POLICY REGISTER

CONTENTS 

Ends A – Ends  

Executive  Limitations 

B – Global Executive Constraint 

B1 – Financial Condition and Activities B2 – Planning and Financial Budgeting B3 – Asset Protection 

B4 – Membership Rights and 

Responsibilities B5 – Treatment of Customers 

B6 – Staff Treatment and Compensation B7 – Communication to the Board B8 – Board Logistical Support 

B9 – Emergency GM Succession 

Board Process C –     Global Governance Commitment C1 – Governing Style 

C2 – The Board’s Job 

C3 – Agenda Planning 

C4 – Board Meetings 

C5 – Directors’ Code of Conduct 

C6 – Officers’ Roles 

C7 – Board Committee Principles 

C8 – Governance Investment 

Board 

Management  Relationship 

D – Global Board-Management Connection D1 - Unity of Control 

D2 – Accountability of the GM 

D3 – Delegation to the GM 

D4 – Evaluating the GM

Appendices Bylaws 

Board Annual Calendar and Monitoring Schedule 

Committee Charters 

Conflict of Interest Disclosure form 

Monitoring Decision Tree 

Policy Governance Quick Guide  

Principles of Policy Governance 

Policy Governance FAQs 

4 Pillars of Cooperative Governance article

Policy Type: Ends 

Policy Title: A – Global End 

Adopted: August 22, 2017 

Last Revised: October 28, 2024   

Purple Porch Food Co-­op will be an intentionally inclusive and financially sustainable member-owned cooperative food business that focuses on selling locally grown and produced goods and provides fair compensation for its workers. Our cooperative will strive towards diversity amongst our shoppers, staff, and vendors. This effort includes, but is not limited to: race, gender, sexual orientation, age, religion, disability, and socioeconomic status. We will maintain relationships with local farmers and producers who adhere to sustainable and transparent practices. We will have a reputation in the community as the premier provider of locally-sourced food and as leaders in food education, food justice, and environmental stewardship.

 Policy Type: Executive Limitations 

Policy Title: B – Global Executive Constraint 

Last Revised: August 2016 

The General Manager must not cause or allow any practice, activity, decision, or organizational  circumstance that is unlawful, imprudent, or in violation of commonly accepted business and  professional ethics and practices, or in violation of the Cooperative Principles.

Policy Title: B1 – Financial Condition and Activities 

Last revised: November 28, 2022 

With respect to the actual, ongoing financial conditions and activities, the General Manager must  not cause or allow the Cooperative to approach fiscal jeopardy, have key operational indicators  fall below average for our industry, or be unprepared for future opportunities. 

The GM must not: 

1. Allow sales growth to be inadequate. 

2. Allow operations to generate an inadequate net income. 

3. Allow liquidity (the ability to meet cash needs in a timely and efficient fashion) to be  insufficient. 

4. Allow solvency (the relationship of debt to equity) to be insufficient. 

5. Allow growth in ownership and owner paid-in equity to be insufficient. 6. Default on any terms that are part of the Cooperative’s financial obligations. 7. Allow late payment of contracts, payroll, loans or other financial obligations. 

8. Incur debt other than trade payables or other reasonable and customary liabilities incurred  in the ordinary course of doing business. 

9. Make a purchase, outside of inventory purchases or budgeted capital expenses, of greater  than $2,500 without Board approval. 

• The exception would be an emergent condition affecting staff, causing financial  loss of significant scope or compromise to the other assets requiring immediate  attention: 

• That such case, the GM would notify the Board President of any actions taken and  reason why as soon as possible, but not later than 24 hours after the decision. 

10. Acquire, encumber or dispose of real estate or enter into long-term real estate leases. 

11. Allow tax payments or other government-ordered payments or filings to be overdue or  inaccurately filed. 

12. Use restricted funds for any purpose other than that required by the restriction. 

13. Allow financial record keeping systems to be inadequate or out of conformity with  Generally Accepted Accounting Principles (GAAP).

Policy Title: B2 –Planning and Financial Budgeting 

Last revised: October 7, 2018 

The General Manager must not operate without annual and multi-year budgets and plans that  address intentional and improved Ends accomplishment along with avoidance of fiscal jeopardy. 

The GM must not: 

1. Create plans or budgets that 

a. Risk incurring those situations or conditions described as unacceptable in the  Board policy “Financial Condition and Activities.” 

b. Omit credible projection of revenues and expenses, owner investment and return,  separation of capital and operational items, cash flow, and disclosure of planning  assumptions. 

c. Do not address excellence in business systems and operations. 

d. Have not been tested for feasibility. 

2. Provide less for Board prerogatives during the year than is set forth in the board budget. 

Policy Title: B3 – Asset Protection 

Last revised: October 7, 2018 

The General Manager must not allow assets to be unprotected, unreasonably risked, or  inadequately maintained. 

The GM must not: 

1. Allow equipment and facilities to be inadequately insured, or otherwise unable to be  replaced if damaged or destroyed, including coverage for any losses incurred due to  business interruption. 

2. Allow unnecessary exposure to liability or lack of insurance protection from claims of  liability. 

3. Allow deposits or investments to be unreasonably risked. 

4. Allow inadequate security of premises and property. 

5. Allow data, intellectual property, or files to be unprotected from loss, theft or significant  damage. 

6. Allow improper usage of member-owners’ and customers’ personal information. 7. Allow purchasing that is uncontrolled or subject to conflicts of interest. 8. Allow lack of due diligence in contracts. 

9. Allow damage to the Cooperative’s public image.

Policy Title: B4 – Membership Rights and Responsibilities Last Revised: November 28, 2022 

The General Manager must not allow member-owners to be uninformed or misinformed of their  rights and responsibilities. 

The GM must not: 

1. Allow any individual to become a member-owner unless that individual meets the  eligibility requirements described in our Bylaws. 

2. Create or implement a member-owner equity system without the following qualities: 

a. Member-owners are informed that equity investments are a) at risk, and b)  generally refundable, though the Board retains the right to withhold refunds when  necessary to protect the Cooperative’s financial viability. 

b. Equity will not be refunded if such refunds would lead to a net decrease in total  member-owner paid-in equity at the end of any reporting period, or would risk, cause or exacerbate non-compliance with any Financial Condition policy. 

3. Implement a patronage dividend system that does not 

a. Comply with IRS regulations. 

b. Allow the Board to examine a range of options and implications, so the Board can  make a timely determination each year concerning how much, if any, of the  Cooperative’s net profit will be allocated and distributed to member-owners. 

Policy Title: B5 – Treatment of Customers 

Last Revised: November 28, 2022 

The General Manager must not provide less than exceptional customer service. The GM must not: 

1. Be unresponsive to customer needs. 

2. Operate without a system for soliciting and considering customer opinion regarding  preferences, product requests, complaints and suggestions. 

3. Allow an unsafe shopping experience for our customers. 

4. Fail to be a visible presence in the store.

Policy Title: B6 - Staff Treatment and Compensation 

Last revised: November 28, 2022 

The rGeneral Manager must not treat staff in any way that is unfair, unsafe, or unclear. The GM must not: 

1. Operate without written personnel policies that: 

a. Clarify rules for staff. 

b. Provide for fair and thorough handling of workplace conflicts. The Board should  not be included as a participant in the conflict resolution process. 

c. Are accessible to all staff. 

d. Inform staff that employment is neither permanent nor guaranteed. 

e. Encourage employees to report unethical or illegal behavior or activity. 

2. Prevent any employee from reporting unethical or illegal behavior or activity to the  Board or discriminate or retaliate against any employee for reporting unethical or illegal  behavior or activity. 

3. Cause or allow personnel policies to be inconsistently applied. 

4. Provide for inadequate documentation, security and retention of personnel records and all  personnel-related decisions. 

5. Establish compensation and benefits that are internally or externally inequitable. 

6. Change the GM’s own compensation and benefits, except as those benefits are consistent  with a package for all other employees.

Policy Title: B7 – Communication to the Board 

 Last Revised: October 26, 2021 

The General Manager must not cause or allow the Board to be uninformed or unsupported in its  work. 

The GM must not 

1. Submit monitoring reports that are untimely or inaccurate, or that lack operational  definitions and verifiable data directly related to each section of the policy. 

2. Report in an untimely manner any actual or anticipated noncompliance with any Board  policy, along with a plan for reaching compliance and a proposed schedule regarding  follow-up reporting. 

3. Allow the Board to be unaware of relevant legal actions, media coverage, trends, public  events of the Cooperative, or internal and external changes. 

4. Withhold from the Board relevant information from or about key partners including  NCG, including (but not limited to): reports about industry trends, operational audits, risk  assessment and joint liability, program participation, and member agreements. 

5. Withhold an opinion if the GM believes the Board is not in compliance with its own  policies on Governance Process and Board-Management Delegation, particularly in the  case of Board behavior that is detrimental to the working relationship between the Board  and the GM. 

6. Deal with the Board in a way that favors or privileges certain directors over others except  when responding to officers or committees duly charged by the Board. 

Policy Title: B8 –Board Logistical Support 

Last Revised: October 26, 2021 

The General Manager must not allow the Board to have inadequate logistical support. The GM must not: 

1. Provide the Board with insufficient staff administration to support governance activities  and Board communication. 

2. Allow the Board to be without a workable mechanism for official Board, officer or  committee communications. 

3. Allow directors to be without an updated copy of the Policy Register and the Bylaws. 

4. Provide inadequate information and notice to member-owners concerning Board actions,  meetings, activities and events. 

5. Allow insufficient archiving of Board documents.

Policy Title: B9 – Emergency GM Succession 

Last revised: October 7, 2018 

To protect the Cooperative from sudden loss of GM services, the GM must not have less than  one other manager sufficiently familiar with Board and GM issues and processes to enable them to take over with reasonable proficiency as an interim successor. 

Policy Type: Board Process 

Policy Title: C – Global Governance Commitment 

Last Revised: August 2016 

Acting on behalf of our member-owners, the Board ensures the success of the cooperative by  working together effectively, empowering and holding accountable professional management,  providing strategic leadership for our cooperative, and perpetuating our democratic organization. 

Policy Title: C1 – Governing Style 

Last Revised: October 26, 2021 

We will govern in a manner consistent with the Four Pillars of Cooperative Governance (Teaming, Accountable Empowerment, Strategic Leadership, Democracy). In order to do this,  we will: 

1. Be a strategic leader by developing insight and foresight to set direction and facilitate  movement in that direction. 

2. Ensure effective systems of delegating authority to professional management, holding the  use of that power accountable, and clearly distinguishing between Board and  management responsibilities. 

a. Observe the 10 Policy Governance principles (Ownership, Position of Board,  Board Holism, Board Means Policies, Clarity and Coherence of Delegation, Ends  Policies, Executive Limitations Policies, Policy Sizes, Any Reasonable  

Interpretation, Monitoring) 

3. Maintain team discipline, authority and responsibility. 

4. Practice the habits of a successful democracy. 

5. Obey all relevant laws and bylaws.

Policy Title: C2 – The Board’s Job 

Last Revised: October 7, 2018 

In order to govern successfully, we will: 

1. Practice, protect, promote, and perpetuate a healthy democracy for our Cooperative. 

2. Hire, set compensation for, delegate responsibility to, and hold accountable a General  Manager.  

a. Use a strategic process to establish the value of GM compensation and complete  this process in a timely manner. 

3. Assign responsibility in a way that honors our commitment to empowerment and clear  distinction of roles. 

4. Rigorously monitor operational performance in the areas of Ends and Executive  Limitations. 

5. Regularly evaluate our own Board performance in the areas of Board Process and Board Management Relationship. 

6. Perpetuate the Board’s leadership capacity using ongoing education and training, a robust  recruitment, qualification and nomination process, and fair elections. 

7. Perform other duties as required by the bylaws or because of limitations on GM  authority. 

Policy Title: C3 – Agenda Planning 

Last Revised: August 2016 

We will follow a strategic multi-year workplan and annual agenda that focuses our attention  upward and outward. 

1. We will create, and modify as necessary, an annual calendar that includes tasks and  events related to our multi-year workplan, membership meetings, Board training  schedule, monitoring schedule, and the GM evaluation and compensation decisions as  outlined in our Board-Management Relationship policies. 

2. Board meeting agendas will be determined by the Board president and may be modified  at the meeting by a majority vote of the Board.

Policy Title: C4 – Board Meetings 

Last Revised: October 26, 2021 

Board meetings are for the task of getting the Board’s job done. 

1. We will use Board meeting time only for work that is the whole Board's responsibility.  We will avoid committee issues, operational matters, personal concerns and other topics  that are not the highest and best use of our time. 

2. Meetings will be open to the membership except when executive session is officially  called. 

a. We may occasionally use executive session to deal with confidential matters, as  long as the purpose of the session is stated. When possible, announcement of the  executive session should be on the published agenda. 

3. We will seek consensus through discussion. We will then finalize and document  decisions through the use of motions, seconds and majority vote. 

4. If we must make a decision outside of a regular meeting, that decision must be  unanimous and affirmed in writing by all directors. We will include a record of that  decision in the minutes of the next regular meeting.

Policy Title: C5 – Directors’ Code of Conduct 

Last Revised: October 7, 2018 

We each commit ourselves to ethical, professional and lawful conduct. 

1. Every director is responsible at all times for acting in good faith, in a manner which they reasonably believe to be in the best interests of the Cooperative, and with such care as an  ordinarily prudent person in a like position would use under similar circumstances. 

2. Directors must demonstrate unconflicted loyalty to the interests of the Cooperative’s  member-owners. This accountability supersedes any conflicting loyalty such as that to  advocacy or interest groups, membership on other boards or staffs, and the personal  interest of any director acting as an individual consumer or member-owner. 

a. There will be no self-dealing or any conduct of private business or personal  services between any director and the Cooperative except as procedurally  controlled to assure openness, competitive opportunity and equal access to  “inside” information. 

b. Every year, every director will complete the Conflict of Interest form and will verbally report to the whole Board all actual and potential conflicts. Every director will immediately report any subsequent actual or potential conflicts  to the whole Board. 

c. When the Board is to decide on an issue about which a director has an  unavoidable conflict of interest, that director shall abstain from the conversation  and the vote. 

d. A director who applies for employment at the Cooperative must first resign from  the Board. 

3. Directors may not attempt to exercise individual authority over the organization. 

a. When interacting with the GM or employees, directors must carefully and openly  recognize their lack of authority. 

b. When interacting with the public, the press, or other entities, directors must  recognize the same limitation and the inability of any director to speak for the  Board except to repeat explicitly stated Board decisions. 

4. Directors will respect the confidentiality appropriate to issues of a sensitive nature and  must continue to honor confidentiality after leaving Board service. 

5. Directors will prepare for, attend and participate fully in all Board meetings and trainings. 

6. Directors will support the legitimacy and authority of the Board’s decision on any matter,  irrespective of the director’s personal position on the issue. 

7. Any director who does not follow the code of conduct policy can be removed from the  Board by a 2/3 majority vote of the remaining Board members.

Policy Title: C6 – Officers’ Roles 

Last Revised: October 26, 2021 

We will elect officers in order to help us accomplish our job. 

1. No officer has any authority to supervise or direct the GM. 

2. Officers may delegate their authority but remain accountable for its use. 3. The president ensures the Board functions well and in accord with our policy agreements. 

a. The president is authorized to make decisions that are consistent with Board  Process and Board-Management Relationship policies in order to facilitate the  Board’s functioning. 

b. The president will chair and set the agenda for Board meetings. 

c. The president plans for leadership (officer) perpetuation. 

d. The president may represent the Board to outside parties. 

4. The vice-president will perform the duties of the president if the president is unable to do  so. 

5. The treasurer is responsible for supporting the Board in all finance-related Board work. 

a. The treasurer will lead the Board’s process for creating and monitoring the  Board’s (not the Cooperative’s) budget. 

b. The treasurer will facilitate the Board’s understanding of the financial condition  of the Cooperative. 

6. The secretary will make sure the Board’s documents are accurate, up-to-date, and  appropriately maintained. 

a. The secretary will write the draft and final versions of any new policy or  committee charter.

Policy Title: C7 – Board Committee Principles 

Last Revised: October 7, 2018 

We will use Board committees only to help us accomplish our job. 

1. Committees will reinforce and support Board holism. 

a. In particular, committees help the whole Board move forward when they research  alternatives and bring back options and information. 

2. Board committees may not speak or act for the Board except when formally given such  authority for specific and time-limited purposes. 

3. The Board will establish, regularly review and control committee responsibilities in  written committee charters. 

a. We will carefully state committee expectations and authority to make sure they do  not conflict with authority delegated to the GM. 

Policy Title: C8 – Governance Investment 

Last Revised: November 28, 2022 

We will invest in the Board’s governance capacity. 

1. We will make sure that Board skills, methods and supports are sufficient to allow us to  govern with excellence. 

2. We will incur governance costs prudently, though not at the expense of endangering the  development and maintenance of superior capability. 

a. We will use training and retraining liberally to orient new directors and Board candidates, as well as to maintain and increase existing directors’ skills and  understanding. 

b. We will arrange outside monitoring assistance as necessary so that the Board can  exercise confident control over organizational performance. 

c. We will use outreach mechanisms as needed to ensure our ability to listen to  member-owner viewpoints and values. 

d. We will use professional and administrative support. 

3. We will develop the Board’s annual budget in a timely way so as to not interfere with the  development of the Cooperative’s annual budget. We will complete this work no later  than December.

Policy Type: Board-Management Relationship 

Policy Title: D – Global Board-Management Connection Last Revised: August 2016 

The Board’s sole official connection to the operations of the cooperative will be through the  General Manager. 

Policy Title: D1 – Unity of Control 

Last Revised: August 2016 

Only officially passed motions of the Board are binding on the GM. 

1. Decisions or instructions of individual directors, officers, or committees are not binding  on the GM except in rare instances when the Board has specifically authorized this  power. 

2. In the case of directors or committees requesting information or assistance without Board authorization, the GM can refuse any requests that, in the GM’s opinion, may disrupt  operations or that require too much staff time or resources. 

Policy Title: D2 – Accountability of the GM 

Last Revised: August 2016 

The General Manager is the Board’s only link to operational achievement and conduct. 

1. The Board will view GM performance as identical to organizational performance so that  organizational accomplishment of Ends and organizational operation within Executive  Limitations will be viewed as successful GM performance. 

2. The Board will not instruct or evaluate any employee other than the GM.

Policy Title: D3 – Delegation to the GM 

Last Revised: August 2016 

The Board delegates authority to the GM through written Ends and Executive Limitations  policies. 

1. As long as the GM uses any reasonable interpretation of the Board’s Ends and Executive  Limitations policies, the GM is authorized to establish all further policies, practices and  plans for the cooperative. 

2. The Board will respect and accept the GM’s choices as long as those choices are based on  reasonable interpretations of Board policies. 

3. If the Board changes an Ends or Executive Limitations policy, the change only applies in  the future. 

Policy Title: D4 – Evaluating the GM 

Last Revised: March 20, 2018 

The Board will systematically and rigorously monitor and evaluate the GM’s job performance compared to expectations set forth in Board policies. 

1. The Board’s policy monitoring process is the foundation of our annual evaluation of the  GM. 

a. In January of each year the Board will review a summary of the monitoring  reports received during the previous 12 months. Based on that review, the Board  will present an evaluation letter to the GM. That letter will constitute our full  evaluation, and it will be delivered no later than February 5th. 

2. The Board will acquire monitoring information by one or more of three methods: (a) by  internal report, in which the GM discloses policy interpretations and compliance  information to the Board; (b) by external report, in which an external, disinterested third  party selected by the Board assesses compliance with Board policies; or (c) by direct  Board inspection, in which a designated director or committee assesses compliance with  the policy. 

3. The Board’s standard for compliance will be any reasonable GM interpretation (as  described by operational definitions and metrics) of the Board policy being monitored.  The Board is the final arbiter of reasonableness, but we will always judge with a  “reasonable person” test rather than with interpretations favored by individual directors or by the Board as a whole. 

4. The Board will accept that the GM is compliant with a policy if the monitoring report  includes a reasonable interpretation and adequate data that demonstrate accomplishment  of that interpretation. 

5. The Board will monitor all policies that instruct the GM. The Board can monitor any  policy at any time by any method listed above but will ordinarily follow the schedule  outlined in the Board Annual Calendar.

APPENDICES

Bylaws of the Purple Porch Cooperative, Inc. as amended by the Voting Members October 30, 2016 Article I: Organization 

1.1 Name. The name of the organization shall be The Purple Porch Cooperative, Inc. henceforth PPC or  Cooperative. 

1.2 Ownership and Purpose. The Cooperative shall be owned by its members and shall operate in accord  with the International Cooperative Alliance’s Statement on the Cooperative Identity for the mutual benefit of  its members (henceforth “member-owners”). PPC is committed to growing a local, sustainable food economy  that will focus on local foods in a just food cooperative. 

Article II: Membership 

2.1 Eligibility. Membership in the Cooperative shall be open to any individual or legal entity who is in accord  with its purposes and is willing to accept the responsibilities of membership. 

2.2 Nondiscrimination. Membership shall be open without regard to any characteristic that does not  directly pertain to a person’s eligibility. 

2.3 Admission. Any eligible person may be admitted to membership upon submitting an application and  investing equity in an amount and on such terms as determined by the Board of Directors (henceforth “the  Board”). A legal entity applying for membership must name a single individual as an authorized representative. 

2.4 Rights. Member-owners have the right to elect the Cooperative’s Board, to attend meetings of the  Board, to receive notice of and attend membership meetings, to petition as described in these bylaws, and to  approve amendments to these bylaws. Each member-owner shall have one vote and no more on all matters  submitted to member-owners. The rights of member-owners shall apply only to active member-owners in good  standing. All rights and responsibilities of member-owners are subject to applicable state law, the bylaws as  they may be amended from time to time, and to policies and decisions of the Cooperative or the Board. PPC  shall be organized on a non-stock, member owner basis. 

2.5 Responsibilities. Member-owners shall keep current in equity investments due to the Cooperative,  shall keep the Cooperative informed of any changes in name or current address, and shall abide by these bylaws  and the policies and decisions of the Cooperative or the PPC Board. Member-owners shall also patronize the  cooperative. A member-owner who upholds these responsibilities is considered an active member in good  standing. 

2.6 Termination of Membership. A member-owner may terminate his or her membership voluntarily at  any time by written notice to the Cooperative. Membership may be terminated involuntarily by the Board for  cause after the member-owner is provided fair notice of the reasons for proposed termination and has an  opportunity to respond in person or in writing. Cause may include intentional or repeated violation of any  provision of the Cooperative’s bylaws or policies, actions that will impede the Cooperative from accomplishing  its purposes, actions or threats that adversely affect the interests of the Cooperative or its member-owners,  willful obstruction of any lawful purpose or activity of the Cooperative, breach of any contract with the  Cooperative, or failure to patronize the business for more than 3 years. 

2.7 Settlement of Disputes between Cooperative and Member-Owners. In any dispute between the  Cooperative and a Member-Owner or former Member-Owners that involves normal membership transactions  and that cannot be resolved through informal negotiation, it shall be the policy of the Cooperative to use  mediation whereby an impartial mediator may facilitate negotiations between the parties and assist them in  developing a mutually acceptable settlement. No party with a grievance against the other shall have recourse  to litigation until the matter is submitted to mediation and attempted to be resolved in good faith. 

2.8 Return of Equity. Equity may be returned upon termination of membership in the Cooperative, under  terms determined by the Board, provided that the Board has determined that the equity is no longer needed  by the Cooperative. 

2.9 Unclaimed Equity. If a member-owner voluntarily or involuntarily terminates membership in the  cooperative, and fails to inform the cooperative of his or her mailing address, then the equity and patronage  dividend amount allocated to that member-owner will be retained by the Cooperative or donated to a non profit to the extent authorized by State law. 

2.10 Non transferability. Membership rights and member equity may not be transferred in any manner. Article III: Member Meetings and Decision Making 

3.1 Annual Meeting. A membership meeting shall be held each year at a time and place to be determined by the Board. The purpose of such meetings shall be to hear reports on governance, operations and finances,  to review issues that vitally affect the Cooperative, and to transact such other business as may properly come  before the meeting. 

3.2 Special Meetings. The Board may call special meetings of the membership. The Board shall call a special  meeting if presented with a written petition stating a proper purpose and signed by 15% of active members.  Notice of special meetings shall be issued to member-owners. In the case of a petition, notice of the special  meeting will be issued within ten (10) days after a presentation of the petition to the Board. No business shall  be conducted at that special meeting except that specified in the notice of meeting. 

3.3 Notice of meetings. Notice of the date, time, place and purpose of each meeting of the membership shall  be posted in a conspicuous place at the Cooperative and communicated to members not less than 15 days prior  to the date of the meeting. 

3.4 Voting. Voting on all matters that member-owners are entitled to vote upon will be accomplished  through paper or electronic ballots, or both, as authorized by the Board. Unless otherwise specified in these  bylaws, notice of the vote shall be posted in a conspicuous place at the Cooperative and communicated by  written notice delivered to member-owners’ postal or electronic address not less than 15 days prior to the end  of the election period. Unless otherwise stated in the articles of incorporation, or these bylaws, or required by  law, all questions shall be decided by a vote of a majority of the member-owners voting thereon. Proxy voting  is not allowed. 

3.5 Quorum. At any meeting of the member-owners, or for any vote of the members, a quorum necessary  for decision-making shall be 5% of the total number of member-owners or 50 member-owners, whichever is  less. 

ARTICLE IV: Board of Directors 

4.1 Powers and Duties. The Board shall be composed of nine Directors. Except for matters for which  member-owner voting is required, the Board shall have full power to govern the Cooperative, including, but  not limited to, hiring management, establishing compensation, if any, for the Board, and assuring that the  mission of the Cooperative is articulated and carried out. 

4.2 Eligibility. Directors must be member-owners of the Cooperative in good standing. Employees and  spouses or domestic partners of employees may not serve as Directors. A person with a conflict of interest so 

continuing and pervasive that he or she is unable to effectively fulfill the responsibilities of a Director with the  Cooperative shall not be qualified to serve as a Director. 

4.3 Terms and Elections. Elections shall occur annually, in a manner prescribed by the Board. Directors  shall serve a term of three (3) years and shall serve staggered terms so that approximately one-third (1/3) of  the Board is elected each year. No Director may serve more than three (3) consecutive terms. 

4.4 Vacancies. Any vacancy among Directors may be filled by appointment by the Board. A Director so  appointed shall be appointed until the end of the pertinent term. 

4.5 Removal. A Director may be removed by decision of 2/3 of the remaining Directors for conduct  contrary to the Cooperative or failure to follow Board policies. A Director may be removed by decision of the  member-owners in accordance with the petition and voting provisions of these bylaws. 

4.6 Meetings. The Board shall hold regular and special meetings at such time and place as it shall  determine, and all Directors shall be notified in writing of said meeting at least five (5) days in advance,  unless the Board agrees to a shorter notice. The Board will provide reasonable notice of all board meetings to  member-owners. Attendance at any meeting constitutes waiver of notice of that meeting. Meetings shall be  open to all member-owners unless the Board decides to go into executive session regarding confidential or  proprietary matters such as: labor relations or personnel issues; negotiation of a contract; discussion of  strategic goals or business plans, the disclosure of which would adversely impact the Cooperative’s position  in the marketplace; and/or discussion of a matter that may, by law or contract, be considered confidential. 

4.7 Action Without a Meeting. Any action required or permitted to be taken at a meeting of the Board  may be taken by written action affirmed by all of the Directors. The action is effective when affirmed by all of  the Directors, unless a different effective time is provided in the action. 

4.8 Quorum. A majority of the current Directors shall constitute a quorum and no decisions shall be made  without a quorum. 

4.9 Conflicts of Interest. Directors shall be under an obligation to disclose their actual or potential  conflicts of interest. Directors having such a conflict shall absent themselves from discussion and decision of  any related matter under consideration by the Board unless otherwise determined by the Board. Directors  may not do business with the Cooperative except in the same manner as other member-owners generally do  business with the Cooperative or under other conditions that are procedurally defined to avoid preferential  treatment. 

4.10 Officers. The Board will designate officers as necessary for the effective conduct of Board business,  consistent with any requirements of Indiana state law. 

4.11 Indemnification. The Cooperative shall indemnify and reimburse each present, past and future  Director for any claim or liability (including expenses and attorneys’ fees actually and reasonably incurred in  connection therewith) to which such person may become subject by reason of being a Director, to the full  extent allowed by law, except to the extent the Director acted in bad faith. 

ARTICLE V: Patronage Dividends 

5.1 Allocations to member-owners. The Cooperative shall allocate and distribute to member-owners the  net profit from business done with them in such a manner as to qualify them as patronage dividends  consistent with cooperative principles, applicable state and federal laws and adequate accounting principles.  The Board shall determine when and how such allocations and distributions will be made. 

5.2 Consent of member-owners. By obtaining or retaining membership in the Cooperative, each  member-owner consents to take into account, in the manner and to the extent required by federal and state  tax law, any patronage dividend received from the Cooperative. Each member-owner also agrees that if his or  her patronage dividend is not cashed within 90 days of the date on which it was issued by the Cooperative, 

the Cooperative shall have the right to make a contribution in the name of that member to support other  organizations aligned with the Cooperative’s purpose in a manner as may be directed by the Board from time  to time. 

ARTICLE VI: Dissolution and Liquidation 

6.1 Asset Distribution. The Cooperative may be dissolved or liquidated upon a decision of the Board and  a two-thirds (2/3) vote of the member-owners who participate in the vote. Upon dissolution of the  Cooperative, its assets shall be distributed in the following manner and order: (i) by paying or making  provision for payment of all liabilities and expenses of liquidation; (ii) by redeeming any equity accounts  which, if they cannot be paid in full, shall be paid on a pro rata basis; (iii) by distributing any remaining assets  in a way that furthers the Cooperative’s mission, as determined by the Board. 

ARTICLE VII: Bylaws 

7.1 Amendments. These bylaws may be amended or repealed in whole or in part by a majority of the  member-owners who participate in the vote. An amendment may be proposed by decision of the Board or by  petition of at least fifteen percent (15%) of active member-owners. The proposed amendment shall be  publicized to the membership not less than four (4) weeks prior to the voting process, which shall be held at a  time and in a manner determined by the Board. 

Bylaws of the Purple Porch Cooperative, Inc. as amended by the Voting Members October 30, 2016 Bylaws of the Purple Porch Cooperative, Inc. as amended by the Voting Members October 12, 2014 Bylaws of the Purple Porch Cooperative, Inc. previously amended by the Voting Members April 27, 2012 Bylaws of the Purple Porch Cooperative, Inc. previously amended by the Voting Members October 10, 2009

Purple Porch Food Co-op Standing Committees 

The purpose of Committees is to provide support to the GM and the Board of Directors as they carry out their respective duties in accordance with the principals of Policy Governance and as specified in the Policy Manual in the running of the Co-op. The Committees exist to provide efficient, effective, and professional support to the running of the Co-op. All Committees interact as needed and all Committees will be reviewed every two years to make any necessary changes. 

Some committees are more active than others. Some are on call for activation as needed while others function continually. Ad hoc and sub-committees may be convened as needed. The Board consults with the General Manager to determine the need for additional standing or ad hoc committees. 

Every committee has a Board Member as the Chair and/or liaison. Said Board Member will report the committee’s activity at every Board Meeting and will submit an annual written report to the Board at the end of the year. The other committee members are sought for their expertise or interest and may be drawn from Co-op or community members. 

Finance Committee: 

The committee works with the GM and the Board of Directors to create the annual budget and develop long-term financial plans. This committee analyzes financial information, requests additional information, and makes financial recommendations. 

Membership Committee: 

The committee works with the GM and the Board of Directors to develop and implement strategies to support membership growth. This includes but is not limited to membership drives. 

Building and Grounds Committee: 

The committee may be invoked when major renovations, improvements, or changes to the physical structure or grounds are undertaken. The committee works to ensure quality and aesthetic values in line with Co-op values, while following official guidelines and regulations. 

Producer Committee: 

The committee works with the General Manager and the Board of Directors to help recruit and support our local producers. It helps to identify and meet the needs of our producers. 

Marketing and Communication Committee: 

The committee supports the GM and the Board to develop strategies that promote the PPFC’s mission, values, sales, services, and events and effectively communicate them to our members and the broader public. The committee helps to create and promote the consistent use of the PPFC’s visual identity and core messages. 

Events Committee: 

The committee helps the GM and Board of Directors to plan, organize, and evaluate events. These may include but are not limited to the Annual Members’ Meeting, Octoberfest, speakers, holiday events, festivals, and new developments on health and wellness. 

Strategic Planning: 

This committee is made up of the Board of Directors as a whole and works with the GM to create, evaluate and update the PPFC Strategic Plan.

Confidentiality and Conflict of Interest Policy and Disclosure Form 

Confidentiality 

As a member of the Board, I recognize that I owe a fiduciary duty of care to the Purple Porch Cooperative (PPC). This includes a duty of confidentiality. All information and documentation that I receive from PPC and others in connection with my service on the Board will be treated with strict confidentiality. Neither the contents nor the existence of this information or documentation will be shared with anyone other than the officers, directors, employees, and authorized agents of PPC. I will direct any questions regarding my confidentiality obligations to the PPC chairman of the Board. 

Conflicts of Interest 

As a member of the Board, I recognize that I owe a fiduciary duty of loyalty to PPC. This duty requires me to avoid conflicts of interest and to act at all times in the best interests of PPC. The purpose of the conflicts of interest policy (set forth below) is to help inform the Board about what constitutes a conflict of interest, assist the Board in identifying and disclosing actual and potential conflicts, and help ensure the avoidance of conflicts of interest where necessary. This policy may be enforced against individual Board members as described below: 

1. Board members have a fiduciary duty to conduct themselves without conflict to the interests of PPC. In their capacity as Board members, they must subordinate personal, individual business, third-party, and other interests to the welfare and best interests of PPC. 

2. A conflict of interest is conduct, a transaction or relationship that presents or might conflict with a Board member’s obligations owed to the PPC and the Board member’s personal, business or other interests. 

3. All conflicts of interest are not necessarily prohibited or harmful to PPC. However, full disclosure of all actual and potential conflicts, and a determination by the disinterested Board (or PPC Executive Committee) members – with the interested Board member(s) recused from participating in debates and voting on the matter – are required. 

4. All actual and potential conflicts of interests shall be disclosed by Board members to the PPC Executive Committee through the annual disclosure form and/or to the Board whenever a conflict arises. Disinterested members of the PPC Executive Committee shall make a determination as to whether a prohibited conflict exists and what subsequent action is appropriate (if any). The PPC Executive Committee shall inform the Board of such determination and action. The Board shall retain the right to modify or reverse such determination and action, and shall retain the ultimate enforcement authority with respect to the interpretation and application of this policy. 

5. On an annual basis, all Board members shall be provided with a copy of this policy and required to complete and sign the acknowledgment and disclosure form below. All completed forms shall be provided to and reviewed by the PPC Executive Committee, as well as all other conflict information, if any, provided by Board members.

CONFLICTS OF INTEREST ACKNOWLEDGMENT AND DISCLOSURE FORM I have read the conflicts of interest policy set forth above and agree to comply fully with its terms and conditions at all times during my service as a PPC Board member. If at any time following the submission of this form I become aware of any actual or potential conflicts of interest, or if the information provided below becomes inaccurate or incomplete, I will promptly notify the PPC Board of Directors in writing. 

Disclosure of Actual or Potential Conflicts of Interest: 

_________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ _________________________________________________________________________________ 

I acknowledge and agree that my selection for service on the Board and the opportunities made available to me by serving on the Board constitute good and valuable consideration for entering into this agreement, the receipt and sufficiency of which I hereby acknowledge. 

In my individual capacity: 

Signature: _____________________________________ 

Name: ________________________________________

Decision Tree for Acting on Internal Monitoring Reports from the General Manager 

Did individual directors receive and read the written report in advance of the meeting and come to the meeting prepared to act? 

Reschedule the item for the  

YES 

Is the Interpretation reasonable? 

NO NO 

next meeting. See board process and/or  board-GM relations policies. 

Board considers 

a range of 

Policy 

reflection throughout the entire process 

Is it the 

policy  

we want? 

YES 

Is there adequate data to  

determine compliance/ 

accomplishment? 

YES 

Does data demonstrate 

compliance/accomplishment? YES 

Accepted as “in compliance with” or as “demonstrating 

accomplishment of a reasonable  interpretation” of  

Policy XYZ. 

NO NO 

Not accepted. Board 

discusses Severity, 

Implications and Trends (SIT) NO 

Was there an acceptable plan, including a timeline for compliance/ 

accomplishment? 

YES 

Is the board prepared to proceed without any 

additional information? YES 

responses 

depending on SIT: 

• Request 

 information 

• Schedule 

 additional 

 follow-up 

 monitoring 

• Increasing 

 frequency of  monitoring 

• Consequences  for the GM. 

NO 

Policy 

reflection: Is this the policy 

we want? YES 

NO 

Monitoring process is complete. Document the board’s decision in the meeting minutes. 

Schedule time on 

a future agenda to 

discuss this policy 

You are so 

awesome. 

Accepted with  

acknowledgement of noncompliance. 

Accepted with  

acknowledgement of noncompliance and consequences (specify). 

NO 

Did the board decide to impose consequences on the GM? 

YES 

Not accepted with  consequences 

(specify). 

Have some cake! 

Document the board’s decisions in the meeting minutes. 

The decision tree is downloadable as a PDF in the Columinate library

CBL101 READER • 2020 • PAGE 69 

Policy Governance  Quick Guide 

A Columinate / CBLD Field Guide 

This Policy Governance Quick Guide  

(a Columinate / CBLD field guide) is avail able in the Columinate Library at:  

https://columinate.coop/ 

policy-governance-quick-guide/

Policy Governance is an operating system for boards of  directors. As with operating systems for computers, the  system itself is not the point of the board’s work; the  system simply provides an underlying framework on which  boards can build further agreements and activities. Policy  Governance does not mandate specific decisions, but does  highlight the kinds of decisions a board should make. These decisions include agreements about how the board  will work together, how the board will empower and hold  accountable the cooperative’s management, how the board  will articulate the cooperative’s purpose and set up the  cooperative for movement in that direction, and how the  board understands the role of member-owners and others in  the governance of the cooperative. 

The Policy Governance operating system is essentially  an integrated set of principles – principles that gain their  power when used together. Key to the principles is the  meaning of the word “policy.” Within the context of Policy  Governance, policies are the proactive articulation of values  or principles that guide action. 

Policy Governance principles: 

1. Ownership 

The cooperative is owned by its members. The board exists  to act and make decisions on behalf of and in the best  interest of the owners. 

2. Position of Board 

The board is a distinct link in the chain of empowerment  and accountability within the cooperative. The owners  empower the board through the bylaws, and the board is  accountable to owners for the success of the cooperative. 

In turn, the board empowers and holds management  accountable, delegating authority to management through  Ends and Executive Limitations policies. 

3. Board Holism 

The authority of the board belongs to the whole. To say  that the board “speaks with one voice” means that the  board’s authority is a group authority. The “voice” of the  board is expressed through the written policy decisions. Directors can work to persuade and influence the board  in its deliberations and decision-making; beyond that,  individual directors or subsets of the board have no  authority to instruct staff. 

4. Board Means Policies 

The board defines in writing its own job and how it  operates. These decisions are agreements about the board’s  means, categorized as Board Process policies and Board Management Relationship policies. 

5. Clarity and Coherence of Delegation 

The board unambiguously identifies the authority  and responsibility of any person (e.g., GM or board  president) or committee to whom the board delegates. No individual director, officer, or committee can be  delegated responsibility that interferes with or duplicates  responsibility delegated to the GM. 

6. Ends Policies 

The board defines in writing the cooperative’s purpose in  terms of: intended effects/benefits to be produced, intended  recipients of those benefits, and (if desired) the intended  cost-benefit or priority of those benefits. (Any decisions  about issues that don’t fit the definition of Ends are means  decisions.) 

7. Executive Limitations Policies 

The board defines in writing its expectations about the  means of the cooperative. Rather than prescribing board chosen means, Executive Limitation policies define limits  on operational means – essentially, defining boundaries on  

CBL101 READER • 2020 • PAGE 46 

the GM’s authority. Executive Limitation policies describe  means that are not allowed even if they are effective. The  board retains the authority to make decisions that are  outside of the GM’s authority. 

8. Policy sizes 

The board decides the four types of policies first at the  broadest, most inclusive level. The board can then further  define each policy in further levels of detail until reaching  a point at which the board can accept any reasonable  interpretation of the written policy. 

9. Any Reasonable Interpretation 

More detailed decisions about Ends and operational means  are delegated to the GM, who has the right to use any  reasonable interpretation of the board’s written policies. A reasonable interpretation will include more detailed  and/or clarified meaning of the board’s policy, along with  operational definitions (the metrics and benchmarks  

Policy Governance is a registered service mark of John Carver. For further information, see: 

used to gauge accomplishment). More detailed decisions  about board means (and the right to use any reasonable  interpretation of those written policies) are delegated to  

the board chair – unless part of the delegation is explicitly  directed to another officer or committee. 

10. Monitoring 

The board must check to ensure that the cooperative  has achieved (or made progress toward) the Ends while  operating within the Executive Limitation boundaries. The board judges the GM’s interpretation and operational  definition for reasonableness, and judges whether the data  demonstrates accomplishment of that interpretation and  operational definition. The ongoing monitoring of Ends  and Executive Limitations policies constitutes the GM’s  performance evaluation. The board must monitor its own  performance according to the stated board means policies. 

• Carver, John. Boards That Make a Difference: A New Design for Leadership in Nonprofit and Public Organizations,  third edition. San Francisco: Jossey-Bass, 2006. 

• Policy Governance Source Document, International Policy Governance Association, policygovernanceassociation.org  • carvergovernance.com, the authoritative website for the Policy Governance model 

• Policy Governance FAQ in the Columinate Library, columinate.coop/library 

• Goehring, Mark. “Taking Policy Governance to Heart,” Cooperative Grocer, March 2009

CBL101 READER • 2020 • PAGE 47 

The Ten Principles of Policy Governance 

Looking for a precise description of the 10 principles of the Policy Governance model?  This official document lays out what IS and IS NOT Policy Governance. 

POLICY GOVERNANCE® SOURCE DOCUMENT

Why a Source Document? 

A “source” is a point of origin. A source document is a  “fundamental document or record on which subsequent  writings, compositions, opinions, beliefs, or practices are  based.” (Websters) 

Without a simply expressed clear point of source,  interpretations, opinions, writings and implementations  may intentionally or unintentionally diverge from the  originating intent and ultimately be undifferentiated. The  point of source (“authoritative source”) is John Carver,  the creator of Policy Governance, with Miriam Carver his  fellow master teacher. 

Without a simply expressed clear source document, Policy  Governance is not reliably grounded and not transferable  as a paradigm of governance. It is left vulnerable to  interpretation, adaptation and impotence. This document  has been produced by the International Policy Governance  Association and approved by John and Miriam Carver as  being true to source. 

What Policy Governance is NOT! 

1. Policy Governance is not a specific board structure. It  does not dictate board size, specific officers, or require  a CEO. While it gives rise to principles for committees,  it does not prohibit committees nor require specific  committees. 

2. Policy Governance is not a set of individual “best  practices” or tips for piecemeal improvement. 

3. Policy Governance does not dictate what a board  should do or say about group dynamics, methods of  needs assessment, basic problem solving, fund raising,  managing change. 

4. Policy Governance does not limit human interaction or  stifle collective or individual thinking. 

What Policy Governance IS! 

Policy Governance is a comprehensive set of integrated  principles that, when consistently applied, allows governing  boards to realize owner-accountable organizations. 

Starting with recognition of the fundamental reasons that  

boards exist and the nature of board authority, Policy  Governance integrates a number of unique principles  designed to enable accountable board leadership. 

Principles of Policy Governance 

1. Ownership: 

The board exists to act as the informed voice and agent of  the owners, whether they are owners in a legal or moral  sense. All owners are stakeholders, but not all stakeholders  are owners, only those whose position in relation to an  organization is equivalent to the position of shareholders in  a for-profit-corporation. 

2. Position of Board: 

The board is accountable to owners that the organization  is successful. As such it is not advisory to staff but an active  link in the chain of command. All authority in the staff  organization and in components of the board flows from  the board. 

3. Board Holism: 

The authority of the board is held and used as a body. The board speaks with one voice in that instructions  are expressed by the board as a whole. Individual board  members have no authority to instruct staff. 

4. Ends Policies: 

The board defines in writing its expectations about the  intended effects to be produced, the intended recipients  of those effects, and the intended worth (cost-benefit  or priority) of the effects. These are Ends policies. All  decisions made about effects, recipients, and worth are  Ends decisions. All decisions about issues that do not fit the  definition of Ends are means decisions. Hence in Policy  Governance, means are simply not Ends. 

5. Board Means Policies: 

The board defines in writing the job results, practices,  delegation style, and discipline that make up its own  job. These are board means decisions, categorized as  Governance Process policies and Board- Management  Delegation policies. 

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6. Executive Limitations Policies: 

The board defines in writing its expectations about the  means of the operational organization. However, rather  than prescribing board-chosen means -- which would  enable the CEO to escape accountability for attaining  Ends, these policies define limits on operational means,  thereby placing boundaries on the authority granted to the  CEO. In effect, the board describes those means that would  be unacceptable even if they were to work. These are  Executive Limitations policies. 

7. Policy Sizes: 

The board decides its policies in each category first at  the broadest, most inclusive level. It further defines each  policy in descending levels of detail until reaching the level  of detail at which it is willing to accept any reasonable  interpretation by the applicable delegatee of its words thus  far. Ends, Executive Limitations, Governance Process, and  Board-Management Delegation polices are exhaustive in  that they establish control over the entire organization,  both board and staff. They replace, at the board level, more  traditional documents such as mission statements, strategic  plans and budgets. 

8. Clarity and Coherence of Delegation: 

The identification of any delegatee must be unambiguous  as to authority and responsibility. No subparts of the  board, such as committees or officers, can be given jobs  that interfere with, duplicate, or obscure the job given to  the CEO. 

9. Any Reasonable interpretation: 

More detailed decisions about Ends and operational means  are delegated to the CEO if there is one. If there is no  CEO, the board must delegate to two or more delegatees,  avoiding overlapping expectations or causing confusion  about the authority of various managers. In the case of  

board means, delegation is to the CGO unless part of the  delegation is explicitly directed elsewhere, for example,  to a committee. The delegatee has the right to use any  reasonable interpretation of the applicable board policies. 

10. Monitoring: 

The board must monitor organizational performance  against previously stated Ends policies and Executive  Limitations policies. Monitoring is for the purpose of  discovering if the organization achieved a reasonable  interpretation of these board policies. The board  

must therefore judge the CEO’s interpretation for  its reasonableness, and the data demonstrating the  accomplishment of the interpretation. The ongoing  monitoring of board’s Ends and Executive Limitations  policies constitutes the CEO’s performance evaluation. 

All other practices, documents, and disciplines must be  consistent with the above principles. For example, if an  outside authority demands board actions inconsistent  with Policy Governance, the board should use a ‘required  approvals agenda’ or other device to be lawful without  compromising governance. 

Policy Governance is a precision system that promises  excellence in governance only if used with precision. These  governance principles form a seamless paradigm or model. As with a clock, removing one wheel may not spoil its  looks but will seriously damage its ability to tell time. So in  Policy Governance, all the above pieces must be in place  for Policy Governance to be effective. When all brought  into play, they allow for a governing board to realize owner  accountability. When they are not used completely, true  owner accountability is not available. 

Policy Governance boards live these principles in  everything they are, do and say. 

Produced by International Policy Governance Association in consultation with John and Miriam Carver, 2005-2007-2011. Policy Governance® is a registered service mark of John Carver. Used with permission. 

Copying permitted if attributed to source. If referenced as source document, must reference entire document and, if  copied, be copied in its entirety. 

Policy Governance® is an internationally registered service mark of John Carver. Registration is only to ensure accurate  description of the model rather than for financial gain. The model is available free to all with no royalties or licence fees  for its use. The authoritative website for Policy Governance is www.carvergovernance.com.

CBL101 READER • 2020 • PAGE 49 

Field Guide: Policy Governance® FAQ 

by Nina Johnson and Joel Kopischke 

Policy Governance® (sometimes abbreviated herein as “PG”) is a comprehensive model whereby governing boards establish their values and expectations in policy, delegate implementation to the board’s sole employee (typically the GM), and monitor the outcome of operational activities against the stated policies. This Field Guide assumes that the reader has familiarity with Policy Governance® (Policy Governance Source Document) and its Principles (Taking Policy Governance to Heart). Here are some questions about PG that we get asked most often: 

THE MODEL 

1. What other governance styles/approaches are there? 

There are many ways to have a board of directors perform their duties well. PG was originally developed to integrate characteristics that are common to all boards and PG can be viewed as a system that boards of differing structures can utilize. The individual principles of PG can be applied separately as best practices, but only when all are applied cohesively is it considered to be PG. So far, we haven't found another comprehensive governance model, though there are an incredible number of resources available that describe various pieces of a board's overall duties. 

2. The Carver Model is 40+ years old. How has it changed to keep up with best practices in corporate governance? 

The principles of good governance have not changed and the PG model has held up well over the years. As more boards experience and work with the model, the language used has been modified to be more readily understood and some best practices have emerged and evolved, particularly in how to best craft effective Ends policies and in methods of monitoring. 

3. Why does the model seem so hierarchical? 

The model’s hierarchy parallels the legal structure and fiduciary responsibility of the organization and its stakeholders. The member-owners (the base or “grass roots” of the organization) are at the top, with those authorized to act on their behalf (the board) below them, continuing to the GM (hired by the board) and the staff (hired by the GM). Hierarchy does not equate with oppression; good leaders ensure situations that allow those under them to thrive. 

4. How can we explain to our members what Policy Governance is? 

Most members are probably more interested in what the organization is accomplishing than what process or model the board is using, but PG can be explained as a system for governance in which all the most important values of the organization are written in policy, and that policy is the way the board guides the GM in running the co-op and holds the GM accountable for organizational performance. You could also explain to your members that you are governing in a way that allows the board to focus more on the long-term direction of the co-op while carefully delegating most day-to day decisions to the GM. 

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Field Guide: Policy Governance FAQ — Cooperative Board Leadership Development

5. Isn't this too dogmatic/structured? / Why is it so rigid? 

All boards have a structure, though not necessarily a structure that is easy to describe; PG simply encourages us to articulate our governing structure and provides an overall framework within which to state our decisions and values. Within PG’s structure there is room for great creativity. Gymnastic and figure skating routines contain portions that are compulsory and also allow for artistic freedom. Engineering principles are quite rigid and structured, yet many different bridge designs exist. Indeed, to ensure safety and functionality, it’s vitally important to follow the principles. After all, if you want to get the best results from a tool, it’s best to use the tool the way it was meant to be used. 

6. How does Policy Governance actually control the GM? 

The Executive Limitations policies within PG stipulate what situations are to be avoided while achieving the organization’s desired Ends. It does not “control” the GM, but clearly specifies to what the GM will be held accountable. The Executive Limitations policies also define the limits of the GM's authority -- what decisions, actions or activities the GM does not have authority over. Any decision in these areas will need to be made by the board of directors. 

7. Why isn't there a role for members? 

There is! The board of directors is comprised of members, voted in by members, empowered by and accountable to members. Members can attend board meetings, the annual meetings and other events where the board and members participate in meaningful dialogue about member values. These values shape the policies that are the heart of PG. Other opportunities may exist as the board and GM are free to utilize whatever resources they see fit in accomplishing their duties. 

8. Shouldn't boards actually do something? Doesn't PG create a board that is "hands off?" Quite often a Board’s desire to “do things” means that they want to be involved “hands on” in the activities of operations. This is inappropriate, as it takes the Board’s energy and attention off of governance and muddies the accountability for accomplishments. Boards actually have a lot to do as they work to understand the world in which the co-op operates, engage the member-owners in a meaningful dialogue of values, and make sure that members' values are represented properly in the policies that guide the organization. Then they rigorously monitor the organizational performance against those policies. 

9. Doesn't the board just end up rubber stamping? 

Not at all—PG boards (or any board for that matter) should rigorously monitor GM/organizational performance. PG boards stay in the leadership position and clearly articulate expectations in their policies and then check whether they have been met. Monitoring for clear expectations will be more efficient than monitoring for vague or unstated goals. Additionally, if directors have done their homework prior to the meeting and all agree that a report shows compliance, additional discussion would most likely provide no value to the owners. The absence of extraneous discussion may be misinterpreted as rubber stamping, when it actually indicates a responsible and efficient board. 

ENDS 

10. What is this word “Ends” and what does it mean? Why not ”mission” or ... Carver chose “Ends” because the term wasn’t being used anywhere else. He didn’t want to redefine an already familiar term and risk that people would apply the old definition. “Ends” describe the end result of everything the organization does. Its meaning is defined in three distinct parts: 1) the intentional outcome/results/impact 2) for identified recipients 3) at a specified cost or value. Mission statements do not typically contain all 3 parts of Ends. 

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Field Guide: Policy Governance FAQ — Cooperative Board Leadership Development

11. Why is the ends/means distinction so important? 

Because Ends describe organizational accomplishments to be achieved and Means describe everything else. Unclear distinction will result in unclear goals for organizational accomplishment and diminish effective accountability systems. Additionally, Ends policies are monitored very differently than policies that articulate Means. (see our resources for Acting on Ends Reports and Acting on GM Monitoring Reports) 

12. Why is it such a big deal not to use verbs in the Ends statement? Wouldn't it be better to have something people can understand? 

Ends statements/policies should be easy to understand. Verbs can and should be used, but they should not be verbs that describe organizational action or effort. Ends should describe the outcome or impact of the work of the organization, not the actual work or the attempt or effort. An outcome focused Ends policy gives the GM maximum freedom and flexibility to innovate and partner and respond to changing conditions in order to achieve the desired outcome/results in the most effective way. Additionally, the GM will be held accountable for actual results, not activities or efforts. Though Ends may be used as a public statement of the co-op's purpose, they are not intended to serve as a public relations or marketing tool. Ends policies are used as the primary method for the board to communicate the members’ values about outcomes to the GM. 

13. How do we determine and describe the “relative worth” or “cost” part of the Ends Policy? 

Most broadly, “worth” or “cost” means that results produced should be worth the effort (or resources used). Relative worth indicates that different parts of Ends policies (i.e. different “results for recipients”) have different priorities; boards can either articulate these priorities in the Ends policies or choose to allow the GM to set priorities. The Ends need not address cost of goods and services because the co-op is a business operating in a marketplace and the market will determine if those costs are reasonable. 

14. OK, so we have the Ends written...now what? 

Once you are satisfied with your Ends policies, first you should celebrate! The GM will interpret them and develop strategic plans for achieving them and measuring progress toward accomplishment. The board will rigorously monitor the steps toward, and actual accomplishment of, these Ends. Meanwhile, the board will continue to educate itself about the members’ values and other important trends and topics that may inform refinements to Ends over time. And, of course, the board will be doing its other job functions: monitoring the Limitations, working on perpetuating board excellence (recruitment, nominations, training), etc. 

15. Isn't all this Ends study work just a fancy book club? 

Study work is intended to develop the wisdom of the board and increase its ability to make good decisions. If a board spends time studying but does nothing with that new knowledge, then it may feel to some like nothing more than a book club. By building its knowledge and wisdom, the board becomes subject matter experts on behalf of their members. A Board should always be striving to build its wisdom so that they can write better policy and make better-informed decisions. In this way, Ends study work drives the strategic thinking of the board which then informs the strategic planning and direction of the organization. Many co-ops have achieved significant concrete accomplishments as a direct result of board-level strategic thinking and Ends study work. 

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Field Guide: Policy Governance FAQ — Cooperative Board Leadership Development

IMPLEMENTATION 

16. Can we just use another co-op’s policy documents? 

We have found it best practice to start with a sample policy set (for all policies except Ends) and review it and adapt it as needed. The CBLD policy template is based on our team’s collective years of experience working with boards and their policies. When your board reviews and adapts the sample set, you make sure that your values are reflected in the policies and take ownership of those policies. The Ends are unique to your organization. There may be similarities between natural food co-ops, but it is very important for each board to articulate their member-owners’ values. Each organization (through its board) will have its own unique way of answering the question of what results should be achieved for whom and at what cost or relative worth. 

17. Do we have to write policy in negative language? 

There are four categories of policy: Ends, Executive Limitations, Board/GM Relationship and Board Process. Of these only the Executive Limitations policies are written proscriptively, that is, in a way that prohibits certain behavior. The majority of policy is not written in negative language. PG is designed so that the board tells the GM what its desired outcomes are (Ends) and then says that the GM must not do anything illegal, unethical and imprudent on the way to achieving those Ends. Rather than telling the GM how to do their job (which makes it harder to hold them accountable), the board sets limits, gets out of the way, and monitors. It is a lot simpler to list the small number of things the GM cannot do than it is to list the gazillions of things s/he can or should do. Leaving the “what you can do” things to the GM to determine provides for maximum creativity and flexibility to create great outcomes from ever-changing conditions and ever-expanding possibilities. 

FIDUCIARY RESPONSIBILITY 

18. How can boards fulfill their fiduciary responsibility when they don't approve budgets, make decisions about capital expenditures, or see financial statements? The best approach for a board on any topic, and perhaps especially financial matters, is to proactively set guidelines and monitor for compliance, not to be reactive. The board provides leadership and doesn’t leave the GM to guess what is acceptable or what might be approved. Budgets are by definition plans about the future and are therefore subject to change. If the Board approves the budget, the inevitable deviations would have to be either approved by the board (highly inefficient for the organization) or allowed without approval (rendering the original approval irrelevant). Instead the board defines the guidelines for an acceptable budget; then they monitor the budget to be sure it fits the criteria that they have specified. Boards may make decisions about capital expenditures within the context of financial limitations policies; once those policies are in place, then the GM is authorized to make further decisions inside the boundaries. The board retains authority for decisions that are outside the boundaries delegated to the GM. Lastly, Boards will likely be monitoring financial policies quarterly (during an expansion phase a board may monitor more often). 

19. Are boards truly prepared to be accountable for financial liability, especially when it is said to be unnecessary for anyone with financial expertise to be on the board? While financial expertise is not required, each director should have some basic financial knowledge (easily attained/learned) so that they can participate fully in board-level financial decision-making. When monitoring financial (or any other) policies, boards should require that all reports contain operational definitions and enough outside supporting information to show that the definitions are valid. The supporting information, such as industry standards per NCGA or CoCoFiSt, should provide the board with the context and outside input to make determinations on financial matters. The reports should also contain verifiable data that show whether or not the policy is in compliance. 

4 

Field Guide: Policy Governance FAQ — Cooperative Board Leadership Development

GM ACCOUNTABILITY 

20. How does a board evaluate visionary leadership in their GM? How can we tell if our GM is above-and-beyond or merely compliant? 

The board should come to a clear understanding about what it means by “visionary” organizational achievements and then write that into its policies. Then rigorously monitor to ensure the GM’s accomplishment of them. If the concern is compensating the GM (a separate process from evaluating), please see our resources on Setting A Process For GM Compensation. 

21. What should a board do if the GM is getting results but the GM is not popular with the staff? 

The manager's job is to be effective, not popular. We recommend that your policies include staff treatment guidelines to be sure that staff is treated fairly (see the CBLD Policy template and the template monitoring report in the GM Report Support section of our CBLD Library). Given human nature, it is likely that some staff may be unhappy (it is “work”, after all). Good reporting will include valid staff survey results or some other type of objective data, which will show treatment and systemic staff attitude issues, if any. If all performance metrics (financial, customer service, fair staff treatment etc.) are on track it is likely that the manager is being effective. 

22. How can we be sure that we are not being lied to if the GM is the source of the information? Isn't relying on the GM for data like having the fox guard the hen house? This is not unique to PG. If the GM is a liar or a cheat, they will lie or cheat whether or not the board uses PG. PG boards can choose to hire an external/third party professional to monitor policies or do it one’s self (assuming the expertise is present) but both methods are expensive in time and/or money. Good monitoring reports contain verifiable data and information (such as benchmarks or industry standards) from credible outside sources that help the board determine if the GM’s interpretations of policy are valid. Verifiable data and targeted external monitoring (such as an annual Financial Review/Audit) and, to a lesser extent, direct inspection are ways to guard against liars and cheats. You can find examples of great monitoring reports in the GM Report Support section of our CBLD Library. 

23. Aren't boards supposed to know what is going on in the business operations? Boards can know what’s going on in the business operations, but at a governance level the concern should be on the big picture of operations performance. A good tool is a GM-to-Board “FYI Report” that includes interesting and important things going on in operations, but which fall outside of the purview of the board. This report takes no Board time on its meeting agenda but serves to keep the board informed and connected. 5 

Field Guide: Policy Governance FAQ — Cooperative Board Leadership Development

SPEAKING IN ONE VOICE 

24. Does this “one voice” thing mean we can't ever disagree with a decision? Speaking with “one voice" does not mean that an individual director cannot express personal opinions to anyone he or she cares to; it does mean that directors should understand that only the full board (and not individual directors) has authority and the board's "voice" is expressed through the written policies. There should be healthy debate, even passionate disagreement, as part of the decision making process. If your board uses majority rule for its decision making process and there are enough votes to pass, then the board has spoken and a 5-4 decision is the same as a 9-0 vote. Board members can disagree with a decision, but board members have committed to support ALL board decisions that have been made in accordance with their board process policies. In short, if you followed a valid and fair process, then the decision of the board is valid and should be honored by all directors. 

Policy Governance® is the registered service mark of John Carver. 

The authoritative website for the Policy Governance model can be found at www.CarverGovernance.com  

Field Guide: Policy Governance FAQ — Cooperative Board Leadership Development

From Cooperative Grocer, Jan.–Feb. 2014

Four Pillars of Cooperative Governance A new model grounded in the cooperative difference 

By marilyn scholl and art sherwood 

Great leaders demonstrate how to  be a force for good in local com munities and beyond. Our coop 

erative heroes—the Rochdale  Pioneers—were striking weavers  who opened a grocery co-op in  

S U C C E S S O F T H E C O O P E R A T I V E 

1844 in Rochdale, England, to help them selves and others get free from indebtedness  to the company store.  

The Pioneers asked and answered some  compelling questions: Shouldn’t the economy  serve the people rather than the people serve  

the economy? What does it look like when  that happens? Their belief in economic equity  and fairness led to the worldwide consumer  cooperative movement. 

In keeping with the Rochdale Pioneers’  

Member Owners 

Board 

GM/CEO Sta 

Member Owners 

Board 

GM/CEO Sta 

Member 

Owners 

Board 

GM/CEO 

Sta 

STRATEGIC 

Member Owners 

Board 

GM/CEO Sta 

vision, and a well-defined current global need  for financial and environmental stability,  the International Cooperative Alliance (ICA)  

TEAMING 

DEMOCRACY 

LEADERSHIP ACCOUNTABLE EMPOWERMENT 

in 2012 outlined a strategic agenda for  cooperatives.  

COOPERAT IVE PRINCIPL E S AND VALUE S 

At the same time, the present authors had  been asking ourselves whether there should  be a model of cooperative governance, and  if so, what would it need to look like to sup port and drive forward the success of our  cooperatives?  

Tools for cooperatives 

Co-ops have many governance tools at their  disposal that have served them well, such  as Policy Governance, a system for defining  Ends and clarifying roles and structure for  organizing the board’s work. Over the last  decade, co-op boards have been strengthened  by a solid focus on Ends accomplishment  and good process and systems. This has  helped create positive and effective relation ships with general managers. We have seen  the outcome this has had on both business  growth and social impact in our movement. 

However, the cooperative boardroom does  not share all the same purposes as the boards  of investor-owned corporation or nonprofits.  Co-ops are organized to benefit their owners,  

and that is more important than a financial  return on investment. We concluded it was  time to re-create our understanding of coop erative governance.  

Last spring, one of the authors, Art  Sherwood, was invited to be a visiting  scholar to address our questions at the  world-renowned Vincent and Elinor Ostrom  

Workshop on Political Theory and Policy  Analysis at Indiana University. Based on  Nobel Prize Laureate Elinor Ostrom and  

Vincent Ostrom’s work, Sherwood conducted  research addressing the expectations we have  of cooperative governors and how this might  

differ from investor-owned corporations.  Based on the results of this research (see  References) and our team’s deep experience  with cooperative leadership, we designed  the Four Pillars of Cooperative Governance  model. We have since presented it at the  International Cooperative Governance  Symposium in Halifax, Nova Scotia, and we  explain the model below. 

Four Pillars of  

Cooperative Governance 

Cooperative governance is the act of steering  cooperatively owned enterprises toward eco nomic, social, and cultural success. It consists  of answering key questions, defining roles  and responsibilities, and establishing pro cesses for setting expectations and ensuring  accountability.  

A model is a way of framing so that the  parts and processes make sense. Our Four  Pillars model is a not about changing systems  but is a new way of making sense of coop erative governance. We think it addresses  current gaps in strengthening owner relation ships and democratic practices that are not  clearly part of other business or governance  models. The Four Pillars of Cooperative  Governance are: 

Teaming: successfully working together to  achieve common purpose. 

Accountable Empowerment: successfully  empowering people while at the same time  

CBL101 Reade r • 2016 • pag e 37 

holding them accountable for the power  granted. 

Strategic Leadership: successfully articu lating the cooperative’s direction/purpose  and setting up the organization for move ment in this direction.  

Democracy: successfully practicing, pro tecting, promoting, and perpetuating our  healthy democracies. 

Within a co-op, no matter what the role,  the expectation is that everyone is respon sible for working together effectively, to be  accountable and able to empower others, to  be focused on purpose, and to participate  in ensuring a healthy democracy. It is what  co-ops are working to achieve, not only in  the boardroom but also in the workplace and  with members in the co-op. Governance— steering, making key decisions, working  together for common goals—happens  throughout the co-op at every level.  

Therefore, the Four Pillars of Cooperative  Governance is a framework for connecting  the co-op’s values to governance activities  at all levels: staff, management, board, and  owners. Each of the four pillars—Teaming,  Accountable Empowerment, Strategic  Leadership, and Democracy—is relevant to  each constituency in a co-op. Again, Four  Pillars of Cooperative Governance is not  about changing systems, but a new way of  thinking about the role of governance in a  co-op. 

Four pillars at the board level The remainder of this article will focus on  

Each of the four pillars is relevant  

to each constituency in a co-op.

STRATEGIC 

LEADERSHIP 

ACCOUNTABLE 

TEAMING 

EMPOWERMENT 

DEMOCRACY 

Four Pillars of  

understanding cooperative governance at the  level of the board of directors. The work that  

they need to understand the big picture and  also be able to home in on specific skills, pro cesses, or tools that they need at any given  

leadership of the group. 

The board has power as a unit. An indi vidual director’s only power, beyond that  

Cooperative Governance 

co-op boards are charged with (stewardship  of a community-owned asset) is being carried  out, but it is currently missing a framework  for directors to easily define it and have a  vocabulary for it. 

We need to build on what we’ve learned  about effective governance to demonstrate  with intention how boards express coopera tive values in the way they govern. When  the Rochdale Pioneers created structure for  their ideas by shaping a set of Cooperative  Principles, cooperation became a bona fide  business model that allowed the idea to grow  beyond one single group into a worldwide  movement. What the Pioneers did is give  cooperatives a framework, based on the prac tical application of their values. This allowed  cooperation as an economic philosophy, and  a business, to grow.  

In our work with boards, we find that  

time. We see the Four Pillars of Cooperative  Governance as a way to do both—to have a  good perspective on the whole mission and  

yet be able to focus in on specific needs. The  Four Pillars is also a way to identify things  that are working well within a particular  co-op and show opportunities for areas of  advancement and improvement. (We will  explore these opportunities in more depth in  a followup article). 

Teaming 

The board is responsible for perpetuating  board excellence and for organizing and  managing its own work. The board must  

work together effectively as a team to make  this possible. This includes having a common  agreement about the work, clear expectations  of individuals and the group itself, an effec tive decision-making system, and effective  

of any other co-op owners, is the ability  to influence the board group. Diversity of  opinion is necessary and valuable. Yet the  group must have the ability to think and  learn together, to come to a decision and  support that decision. The board must create  and maintain a group culture that supports  their work. Viewed through the lens of the  Four Pillars of Cooperative Governance, self responsible teaming is the first step for board  effectiveness. 

Accountable empowerment To fulfill its fiduciary duties on behalf of own ers, a board needs to be vigilant. The board  also delegates power to the general man ager or CEO to empower him or her to act.  Power is the ability to get things done and  to be effective. Power is necessary and good.  The ideal situation is having both a power 

CBL101 Reade r • 2016 • pag e 38 

ful board and a powerful general manager.  Unaccountable power is a problem, however,  so boards must have effective systems of  accountability. 

Accountability is having clear expecta tions, assigning responsibility, and checking.  Policy Governance is one model for ensuring  

accountability, and it has been an excellent  method for role clarity, accountability, and  focus. Because many co-op boards have effec tively used Policy Governance, it is a valuable  tool for accountable empowerment in the  Four Pillars of Cooperative Governance. 

Democracy 

The board must practice, protect, promote,  and perpetuate the democratic nature of the  cooperative. Democracy in cooperatives is  about more than voting. A healthy democracy  gives owners opportunities to meaningfully  participate in reflection and change in their  organization. All owners have the right to  participate in the cooperative regardless  of their wealth, investment, patronage, or  values and beliefs. Owners are entitled to  information, voice, and representation, and  boards must understand the diverse needs of  their owners. 

Further, the board needs to build align ment and shared understanding among  owners about the strategic choices the co-op  needs to make. From newsletter articles  and member meetings to surveys and focus  groups, co-op leaders have a plethora of  opportunities to build relationships with  member owners. Ownership and democracy  are at the heart of what makes a co-op differ 

ent from other businesses. 

 The Four Pillars of Cooperative Governance  includes this all-important aspect of co-op  governance to provide critical focus on an  area that has not reached its full potential. 

Strategic leadership 

Strategic leadership is about defining purpose  and setting direction. How can the coopera tive most effectively meet owner needs? How  can it distinguish itself in the marketplace?  What should the co-op achieve? 

The board has a responsibility to establish  direction and to facilitate movement toward  the desired direction through their choice of  management, ensuring adequate resources,  and monitoring progress. Providing strategic  leadership requires information, knowledge  and wisdom. Boards need to be able to  learn and build wisdom together in order to  develop foresight and make informed deci sions. Boards need a way to free up board  agendas to focus on strategic thinking and  have a process for building the knowledge  pool.  

Elevate participation and  

governance 

Over the last decade, we have observed that  co-op boards have learned ways to systemati cally work better together and to practice  accountable empowerment. Now that boards  have become more skilled at that, the next  phase of co-op governance is to clearly articu late democracy in how we work together  with all our stakeholders and express strate gic leadership in ways that demonstrate the  

co-op difference. We see many opportuni ties and synergies for co-ops to match their  efforts with those happening globally through  the 20/20 Challenge and the ICA’s Blueprint  for a Cooperative Decade. 

When we look to icons of leadership  throughout history, we are struck by their  abilities to speak well, be courageous, and  

solve problems with compassion and creativ ity. Yet those whose legacy will be most last ing are the ones who powerfully embody the  values they champion. There is no substitute  for authenticity. This is also part of the coop erative advantage. 

What is more, directors of co-ops are  some of the most dedicated, passionate, and  dynamic cooperators out there. We can help  lead the way toward answering the question  of what leadership in an economic democracy  looks like. The Four Pillars of Cooperative  Governance is an invitation for you to partici pate in this emerging conversation. 

In the next issue of the Cooperative Grocer,  we will further this discussion by talking  about the practical application of the Four  Pillars of Cooperative Governance model. n 

Thank you to Patricia Cumbie and Mark Goehring  for their assistance with this article. 

References 

Sherwood, A.L. (2013), Democratically owned and  controlled businesses: Identifying common and  unique expectations of co-op board governance  systems. Last accessed 11/20/13, www.indiana. edu/~workshop/colloquia/materials/spring2013_ all_workshopcolloquia.html#022513

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