RESOURCE 1
Terms of Employment
January 10, 2006
2:00-3:30 p.m., ET
Background Materials
Research
y
The Board and the CEO: Contracts, Job Descriptions, Evaluation of Performance and
Determination of Compensation. See RESOURCE 2.
Background Materials
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Employment Contract:
" A Guide to Creating Employment Agreements that Protect Both Leaders and Their
Charities ," Chronicle of Philanthropy
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Suggested Responsibilities for the Executive Director, Board, and Staff:
Executive Director
y Acts within policies mandated by the board
y Hires and supervises all staff and acts as bridge between staff and board
y Supports and helps the board develop in its governing role
y Makes day-to-day operating decisions
Board of Directors
y Sets values, vision, mission and policy in concert with the executive staff
y Hires and evaluates the Executive Director
y Ensures that annual planning and budgeting is completed and approved
y Supports the work of the organization (under the supervision of the Executive Director) as
volunteers in areas such as fundraising and public relations
y Board Chair provides official link between board and executive
Organization Staff
y Staff, paid and unpaid (including board members when they are acting in a "volunteer" capacity),
carry out the work of the organization under the direction of the Executive Director
y Staff members communicate to the board primarily through the Executive Director, and always
with his or her knowledge
Partnership
y The board and the Executive Director/staff act as partners
y Effective policy is drafted by the board and staff together
y A good working relationship between the Board Chair and the Executive Director is critical
Adapted from www.501click.com
Terms of Employment: Reference and Background Materials
Page 2
First Sample Contract: Richard and Susan Smith Family Foundation
RE: Terms of Employment as Executive Director
Dear _____:
I am writing to confirm our agreement concerning your employment by the Richard and Susan
Smith Family Foundation (the "Foundation") upon the following terms:
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During your employment as Executive director of the Foundation, you will devote your full
time, best efforts, knowledge and skills exclusively to the business and affairs for the
Foundation. You agree at all times to act in a reputable manner and in conformance with all
laws, rules, regulations and codes of ethics governing the Foundation. Your expected start
date will be _________________ (the "Start Date").
0
Your base salary will be $_______ annually. The base salary shall be increased (as an
inflation adjustment) after three years by four percent to $_______, and after another three
years by another four percent to $_______.
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Benefits will be in an amount not to exceed twenty percent of the base salary, or $_______ in
the first year (the "Benefit Amount"). Benefits include:
00Health care coverage on a family plan, subject to reduction or elimination if you can be
insured under your spouse's employer's health plan at no cost to you or your spouse.
Estimated cost in the first year: $_______.
00Life insurance coverage on your life in the amount of $_______. Estimated cost in the
first year: $_______.
00Employer's contribution of Social Security and Medicare taxes associated with
employment. Estimated cost in the first year: $_______.
00The Foundation will sponsor a tax-qualified plan and will contribute to your plan
account, annually during each year of employment, the lesser of :
慰
an amount such that, if deposits of such amount were made over the balance of years
remaining until the tenth anniversary of the Start Date, the balance in the account
would then be sufficient to provide (or purchase) an annuity paying you (and, after
your death, your spouse) $_______ per year for your lifetimes. The foregoing is
subject to any limitations on funding such a plan under the Internal Revenue code.
Estimated limit on contribution in the first year: $_______.
慰
the balance of the Benefit Amount.
First Sample Contract: Richard and Susan Smith Family Foundation
Terms of Employment: Reference and Background Materials
Page 3
On account of the contribution limits set forth above and the uncertainties of investment
performance and interest rates (including the interest rate that will be in effect at the time
the annuity must be provided or purchased), the Foundation is not guaranteeing any
specific amount of benefit that will result from the contributions to such plan.
00In addition to the tax-qualified plan to which the Foundation will make contributions as
described above, the Foundation will seek to sponsor a plan under which you will be
permitted to make contributions of salary to defer its income taxation, subject to any
limitations on funding such a plan under the Internal Revenue Code.
0
The Foundation will reimburse you for the expenses of packing and moving the contents of
your primary residence from ____________ to Massachusetts.
0
The Foundation will reimburse you for temporary housing costs beginning at the Start Date
and continuing, if necessary, until _____________.
0
Compensated absences, including vacation, sick leave, personal time off, and religious
holidays, will consist of five weeks (25 business days) per year, any unused days not to be
carried over and not convertible to cash compensation. In addition, the Foundation will
recognize the following paid holidays: New Years Day, Martin Luther King Day, Presidents
Day, Memorial Day, July 4th, Labor Day, Columbus Day, Thanksgiving, and Christmas Day.
0
Your employment may be terminated by you or by the Foundation, with or without cause, by
written notice given to the other at least 30 days prior to the effective date of such
termination. If terminated without cause, the Foundation will pay you severance of six-
months salary.
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This agreement shall have the effect of an instrument executed under seal and shall be
governed by and construed in accordance with the laws of the Commonwealth of
Massachusetts.
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This agreement shall not be changed or modified in whole or in part except by an instrument
in writing. This instrument contains the entire agreement between the parties in respect of its
subject matter.
Please confirm your acceptance of and agreement to the foregoing terms and conditions by
signing and returning the extra copy of this letter.
Very truly yours,
Richard A. Smith, Trustee
ACCEPTED AND AGREED TO:
_____________________________
[Name]
Terms of Employment: Reference and Background Materials
Page 4
First Performance Sample CEO Evaluation - San Antonio Area Foundation
1. LEADERSHIP
Leads the organization with a vision, philosophy and culture which are well understood,
widely supported, consistently applied and effectively implemented.
2. COMMUNICATION
Serving as the organization's chief spokesperson, effectively communicates to all stakeholders,
including donors, employees, community, leaders in the field and government officials.
3. PLANNING
Assures the development of a vision and long-term strategy for the organization which
establishes objectives and plans that meet the needs of donor, employees, and all constituents.
Ensures consistent and timely progress toward strategic objectives. Obtains and allocates
resources in support of strategic objectives.
Rating
:
(Mark with X)
Below Meets Exceeds
Expectations
Expectations
Expectations
1 2 3 4 5
Comments:
Rating
:
(Mark with X) Below Meets
Exceeds
Expectations
Expectations
Expectations
1 2 3 4 5
Comments:
Rating
:
(Mark with X) Below Meets
Exceeds
Expectations
Expectations
Expectations
1 2 3 4 5
Comments:
First Performance Sample CEO Evaluation - San Antonio Area Foundation
Terms of Employment: Reference and Background Materials
Page 5
4. SUCCESSION PLANNING
Attracts, develops, retains, motivates and supervises an effective top management team capable
of achieving the organization's objectives.
5. HUMAN RESOURCES & DIVERSITY
Ensures the development of effective recruitment, training, retention, and personnel
communications plans and programs to provide and motivate the necessary human resources
to achieve objectives. Establishes and monitors programs to provide equal opportunity for
women and minorities in the organization.
6. EXTERNAL RELATIONS
Ensures the organization is appropriately known in the community, the field, and with
potential collaborators. Through leadership in promoting the work of the organization in the
community, finds ways that enhance donor's confidence in the organization and broadens the
public's understanding of the organization's mission and values.
Rating
:
(Mark with X) Below Meets
Exceeds
Expectations
Expectations
Expectations
1 2 3 4 5
Comments:
Rating
:
(Mark with X) Below Meets
Exceeds
Expectations
Expectations
Expectations
1 2 3 4 5
Comments:
Rating
:
(Mark with X) Below Meets
Exceeds
Expectations
Expectations
Expectations
1 2 3 4 5
Comments:
First Performance Sample CEO Evaluation - San Antonio Area Foundation
Terms of Employment: Reference and Background Materials
Page 6
1. RELATIONSHIP TO THE BOARD
Ensures an open, candid partnership with the Board.
8. PERSONAL EFFECTIVENESS
Fosters a culture that promotes ethical practices, encourages individual integrity, and fulfills
social responsibility. Provides leadership consistent with the organization's values. Motivates
employees to do what's right.
9. MEET PERFORMANCE OBJECTIVES
Ensures goals and objectives are established and implemented through the Operating Plan
Attached. Ensures financial objectives are maintained through proper fiscal control of
annual budget.
10. ADDITIONAL COMMENTS
Responses are confidential.
Rating
:
(Mark with X)
Below Meets Exceeds
Expectations
Expectations
Expectations
1 2 3 4 5
Comments:
Rating
:
(Mark with X) Below Meets
Exceeds
Expectations
Expectations
Expectations
1 2 3 4 5
Comments:
Rating
:
(Mark with X) Below Meets
Exceeds
Expectations
Expectations
Expectations
1 2 3 4 5
Comments:
Terms of Employment: Reference and Background Materials
Page 7
SECOND EXECUTIVE DIRECTOR PERFORMANCE APPRAISAL
Name: Evaluated by: _________________________ Date: _______
Consistently
Excellent
Typically
Good
Generally
Acceptable
Below
Expectations
Do Not
Know
A. BOARD RELATIONS
1. Works well as a team with committee chairs and Board
members in implementing Board decisions.
2. Uses Board members' time effectively.
3. Appropriately plans for Board and Committee meetings and
coordinates work to avoid overlap and gaps in progress
towards goals.
4. Provides appropriate information to the Board to enable
effective policy-making.
5. Provides ongoing information to Board relating to the
Foundation's status, trends in the community foundation
industry and trends in philanthropy in general.
6. Works to ensure that each Board member is using his/her
gifts or interests in the Foundation's work and is recognized
and appreciated for his or her work on behalf of the
Foundation.
7. Inspires and challenges the Board (individually and
collectively) to respond to the opportunities and
responsibilities of Board membership.
8. Maintains the proper balance with respect to bringing policy
matters to the Board and retaining administrative matters
without Board involvement.
B. STAFF PLANNING AND OVERSIGHT
1. Translates vision and goals from the Board into work plans
with defined staff roles and timetables.
2. Manages operations efficiently and effectively, within the
framework of Board policies and the approved budget.
3. Fosters good communication and teamwork among staff.
4. Promotes staff learning and professional development.
5. Maintains the proper balance with respect to setting
individual goals and monitoring progress, while giving staff
the freedom and authority to do their jobs.
Second Performance Sample CEO Evaluation
Terms of Employment: Reference and Background Materials
Page 8
C. PUBLIC RELATIONS AND DEVELOPMENT
1. Enthusiastically and effectively serves as a spokesperson for
the Foundation to the media, general public, special
constituencies, potential donors and other
organizations/entities.
2. Actively seeks opportunities to speak about Foundation
activities before groups and on occasions that will further
the Foundation's goals, including our own events.
3. Develops the necessary materials for publicity, including
newsletters, annual report and resource materials for special
constituencies (i.e., professional advisors).
4. Identifies, builds and maintains good relationships with key
individuals who have an integral role in shaping the future
of the Foundation.
5. Understands the concept of a community foundation.
Expresses this clearly and accurately in both written and
verbal communications and marketing.
6. Actively seeks to build personal and institutional capacity
for gift planning, including technical knowledge of giving
vehicles and the applications of current tax laws.
7. Develops and promotes appropriate educational
opportunities for professional advisors, board members and
potential donors.
8. Provides comprehensive and accurate statements of donor
fund activity on a timely basis.
9. Takes the initiative in encouraging board members to call
upon prospective donors, financial advisors, etc.
D. GRANTS AND PROGRAMS
1. Ensures the grantmaking programs of the Foundation are
administered within the framework established by the
Grants Committee, Scholarship Committee and Board.
2. Actively seeks ways to leverage Foundation resources in
responding to community needs.
3. Initiates or cooperates in joint ventures with other
organizations to enhance the capacity of the sector and
benefit the community.
Second Performance Sample CEO Evaluation
Terms of Employment: Reference and Background Materials
Page 9
Consistently
Excellent
Typically
Good
Generally
Acceptable
Below
Expectations
Do Not
Know
E. FISCAL MANAGEMENT
1. Prepares and operates within the parameters of the annual
operating budget.
2. Anticipates and plans for the capital needs of the
Foundation.
3. Works with the Finance Committee to assure adequate cash
flow for grantmaking purposes.
4. Demonstrates conscientious custodianship for the assets of
the Foundation.
5. Ensures that the Foundation complies with all governmental
regulations.
F. PERSONAL CHARACTERISTICS
1. Engenders confidence as the Foundation's leader.
2. Effectively balances responsibilities for administration,
programs, asset-building and marketing.
3. Demonstrates sufficient self-confidence to make decisions
independently when needed.
4. Is enthusiastic about Foundation activities.
5. Displays initiative in carrying out responsibilities.
6. Works well independently (a "self starter").
7. Is tactful and diplomatic.
G. INSTITUTIONAL VISION
1. Demonstrates vision with respect to the future of the
organization.
2. Challenges the Board to establish its vision, and to develop
long-term strategies and annual goals to realize the vision.
3. Keeps focused on the long-term strategies and annual goals
of the Foundation.
Second Performance Sample CEO Evaluation
Terms of Employment: Reference and Background Materials
Page 10
H. GENERAL OBSERVATIONS
What else should the Executive Director do to enhance the health and performance of the
Foundation?
How can Board members be more effective in helping the Executive Director with his/her job?
How can the Executive Director help Board members be more effective in performing their
responsibilities?
What specific areas do you believe need to be addressed by the Executive Director in the coming
year?
Other comments:
download Resource 1: Terms of Employment Background Materials
