNOLOGIES Gray, Maine A signature facility for a technology leader. Familiar Faces, New Home At Great Diamond Partners, we pursue prosperity and opportunity for our clients and community. We can help you achieve your financial goals with confidence and peace of mind. Contact us at team@greatdiamondpartners.com or 207-274-2500

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