Are you ready to change the world (or at least your little part of it) with your new non-profit organization? Having an understanding of the requirements for the board of directors, as well as the functions of the board, is vital to your success.
First off, do nonprofits legally have to have a board of directors? For most small non-profits, the founder(s) serve as the board member(s) to start. But, according to LegalZoom.com, when submitting a “501(c)(3) application or other type of tax exempt application, the IRS almost always requires at least three distinct individuals to serve on the board of directors.”
What is a NonProfit Board of Directors?
The Board of Directors for a non-profit organization mostly comprises of unpaid workers who are trustees of the entity. They represent the organization and are responsible for the clients of the organization, the community, donors, the government and also the taxpayers as a whole.
The Board of Directors ensures that the entity keeps the promises outlined in the mission and value statements and they also ensure that the organization follows all laws applicable to them.
The Board always acts as a group and the individuals in the board have no power except that which is expressed by the majority by means of a vote.
NonProfit Board of Directors Positions
It’s not uncommon for a single nonprofit board member to hold many positions or roles, especially if the organization is on the smaller side. Here are some options for nonprofit board of directors positions:
- Chair or President
- Vice Chair or Vice President
- Committee Chair
- Board Member
10 Duties of the NonProfit Board of Directors
- They determine and establish the mission and purpose of the organization with all its members. They put it in writing and explain to all members what it means and represents, and the board also reviews it periodically to check for its adequacy, viability and accuracy as per the changing times.
- They select the Executive Director and this decision impacts the organization’s effectiveness and development greatly. The hiring decision may be shared by someone who has a say or stake in the outcome, but the final decision is made by the board itself.
- The Board provides the required support to the executives and it also reviews his or her performance in the business. The Board also ensures that the executives get timely and constructive feedback; are introduced to other community leaders and organizations; get invited to important social gatherings; are recognized and rewarded for exceptional initiatives; get personal and professional leave and are also assisted when other members misunderstand their role or overstep their authority.
- The Board should make sure that organizational planning is done effectively and comprehensively. They can either be a part of the planning process if they plan to own it or ask good questions from the other planners if they themselves are not a part of it. The board should only approve plans after thorough deliberation and analysis of the same.
- The Board also ensures that the organization has adequate resources to meet its needs. It is, of course, the top executive who is the main fundraiser. But it is the board that determines what is really possible to achieve. The board influences potentially big donors, introduces the top executives to new fundraising initiatives and also monitors the different fundraising initiatives within the organization.
- After providing resources, the board also needs to ensure that these resources are being utilized efficiently and effectively. They protect accumulated assets and manage the current income properly. They are wholly and solely accountable for the use of resources in the organization especially because the organization is declared tax exempt by federal and state laws. Therefore, the Board develops and approves an annual budget and ensures that the budget implementation is accompanied with accurate, intelligible, clear and timely reporting.
- The Board also determines and monitors the organization’s services and programs. They have to ensure that they are in line with the current and stated mission and purpose of the organization.
- The Board also works to enhance the organization’s public image. The media, government and prospective donors and clients need a positive image of an organization for reliance, and the Board makes sure of just that. They choose the organization’s spokesperson who might be situational to use but comes in handy when needed. The members also ensure that none of the other board members goes out and makes a statement on behalf of the board or the organization without prior consultation and approval of all the other members.
- They also serve as a court of appeal in case the top executive’s judgment is challenged. This can be in issues pertaining to personnel policies and procedures, grievance protocols, etc.
- The Board also assesses its own performance. Every three or five years, the board should take out some time from their usual work and review their own performance.
What Makes a Good Board Member?
When choosing a board member or compiling a board, ask yourself the following:
- Does the prospective candidate have enough time for attending meetings and representing the organization in various forums?
- Does he or she believe in the cause of the organization?
- Does he or she understand and agree to accept the legal liability for the activities happening in the organization?
- Does he or she come from a relatively varied field of expertise compared to the other board members? This diversity helps in decision making in different areas.
Apart from the above, the candidate should also be able to read and understand basic financial reports like balance sheets, budgets and P&L statements. They should also not expect any form of remuneration except for the feeling of contributing to the community. For more resources, check out Bridgespan and Idealist.