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Overview
The Role and Responsibilities of Nonprofit Boards
1. Introduction: The Legal Framework
Nonprofit organizations are legally mandated to have a board of directors, and these boards operate under specific legal duties. The core duties encompass the duty of care, the duty of loyalty, and the duty of obedience. Each of these responsibilities is essential for effective nonprofit governance.
2. Core Duties of Board Members:
- Duty of Care: Board members are required to exercise "reasonable care" when making decisions on behalf of the nonprofit. This entails prudent and diligent decision-making.
- Duty of Loyalty (Fiduciary Duty): Board members must prioritize the nonprofit's interests over their personal gain, ensuring that the mission of the organization is advanced.
- Duty of Obedience: The board is responsible for ensuring compliance with all applicable laws, regulations, the organization's constitution, and bylaws.
3. Building a Diverse and Committed Board:
- To assemble an effective board, it is advantageous to recruit members with diverse skills and ethnic backgrounds.
- Board members should be individuals who are passionate about the mission, willing to dedicate their time, and possess community connections.
- All board members should complete a Conflict-of-Interest form to disclose any potential conflicts, thereby preventing personal or professional gain from the nonprofit's work.
4. Roles and Responsibilities of the Board:
- The board plays a pivotal legal role in ensuring that the nonprofit effectively fulfills its public service mission.
- The board is involved in various areas, including policy approval, strategic planning, annual budgeting, financial procedures, risk management, compensation setting, executive director's performance appraisal, and succession planning.
- While the executive director oversees program operations and daily decisions, the board's duty is to establish policies that guide the executive director.
- Board members vote to approve or disapprove programs and budgets, thereby directing the organization's work and ensuring mission alignment.
- All boards have different cultures, decision-making approaches, etc. Before joining a board, understand their culture and expectations. Find out what they need from you to be successful.
5. Board Member Involvement:
- In emerging nonprofits with limited funding, board members often actively participate in executing the organization's work.
- When the board engages directly in program activities, members serve as volunteers rather than merely as board members.
6. Recruiting an Effective Board:
- When recruiting the initial board of directors, seek individuals who share the mission's passion, are willing to contribute their time, possess community connections, and offer diversity in age, gender, skills, race, and experience.
- Many states stipulate a minimum number of board members, typically one to three, with an odd number being preferable to avoid tie votes. Document the number of board members and consider a flexible range in the organization's bylaws.
- Board terms typically span two to three years, with opportunities for re-election. Term length and the number of re-elections should be documented in the bylaws. Staggered terms help maintain continuity within the board.
7. Commitment and Financial Support:
- Board members should be willing to contribute financially and assist in networking to secure financial support.
- Attendance at meetings is vital for effective board contribution. It is advisable to document board expectations in a handbook to prevent misunderstandings and facilitate justifications for board member dismissal if necessary.
8. Board Handbook Contents:
- The board handbook should include:
- Organization's constitution and bylaws
- Board member role descriptions and committee descriptions
- Board roster with service dates and contact information.
- Organization documentation (mission, vision, values, strategic plans, program details, fundraising plans, annual budget, etc.)
- Conflict of Interest form
- Annual meeting schedule
9. Evolving Beyond the First Board:
- Engage the board by providing necessary knowledge and orientation regarding board responsibilities.
- As your nonprofit matures, assess the existing board's skill set, identify additional needed skills, and consider the community connections of potential members.
- The new board's role may shift from actively participating in tasks to setting policies or developing long-range plans.
- Form a nominating or recruiting committee, usually comprised of a few existing board members, to identify and evaluate new potential members.
- Offer board training for new members covering various aspects, including the mission, programs, financials, bylaws, fundraising, committees, and executive director hiring and evaluation.
10. Structuring the Board:
- Typically, nonprofit boards include officers such as president, vice president, secretary, and treasurer.
- The number of officers can vary, but initially, a manageable number is recommended.
- While Robert's Rules of Order are beneficial for large meetings, they are not necessary for smaller board meetings.
- Consider establishing standing committees or ad hoc committees to address specific needs or complex issues.
11. Board Meeting Procedures:
- The board president typically collaborates with the executive director to set the meeting agenda.
- Distribute the agenda at least one week in advance to remind members of the meeting and allow them time to review materials.
- A standard agenda includes welcoming remarks, approval of the agenda, approval of previous meeting minutes, financial updates, executive director's program report, committee reports, new business items, and closing remarks.
- For small to mid-sized nonprofits, ideally meetings should not exceed two hours and only on rare occasions exceed three hours.
- Conclude meetings by reminding the board of upcoming meeting dates.
12. Effective Documentation:
- Meeting minutes should be diligently recorded and sent out as a draft shortly after the meeting, serving as a reminder of tasks assigned to individuals.
Leader’s Wisdom
Building an Effective Board
1. Thoughtful Board Member Selection:
- Screening Process: Choose board members wisely by carefully evaluating their qualifications and commitment. Use committees for short-term projects and invite people who do not want long-term board positions. This may be a testing ground for both the individual and the board.
- Avoid Warm Bodies: Don't settle for just any available individual; prioritize candidates who align with the organization's mission.
- Diversity of Perspectives: Seek individuals who bring diverse backgrounds and perspectives to the board to avoid groupthink.
- Startup Board Structure: For new organizations, consider a board of three key roles: founder, finance expert, and another skilled leader.
- Training and Legal Responsibilities: Ensure that board members understand their roles and legal responsibilities through proper training.
2. Succession Planning:
- Executive Director and Chair Roles: Develop succession plans for both the Executive Director and Board Chair positions to ensure continuity of leadership.
- Gradual Transition: Transition from a working board (hands-on) to a governance board (strategic oversight) as the organization grows.
3. Board's Role in Accountability:
- Holding Leadership Accountable: Board members should ask challenging questions and hold the Executive Director accountable for results.
- Vetting New Initiatives: Act as a sounding board to vet new ideas and programs, ensuring they align with the organization's mission.
- Monitoring Results: Actively monitor organizational performance through tools like a dashboard.
4. Establishing Board Culture:
- Resource Guides for Board Members: Provide resources to the Board Members to empower them as advocates, network builders, and financial supporters.
- Clear Expectations: Create board job descriptions with high expectations, valuing expertise and commitment.
- 10-10-10 Commitment: For a new nonprofit that cannot hire staff, encourage board members to commitment to 10 hours of volunteering per month, 10 introductions to potential donors per year, and a $10k annual fundraising target. This is an example to spur thinking on what the right ask might be for your board members.
5. Effective Board Meetings:
- Rhythm of Work: Use board meetings to rise above daily tasks, reflect on the big picture, and make course corrections.
- Training for Worshipful Service: Train board members to see their roles as acts of Christian service.
- Meeting Frequency: Suggest 4-6 meetings per year with one being a day-long planning retreat.
6. Diversify and Prioritize Skills:
- Skills-Based Selection: Look for board members based on the skills needed for the organization's growth rather than relying solely on personal connections.
Time for Selection: Take your time and prioritize skills over familiarity.
Resources
Websites
- National Council of Nonprofits – Board members are the fiduciaries who steer the organization toward a sustainable future by adopting sound, ethical, and legal governance, and financial management policies, as well as by making sure the nonprofit has adequate resources to advance its mission. https://www.councilofnonprofits.org/running-nonprofit/governance-leadership/board-roles-and-responsibilities
- National Council of Nonprofits – Just as for any corporation, the board of directors of a nonprofit has three primary legal duties known as the “duty of care,” “duty of loyalty,” and “duty of obedience.”
- Duty of Care: Take care of the nonprofit by ensuring prudent use of all assets, including facility, people, and good will;
- Duty of Loyalty: Ensure that the nonprofit's activities and transactions are, first and foremost, advancing its mission; Recognize and disclose conflicts of interest; Make decisions that are in the best interest of the nonprofit corporation; not in the best interest of the individual board member (or any other individual or for-profit entity).
- Duty of Obedience: Ensure that the nonprofit obeys applicable laws and regulations; follows its own bylaws; and that the nonprofit adheres to its stated corporate purposes/mission.
- BoardSource is the recognized leader in nonprofit board leadership research, leadership, and support. They provide leaders with an extensive range of tools, resources, and research data to increase board effectiveness and strengthen organizational impact and serve as the national voice for inspired and effective board leadership.
- The Board-Staff Partnership
- Roles & Responsibilities
- Oversight & Accountability
- Strategy & Planning
- Fundraising
- Advocacy & Ambassadorship
- Structure, Committees, & Meetings
- Board Composition & Recruitment
- Orientation & Education
- Culture & Dynamics
- Executive Transition
- Executive Evaluation & Compensation
- Assessing Board Performance
https://boardsource.org/fundamental-topics-of-nonprofit-board-service/
- BoardBuild provides board training to prepare quality board members so they can make a significant difference serving a nonprofit. The BoardBuild Essentials training has 6 modules covering 20 topics, and it takes around 3.5 hours to complete. The website also matches trained board members to nonprofit who need a more diverse board. https://www.boardbuild.org/
- Board Effect has an article and downloadable guild on “4 Steps to Nonprofit Board Success.” https://www.boardeffect.com/board-skills-audit-guide/
- The Nonprofit Association of Oregon has several articles on governance including:
1. Board Member Service & Governance Policies
2. Board & ED Roles
3. Board Job Descriptions & Committees
4. Board Communication & Decision Making
5. Board Meetings
6. Board Meetings - Virtual
7. Board Performance & Assessment
8. Board Recruitment & Orientation
9. Board Diversity
10. Board Voting; Adding/Removing Directors
11. Board Member Conduct & Ethics
https://nonprofitoregon.org/resource-library/
- A YouTube vide on how “The Age of Board Members is Over.” https://www.youtube.com/watch?v=PJkZ67jVDlo
- Minnesota Council of Nonprofits has an article on “Principles for Board Governance.” https://www.minnesotanonprofits.org/resources-tools/principles-practices-for-nonprofit-excellence/governance
- The Nonprofit Leadership Lab has an article on “Let’s Build the Nonprofit Board of Your Dreams!” They offer a free class multiple times during the year. https://nonprofitleadershiplab.com/free/fixmyboard/
Books
- The CEO and the Board: The Art of Nonprofit Governance as a Competitive Advantage by Kurt Senske
- Maximizing Board Effectiveness: A Practical Guide for Effective Governance by James C. Galvin
- Organizing for Ministry and Mission: Options for Church Structure by David J. Peter
- The Little Book of Boards by Erik Hanberg
- Called to Serve: Creating and Nurturing the Effective Volunteer Board by Max De Pree.
- Boards That Make a Difference: A New Design for Leadership in Nonprofit and Public Organizations by John Carver
- Winning on Purpose: How to Organize Congregations to Succeed in Their Mission by John Edmund Kaiser
Download Samples
Board Effect’s - Robert’s Rules of Order Bylaws Template
Board of Directors Job Description
Board of Directors Member – Memorandum of Understanding
Board of Directors Annual Calendar
Board of Directors Meeting Agenda
Criteria for Recruiting Effective Nonprofit Board Members
Board Sources’ list of “Essential Ingredients of Good Governance.”
Nonprofit Board Participant Training
Nonprofit Association of Oregon’s “Board Meeting – Effectiveness Assessment.”
Nonprofit Association of Oregon’s “Board Member Self-Assessment”
Conflict of Interest – Disclosure Form
Forsmallnonprofits.com prepared a cheat sheet on Robert’s Rules of Order.
Authenticity Consulting, LLC prepared a list of “Board Manual Contents.”
James C. Galvin created a church governance “Decision Making Grid.”
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Phase 3
Securing Funds and Paperwork
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Chapter 7
Fundraising
Contributions from individuals stem from various motives, including a passion for your mission, positive public relations, personal significance, or a desire for a tax write-off...
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Chapter 7
Build Effective Fundraising Strategies
Build Effective Fundraising Strategies
Contributions from individuals stem from various motives, including a passion for your mission, positive public relations, personal significance, or a desire for a tax write-off...
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Chapter 8
Steps to Launching a New Nonprofit
When launching a new nonprofit, various factors such as legal, financial, and governance considerations must be carefully addressed...
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Chapter 8
Steps To Launch a New Nonprofit
Steps To Launch a New Nonprofit
When launching a new nonprofit, various factors such as legal, financial, and governance considerations must be carefully addressed...
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Chapter 9
Communications, Marketing & Social Media
Effective communication is essential to motivate, inform, and encourage your stakeholders – whether they be staff members, funders, the general public...
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Communications & Social Media
Communications & Social Media
Effective communication is essential to motivate, inform, and encourage your stakeholders – whether they be staff members, funders, the general public...
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Chapter 10
Governance & Board Recruitment/Development
Nonprofit organizations are legally mandated to have a board of directors, and these boards operate under specific legal duties. The core duties encompass...
Read MoreChapter 10
Governance & Board Recruitment/Dev
Governance & Board Recruitment/Dev
Nonprofit organizations are legally mandated to have a board of directors, and these boards operate under specific legal duties. The core duties encompass...
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Chapter 11
Legal Protections & Insurance
A foundational step in reducing liability for individuals working or volunteering at a nonprofit is structuring the organization as a corporation. This strategic move...
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Legal Protections & Insurance
Legal Protections & Insurance
A foundational step in reducing liability for individuals working or volunteering at a nonprofit is structuring the organization as a corporation. This strategic move...
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Chapter 12
Policies & Procedures
Policies and procedures form the core framework of a well-functioning organization, offering structure and guaranteeing uniformity...
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Policies & Procedures – Compliance & Quality
Policies & Procedures – Compliance & Quality
Policies and procedures form the core framework of a well-functioning organization, offering structure and guaranteeing uniformity...
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