Give your society the gift of good governance for Christmas…

The fact that I haven’t written about governance issues in a while does not diminish their importance for individual societies or the future of the fraternal system.  That point has been driven home in recent weeks as I’ve heard governance nightmares – as well as one beacon of hope – from one fraternal CEO after another.  And underscoring all these developments within the fraternal community is the action taken last week by the NAIC’s Financial Standards and Accreditation Committee to approve the Corporate Governance Annual Disclosure Model Act (CGAD) as an accreditation requirement.  Formal adoption of CGAD – which applies to fraternal life insurers – by the NAIC’s Executive and Plenary Committee will likely occur in 2018 and would become effective on January 1, 2020.

The governance horror stories I’ve heard recently reflect the tribalism that has infected American politics.  Small but influential segments of a society’s board or delegates have stirred emotional arguments and populist uprisings against even the most modest improvements to the organization’s governance structure – prohibiting unvetted candidates for board positions to be nominated from the floor at a convention for instance – in an effort to “keep things the way they always have been.”  Unfortunately, because so many fraternal boards and convention delegates are comprised of individuals who have a vested interest in the status quo, these “heat of the moment” arguments have resulted in the rejection of reasonable reforms – with no discussion of compromise, of course – that keep the society in the stone age.  And that’s bad news for any organization that wants to modernize its operations, appeal to the next generation of members, and have a decent shot at growing the organization.

It’s no wonder that regulators specified – and the Alliance fully supported – the inclusion of fraternals in CGAD.

But there is a bit of good news out there.  The board of one Alliance member – Catholic Financial Life – has recently been named the “Non-Profit Board of the Year” by the National Directors Institute (NDI), a group headed by Foley and Lardner LLP.  In presenting the award, NDI highlighted CFL’s “board and leadership team’s efforts to implement a long-term strategic plan that aligns with the mission and vision of the organization.”  NDI pointed out that “the CFL board is unique in that it has adopted public company governance best practices and policies that have contributed to a thriving and financially sound company, and demonstrates how good governance directly results in greater long-term value for members and employees.”

If nothing else, Catholic Financial Life shows that a) making improvements to a fraternal’s governance structure CAN be done; and b) those improvements result in a tangible benefit to members and employees.

Is good governance in your future?  If it isn’t, regulators are going to take a closer look at your society when your state adopts its version of the CGAD Model Act.  But more important than the threat of regulatory interest, isn’t giving your society the best possible chance at a successful future on your Christmas list?  Without a foundation built on sound governance, your society will be competing armed only with rocks and clubs in a world increasingly driven by information and innovation.  Start taking steps today to give your society the gift of good governance in 2018.  The Alliance has loads of resources that can help you accomplish this

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