How well do you know your nonprofit board of directors and the roles they serve? Find out everything you need to know with this guide to the nonprofit board.
There’s a lot at stake when it comes to running a nonprofit. You’re most likely trying to raise awareness for issues that doesn’t get the attention it deserves. On top of that, you’re also trying to make the world a better place by providing services to people in need. And let’s not forget that there are a lot of people — from employees to communities — counting on your nonprofit being well-organized and well-run.
That’s where your nonprofit board of directors comes in. A nonprofit board is responsible for important business decisions that can make or break your organization. Board members guide the decisions being made and ensure your nonprofit is following applicable laws, internal guidelines, and your mission statement.
In the best of times, very little attention is paid to the board of directors. When your nonprofit is operating smoothly, the focus is on what matters: fundraising, carrying out the mission, and the hard work you and everyone else put into everything you do.
But that changes when a nonprofit needs to be held accountable. Whether its due to employee dysfunction or CEO scandals, when things go wrong at a nonprofit, it’s the board that’s suddenly thrust into the spotlight.
If your nonprofit is going to succeed, it needs a strong organizational structure. That can only happen if your board has what it takes to provide efficient oversight and governance.
Read on to learn more about the nonprofit board, their responsibilities, and what it takes to be a successful board member.
Nonprofit Board Positions Explained
When it comes to the number of nonprofit board positions, there’s no universal standard. The size is mostly dependent upon the needs of the organization. Bylaws will determine the number of members and the length of time they can serve.
For newer nonprofits, appointing board members can be as easy as naming them in the articles of incorporation when applying to become a nonprofit. But from then on, it becomes a more formal process. Usually, a nominating committee made up of board members will seek out and evaluate candidates to be recommended to the full board of directors. Then the board will vote to determine its new members.
The IRS prefers boards to have at least three people serving as officers. But while the federal government only makes requests in this matter, state laws will have their own requirements. At the very least, most states will require a president, secretary, and treasurer.
The president is the executive officer who supervises the board and its many responsibilities. This is the officer that acts as a liaison between the board and the nonprofit’s CEO and staff, helping to ensure that the other board members and the CEO are fulfilling their duties. In addition, the president runs board meetings and appoints committees.
This is the officer that is responsible for preserving and protecting all official records of a nonprofit. The secretary’s primary responsibilities include recording the minutes and roll call, helping plan and maintain the board’s agenda throughout the year, maintaining membership lists and contact information, and sending out notices.
As the financial officer of the nonprofit, the treasurer is responsible for maintaining timely and accurate accounting records for the organization. This involves preparing the financial reports, which include budgets, profit-and-loss statements, balance sheets, and cash flow statement. In addition to maintaining a bank account and managing cash flow, the treasurer informs the board of the nonprofit’s financial condition and helps set the financial policies that govern a nonprofit.
Other Board Members
Depending on the size and scope of your nonprofit, you may have more board members. These members don’t have the same responsibilities or powers as the above positions, but they are still a vital asset to nonprofits. Beyond their individual right to vote on matters brought before the board, they also help fill committee positions.
Fiduciary Duties of a Nonprofit Board of Directors
Nonprofit board members are known as fiduciaries (or trustees) who take an active role in governing the affairs of a nonprofit. As fiduciaries, they are bound by law to ensure a nonprofit is conducting business fairly and legally. Three fundamental duties meant to ensure they are faithfully executing their responsibilities are duty of care, duty of loyalty, and duty of obedience.
Duty of Care
The board has a responsibility to give reasonable and prudent attention to the governing of their nonprofit. This means being well informed and actively participating in the decision-making process. In addition to attending meetings and reading reports, the board oversees and monitors the nonprofit’s activities. This ensures the organization’s assets are protected and the mission is constantly being advanced.
Duty of Loyalty
This responsibility requires the board to act in the interests of the charity and avoid conflicts of interest. The decisions the board members make must be in the best interests of the nonprofit and not made for personal gain. Usually, members of the board are required to disclose connections with individuals and groups associated with the nonprofit. In addition, board members may be required to abstain from discussions or votes on matters that involve any conflicts of interest.
Duty of Obedience
The board will adhere to the rules and procedures that govern the organization. They must be aware of state and federal laws to ensure compliance. They must also maintain public trust by ensuring the organization is well managed and funds are used appropriately.
Other Nonprofit Board Responsibilities
In addition to their fiduciary responsibilities, board members take on a number of other tasks. The main focus is on governance, which encompasses strategy, oversight, and accountability. This can include:
- Hiring and oversight
- Approving the budget
- Ensuring adequate resources
- Ensuring transparency and integrity
- Public relations
- Providing support
Nonprofit Governance Models
It’s important for the board to determine how responsibility and authority are delegated in a nonprofit. That means deciding on the best structure, or governance model, for an organization. A good governance model helps determine how decisions are made and who is to be held accountable. There are a lot of options when it comes to how a board will govern. Each nonprofit will put its own systems in place to help guide them along on their mission.
Here are five of the most common nonprofit governance models:
The Advisory Board Model
Members of an advisory board are usually people with a particular set of skills. They use those skills to assist and advise the nonprofit’s CEO. A nonprofit that follows this model can have one or multiple advisory boards helping to govern an organization.
The Patron Model
This model is similar to the advisory board model. The board has little to do with decision making and instead focuses on fundraising. Board members are usually affluent and well-connected individuals who donate their own money and use their influence to solicit donations from their network.
The Cooperative Governance Model
This type of model is often seen as the most democratic. With the cooperative governance model, there is no CEO or hierarchy. Board members share all responsibilities and have an equal say in matters.
The Policy Board Model
With this model, accountability rests with the CEO. The board sets the stage by establishing the policies and guiding principles, but the responsibility and authority to carry out the nonprofit’s mission rests with the CEO.
The Management Team Model
This is a popular model for nonprofits. Instead of hiring people to manage administrative duties like human resources, financing, and fundraising, the board splits up into different committees to handle these responsibilities.
How to Be a Successful Nonprofit Board Member
The success of your nonprofit depends on a number of factors, including what each board member brings with them to the table.
For a nonprofit to grow and carry out its mission, it’s going to need people at the top of the organization who embody certain traits. These will be characteristics that have helped them to succeed as individuals in business or life. They’re the qualities that drive them to want to make the world a better place. When your board members have these necessary traits of success, your organization thrives.
Here are six essential qualities your nonprofit board should have:
Passion: A strong board will be full of members that care deeply and are excited to volunteer and work hard for your nonprofit. Each member of your board should share the organization’s vision and have the same sense of urgency to take action.
Commitment: In order to remain attentive and engaged with the work involved, board members have to be eager and ready to devote time, energy, and resources to your nonprofit’s mission.
Knowledge: Passion and commitment are great but not enough to qualify people for an important role in your organization. Your board members should have relevant experience to match the position they are filling. From strong donor connections to financial expertise, the right board member will have knowledge and experience that that can help drive your organization forward.
Communication skills: An effective board will need strong communication skills. This goes beyond just knowing how to talk to people. Board members will need to know how to listen proactively and with empathy. They’ll need to know how to be a voice for great ideas and how to give constructive feedback.
Detail-oriented: Details matter. Detail-oriented people are organized and highly efficient. This is important because you want board members who can see and understand all the little pieces that make up the overall big picture of your nonprofit and its mission.
Diversity: Does your nonprofit board reflect the diversity of your community? Or does it fall into the nondiverse trap that a majority of nonprofits fail to avoid? If your board fails to represent women, people of color, or different socioeconomic backgrounds, they’re failing to proactively show that your organization is one of inclusiveness. They’re also missing out on the different perspectives that can help a nonprofit to thrive. With a diverse board, your nonprofit has a better chance of avoiding the kind of nearsightedness and group-think that can sink an organization.
Leverage the power of your board to boost the social impact of the organization.
With all the challenges a nonprofit will face, it’s important to not make decisions that will make life harder and threaten your chances of succeeding. One of the best decisions your organization can make is ensuring you have a strong and effective board of directors.
A nonprofit’s success rests on the ability to create and follow through on a strategy that aligns with its mission. And that’s why it’s important for every member of your board to be up to the challenge.