The first time you are asked to sit on the Board for a nonprofit organization, you’re first instinct may be to leap at the chance to serve, and accept as an automatic reaction to the flattery of having been considered. However, serving on the board of a nonprofit is not something to be taken lightly. Board members must pay attention, make the time to be informed, be willing to make hard decisions, and often must be able to write a big check. (More on that later.)
How should you respond when approached? What should you consider before making that decision and committing your time, energy, and often your own personal funds and reputation? As with any important decision, a prospective board member needs to familiarize him/herself with the organization and its current board, not merely rely upon their impressions of the personality of the board and assumptions as to how it functions. Not every board functions efficiently.
Determine the board’s personality and type of commitment
This will take some tact, but you need to discover who is on the current board, their skills, and experience. What you are looking for are peers who get along and have spheres of influence that complement your own. Not every nonprofit, whether well-established or new, will have board development and a good makeup. Ideally, there ought to be someone with strong financial skills to assist the board in meeting its fiduciary duties of financial oversight.
You know how you were asked, but how does the organization get new board members? Is it a diverse group, or is it close-knit? If everyone is a friend of the CEO, there will likely be troubles in making those hard decisions, gaining attendance at events, and reaching out to a broad base for fundraising.
Again, in an ideal world, what you should find is a nominating committee that tries to strike a balance of diverse skills that each board member contributes.
Find out whether board members have to be elected or approved by the organization's membership. Often, such politics can be a source of strife, where social dynamics of a large or small group can determine your experience once committed to participating.
You also ought to find out how long the board members have and are expected to serve. Discover the length of a board member’s term and if there are term limits. For new organizations, there will likely be an issue if a founder is involved. Such early years will have board members who have rolled up their own sleeves to carry out the mission of the organization. If you are one of those initial board members, ask yourself if you have the time and energy to commit? If you are one of the board members coming on shortly after that period, you may be entering at a difficult growth period where the board recognizes the need for new ideas, but may suffer the pains of having to actually follow the lead of new members. Then again, it’s not always easy to enter an established board. Members have a built-in dynamic of “this is how we do things” -- often willing to hear new ideas, but if they get implemented, like a new board, you better be prepared to roll up your own shirtsleeves and do it yourself.
Some boards have very long terms, such as five years. Can you be sure that you will be able to serve that long? If the term is very short, say two years, will you have time to make a difference?
Ask to see the by-laws. It’s important to know how you will be notified of how the board defines quorum, to put differently, just how many board members are needed to take action?
An organization's by-laws will have to specify how many board members there are (usually 6-12), and quorum is how many members must be present to do business and vote. Ask if the group has difficulty establishing quorum. Also be sure to check the by-laws as to how attendance is defined. Sometimes one must be physically present, while other groups could permit proxy or attending by phone or video conference.
Does the by-law provide that you must also be a member of a committee? This will mean you must commit not only to obligations as a board member, such as reviewing minutes, financials, supporting documentation such as fundraising plans and annual budgets, but also those obligations of the committee upon which you will serve. Common committees that many nonprofits have are fundraising, public relations, nominating, special event, and audit committees. Be sure to ask whether you will be assigned to the committee/s or if you have a choice in determining the one that most interests you and suits your skills and available time.
Where’s the money?
Just because the nonprofit is exempt from income tax, doesn’t mean it doesn’t need to meet its expenses, and to do so, it must have source/s of income. You can ask to see the budget, and minutes from the meeting where that budget was presented. You want to watch for sources of income and salaries of key personnel. Also watch for contingent liabilities which might indicate a pending law suit. Further, nonprofits must file an annual tax return, or Form 990, available to the public. You don’t want to commit to an organization that is insolvent. Be sure to ask to see the books and records, or at the very least, Form 990. If you are denied access to their Form 990, and they don’t fall under an exemption and don’t have to file one, then consider this an immediate reason to decline their kind invitation to join their board.
While looking over the financials, make sure that all taxes are paid. Just because the nonprofit is exempt from corporate taxes, does not mean no taxes are assessed. Sales, payroll, and unrelated business income are just a few types of taxes that you need to make sure the organization is current. This is important because if a nonprofit fails to pay its taxes, the IRS can impose harsh penalties. There may even be personal liability placed upon the board should the board fail to meet their obligations of oversight.
Sign the dotted line, who me?
Ask whether the board has Director and Officer insurance. This basically covers board members who have carried out their duties, but may be named in a suit. Examples include a sexual harassment suit, or perhaps the bookkeeper who absconds with those precious charitable funds you worked so hard to acquire. In the off-chance the nonprofit does not carry insurance, call the provider of your home owners insurance and ask if your volunteering as a board member for a nonprofit would be covered. If not, you may want to request whether or not they would underwrite a rider.
Where’s your checkbook?
If you believe in the mission, you will be asked to go beyond dedicating your time and skill to carrying it out. The bulk of fundraising happens with what professional fundraisers call “the big ask.” That won’t be done by the development director, but by members of the board, turning to their contact list of family, friends and colleagues. The most effective way to get those family, friends and colleagues to open their checkbooks is for you to have done so first. Pay attention to the funding sources when reviewing the nonprofits books, because very often, many of those funds were not raised $25 at a time. Be sure to look in the by-laws for a required minimum or simply ask if there an informal expectation that members donate at a certain level. Sometimes that amount can be in trade or in time, but usually this is not the case.
Congratulations Madame Board Member!
Although the board’s role is often described as “managing the affairs of the organization,” there is a fundamental problem: running a nonprofit is not the work of part-time volunteers. Your job as a board member is to make sure there is sufficient management. Therefore, one of the key decisions for a board is selecting the key staff, and in particular, the Executive Director. If the nonprofit is not mature or is so small that there is no staff, as mentioned above, be prepared to have to commit to carry out the policies that you set as a board member.
When going over the minutes, one of the things to look out for is whether the staff, or key volunteers are included in the meetings. Neither the top executive nor the staff should be excluded from setting policy.
There are two aspects of board governance: trustee and action
- Trustee: The first function of the board is to serve as a trustee and protect the public’s interest. Nonprofits receive preferential tax treatment because they provide a “public” service that would not otherwise be available without subsidy. However, since the public at large are not actual shareholders with a vote in selecting the board, the board’s job is be a fiduciary and represent the public’s interest.
- Action: It would be nice if all you need do as a board member is attend meetings and cast an informed vote. As discussed above, committee involvement to personal commitment on your part in a successful fundraising plan are just part of the action you must take. Here are some examples in carrying out your governance and helping responsibilities,
- hiring, and (if necessary) firing the top executive;
- delegating the organization’s management functions, including planning, organizing, staffing, directing, and controlling to the top executive;
- developing and approving strategic plans, including major commitments;
- assuring the continuity of the organization, making emergency decisions when management cannot perform, and stepping in when crisis endangers the programs or existence of the agency;
- maintaining the board as a healthy, well-organized governing body capable of helping the organization achieve success (i.e., progress toward fulfilling its purpose);
Board members must wear the formal, governance hat. It is both a legal obligation and a moral responsibility. The reality of most nonprofits is that board members also have to provide additional volunteer help if the organization is to succeed.
Committee: strategic planning, fundraising, and community relations to name just a few.
other areas where staff needs assistance, such as drafting annual reports, and creating strategic and fundraising plans.
Committees: Getting Boards to Function Well
As mentioned above, in addition to your responsibilities on the board, one thing board members do is attend committee meetings. Because large group meetings are not the best place to conduct in-depth problem solving and planning, most nonprofit boards develop a committee structure to handle much of its work. Based on what the board deems most important, it determines the number and kinds of committees it needs.
Committees are the workhorses of the board. So, if you’ve been lured by the promise of only monthly, bi-monthly, or even quarterly board meetings, you may end up with a much greater time commitment. Remember the adage, if you don’t want to accomplish anything, form a committee.
Understandably, committee members can focus their attention and energy on one or two organizational concerns, rather than on every problem and opportunity that comes along. You will want a strong committee structure in place, otherwise those board meetings will be intolerably long and loaded with detail.
Serving as a member of a Board of Directors of a nonprofit organization can be one of the most important, influential, and satisfying experiences of your life. Unfortunately, many people have unpleasant stories to tell about their experiences as board members, due to misconceptions about the role and functions of the Board of Directors.
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