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Nonprofit Boards: 10 Basic Responsibilities of Nonprofit Board Members and Directors for Nonprofits

Nonprofit Boards: 10 Basic Responsibilities of Nonprofit Board Members and Directors for Nonprofits

Every organization, irrespective of its goals or nonprofit status, needs oversight and clear direction. Typically, this guidance comes from the board members—a diverse group with various backgrounds, united by a common desire to witness the organization succeed. Nonprofits have traditionally opted for well-connected and affluent individuals for their boards, believing that their connections and financial resources would attract greater funding.

However, many nonprofits have recently recognized the importance of identifying individuals who bring more than just connections. It is crucial to have board members composed of individuals who genuinely care about the success of the company.

Choosing a member based solely on their network and ability to attract significant contributions is inadequate. Issues such as, "Does this board member truly care about the organization's success?" are frequently disregarded, as well as "Will they actively contribute to governing the organization?" The trustworthiness of a board member's choices is also quite important.

Nonprofit Boards: Introduction to Nonprofit Board Member Responsibilities 

A nonprofit board is essentially a group of individuals deeply passionate about the organization's mission, steering its long-term journey. These board members take on a fiduciary responsibility, demonstrating their dedication to making decisions that genuinely prioritize the best interests of their nonprofit.

While the intricate details of day-to-day operations predominantly lie within the domain of the lead executive(s), the board plays a crucial role in ensuring that the nonprofit aligns itself comprehensively—both legally and ethically, and in terms of financial and governance matters.

Beyond the paperwork, the board also engages in the world of resources, working to secure everything the nonprofit needs to bring its mission to life. And yes, that includes rolling up their sleeves for some fundraising. Here's the kicker: unless you're talking about the big players, most board members are volunteers.

Now, when it comes to the fundamental success (or oops moments) of the organization, the nonprofit board is the linchpin. In the next section, we're going to zoom in on the ten key areas they keep a close eye on, the kind of stuff that makes or breaks the nonprofit game.

Duty of Care: Ensuring Prudent Use of Assets

The principle of Duty of Care delineates the requisite level of competence and discernment expected from board members. It is conventionally articulated as the obligation to exercise a degree of prudence equivalent to that which an ordinary, judicious person would employ in a comparable position and under analogous circumstances.

Within this framework, a "reasonably prudent" individual, serving as a custodian for the company, would exhibit diligence in business decision-making. Consequently, a fiduciary assumes the responsibility of thorough inquiry, posing relevant queries, and ensuring a comprehensive understanding of matters germane to their decisions. In practical terms, adherence to this duty entails:

Demonstrating Commitment: Developing a genuine interest in and comprehensive knowledge of the company's mission, objectives, and strategic plans.

Preparation for Meetings: Engaging in meticulous pre-meeting preparations, including a review of agendas, reports, and pertinent documentation.

Active Participation: Contributing substantively and attentively during board and committee meetings.

Vigilance to Issues: Maintaining heightened awareness of potential concerns and challenges.

Inquisitiveness for Information: Seeking additional insights from relevant experts, whether managerial, financial, or legal, before arriving at decisions.

Investigative Prudence: Proactively examining any irregularities or breaches in the organizational governance structure.

Duty of Loyalty: Aligning with the Nonprofit's Mission 

The Duty of Loyalty is like keeping a close watch on how things roll financially for board members and tackling any conflicts that might show up. When a board member is in the spotlight making decisions that impact the organization, they've got to be fully committed to the organization's cause. It's not just about picking choices for the company; they can't use any insider info they get for their benefit. No way, their role is to act in the organization's best interest.

Things can get complicated, especially when directors find themselves involved in both sides of an ESOP transaction. So, how do they stick to this Duty of Loyalty?

Well, every board member has to follow the guidelines set in the organization's policy on conflicts of interest- this involves being upfront about any possible conflicts, so it doesn't come off as anything suspicious. This way, the governance committee or board gets the opportunity to really dig into the situation, address any potential issues, and sort things out before reaching any decisions.

And if a conflict of interest does show up, the director involved has to step back and stay out of the discussion and decision-making.

Duty of Obedience: Compliance with Laws and Regulations 

The board of directors is responsible for ensuring the nonprofit complies with relevant laws and regulations, avoiding any illegal or unauthorized activities. The Duty of Obedience mandates that board members align their actions with the organization's mission, governing documents (such as articles of incorporation, bylaws, and policies), and adhere to all applicable laws and regulations.

The role of Duty of Obedience:

  • Verify that the organization fulfills its objectives and refrains from unauthorized activities, remaining faithful to the mission.
  • Confirm that the organization's resources are allocated to its mission.
  • Guarantee that the organization adheres to all contracts, relevant rules, regulations, statutes, and laws.

Financial Oversight and Management 

Board members play a crucial role as fiduciaries, closely overseeing the nonprofit's financial aspects. Their responsibilities include reviewing financial reports, assessing policies (like cash handling or gift acceptance policies), and approving budgets. They must consider the organization's resource needs and be accountable to donors, beneficiaries, and the public.

Whether you're a volunteer on a nonprofit board or leading a nonprofit and training the board (commonly known as "managing up," which can be challenging), it's vital to thoroughly explain and ensure everyone understands these duties when it comes to nonprofits.

Here are two practical ideas for nonprofits: Firstly, consider conducting an annual board orientation, dedicating the entire board meeting to an outsider explaining and discussing the board's full legal and fiscal duties. Secondly, think about creating and sharing a comprehensive "job description" for board members, outlining board expectations and legal responsibilities in writing.

Strategic Planning and Policy Development 

It is widely acknowledged as a "best practice" that the boards play a crucial role in contemplating the organization's overall performance and future direction. Typically, it is recommended that this broad perspective is documented in a "Strategic Plan," serving as a guiding document for the organization's policy decisions. Given the practical constraints of time, finances, and personnel, organizations often cannot pursue every ideal initiative. Therefore, one of the critical questions arises: What should be the primary strategic objectives for the organization in the next two years across key operational areas?

Programs

  • Should there be any adjustments in the demographics of the individuals the organization serves?
  • What modifications are necessary for the scale and quality of programs or services provided to those individuals?
  • How many and what types of additional programs (beyond the existing ones) are required to uphold the mission?

Resources

  • What is the potential for increasing financial support from all sources to prioritize program initiatives?
  • What should be the organization’s resource development goals, and which of them are most feasible to implement?

Capacity Building

  • What changes are necessary in leadership development, staffing, volunteering, information technology, and other management systems to support program and resource development priorities? Which of these changes are the most essential?

Fundraising and Resource Development 

Wondered when we'd talk about this? Finally here! Fundraising roles is a big deal for the board. Rolling up sleeves, getting into the fundraising game—it's all about making sure your nonprofit stays financially healthy.

Here's the thing: it's good for the board to get into the nitty-gritty details here. The more they know about how your fundraising plans are going, the better advice they can give. Keeping everyone in the loop with regular updates is key.

But it's not just about getting hands-on with fundraising; the board should step up in building relationships with the big donors. Board members usually have some standing in the local scene, so they can use that to connect your organization with major donors who can really boost your finances. And hey, they should also put their money where their mouth is—being active donors to your organization, making sure your nonprofit is one of their top choices.

However, the board shouldn't lean too much on the big donors from their own circles. It might be tempting, especially if those donors are part of the board's social and professional networks, but spreading out your funding sources is the real deal for long-term sustainability.

Community Representation and Advocacy 

Given their volunteer status, each board member holds a certain level of credibility with the public that differs from the organization's staff. By sharing their profound passion and knowledge about the organization's mission, goals, and needs within the community, they broaden the likelihood of success.

Attendance at special events is expected from board members. This not only shows support to the broader community but is also crucial for garnering public support. It's challenging to rally support from the general public when those closest to the organization are not visibly backing it. Moreover, board members who proactively engage with other guests at events help convey information about the organization's programs and services.

The expectation of advocacy extends beyond personal networks to involve public relations. Whether being interviewed or interacting with the media, board members must champion your nonprofit's mission and portray the organization positively.

Your board members serve as frontline advocates for your cause. Spreading the word not only fosters the growth of your team but also amplifies visibility for all the impactful work the organization is undertaking. Ultimately, this will open up new doors and opportunities for your organization within the community.

Evaluating and Supporting the Executive Director 

In comparison to other obligations, the appointment of the executive director undeniably wields the most significant influence on the daily progress and efficiency of the organization. While input from other stakeholders, such as staff and major donors, may be considered, the ultimate decision regarding the hiring process rests with the board.

As the board embarks on this undertaking, there are several essential steps to be undertaken, extending from selection to evaluation, including:

Conduct a Thorough Organizational Assessment

Initiate this assessment by evaluating the organization's predominant strengths and weaknesses. Subsequently, identify specific traits and skills required by the new executive director to address these needs.

Nonprofit's Board Supervise the Selection Process

Board members must reach a consensus regarding the executive director's responsibilities. Subsequently, they should compose a detailed job description outlining the necessary skills and conduct a meticulous search to identify the most qualified candidate.

Perform an Annual Evaluation

The board committee should assess the executive director on an annual basis to ensure the fulfillment of their obligations. This annual evaluation should include both quantitative metrics (e.g., completion of fundraising goals) and qualitative metrics (e.g., leadership and problem-solving skills).

Determine Compensation

The board of directors is also tasked with establishing the executive director's salary and benefits based on prevailing market conditions. This compensation should be enticing enough to attract top talent without being excessive. To determine reasonable compensation, the board should review organizations of similar size in the same geographic location to gauge the remuneration offered to senior leaders.

Given the substantial responsibilities held by the executive director in the organization, including ensuring programmatic success, maintaining exceptional staff, and aligning efforts with long-term goals, your board committee members, being the group most directly involved with the executive director, are best positioned to select the ideal candidate and ensure adherence to commitments.

FAQs on Nonprofit Board Responsibilities 

Why should I join a nonprofit board?

When you join a nonprofit board it's a rewarding journey with great reasons, like:

Make a Real Impact: Board service lets you use your unique skills to make a significant difference. Whether it's strategic planning or financial expertise, your contribution enhances the nonprofit's ability to provide essential services.

Develop New Leadership Skills: Serving on a board is more than a role; it's a chance to grow as a leader. Gain invaluable skills recognized by top companies, shaping your professional journey.

Help Build a Business: Dive into areas like management and marketing, contributing to decisions that shape the nonprofit's growth. It's a unique opportunity to make a difference and develop new capabilities.

Expand Your Network: Board service is not just about the cause; it's also about connections. Forge new friendships and open new doors to potential opportunities.

What are the basic responsibilities of nonprofit board members?

The basic responsibilities of nonprofit board members are that they are legally obligated to fulfill the duty of care, the duty of loyalty, and the duty of obedience. As per established nonprofit corporation law principles, a nonprofit's board must adhere to specific standards of conduct and diligence while executing their responsibilities for the organization.

What qualities do nonprofits look for in board members?

The essential attributes nonprofits look for in a board member go far beyond professional background and academic qualifications. Although these elements hold significance, intangible qualities in a potential board member could prove more beneficial for your organization.

Desirable traits in an effective nonprofit board member encompass a genuine passion for the cause, eagerness, and a proactive approach to contributing in diverse ways, coupled with practical readiness and initiative.

What is the role of directors in nonprofit organizations?

The roles the executive director takes on are taking charge of and administering the organization, supervising its operations, finances, programs, staff, and volunteers. They play a crucial role in strategic planning, fundraising, and nurturing stakeholder relationships to accomplish the mission and objectives of the organization.

How is a meeting conducted for nonprofit board members?

When it comes to meetings with board members the board chair leads discussions, maintains order, and ensures an organized meeting according to parliamentary protocol. They facilitate board discussions without voting.

Steps in Running a Board Meeting:

  • Recognizing a Quorum: Ensuring enough board members attend for voting in the board meetings.
  • Calling the Meeting to Order: Officially opening the board meeting.
  • Approving Agenda and Minutes: Board members approve the agenda and prior meeting minutes.
  • Communication and Reports: Updates and recommendations from the executive director and committees.
  • Old/New/Other Business: Addressing old, new, and other items, facilitating discussions and decisions.
  • Closing the Meeting: The chair expresses gratitude, adjourns the meeting, and may follow up with the executive director for further discussions.

Efficient, well-run board meetings rely on a prepared agenda, adherence to protocol, and open discussions for organizational benefit. 

What are the duties, and what is the difference between the president, vice president, and executive director in a nonprofit organization?

In a nonprofit, think of the executive director as the organization's chief, working closely with the board to bring the mission to life. The president, acting as the top officer, partners with the team and takes on the responsibility to shape the mission, and lead board meetings. Meanwhile, the vice president is responsible for supporting these efforts. While the executive director is responsible for handling day-to-day operations, the president focuses on setting policies and signing contracts. 

How can the chair and the chief executive collaborate effectively?

Both the chair and the chief executive of the organization need to support, consult, and complement each other. They each have distinct responsibilities — the chief executive is responsible for operational activities, and the chair leads the board. Together, they share power in their joint pursuit to advance the organization's mission.

To make this happen, they must communicate openly and regularly. This partnership requires constant attention. Personalities may change, but the positions remain. Each partner needs to cultivate the working relationship. 

What is the role of a grant in nonprofits?

The role of grants, distinct from individual donations, are contributions from institutions used to cover administrative and program costs. Gift amounts vary based on the source, grant type, and purpose, ranging from a few hundred to millions.

Acquiring a grant differs from individual donations. Nonprofits submit written requests to foundations, corporations, government entities, or other grantors, outlining fund utilization and supporting data in the proposal.

Grants have the potential to drive significant structural initiatives, facilitating substantial societal influence that might otherwise be challenging for a nonprofit board. Moreover, securing one grant increases the likelihood of obtaining additional grants, as it boosts the credibility of your organization in the eyes of grantmakers.

What is BoardSource in the context of nonprofit boards?

BoardSource stands as the acknowledged authority in research, leadership, and support for the leadership of nonprofit board members. They offer resources aimed at increasing board effectiveness, strengthening organizational impact, and play a pivotal role as the national advocate for inspired, responsible, and effective board leadership.

Concluding Thoughts: Achieving Success with Your Nonprofit Board

Think of your board committee as the guiding force steering your mission toward a meaningful and sustainable future. Your directors shoulder numerous responsibilities of nonprofit boards and adhere to various regulations, embodying the age-old wisdom that with great power comes great responsibility!

By wholeheartedly embracing the nonprofit board member responsibilities detailed in this article, your board members will be better equipped to showcase effective organizational governance and gain a solid understanding of their boundaries. Additionally, maintaining open lines of communication, whether in person or through remote board management tools, is important for keeping board members informed about ongoing responsibilities.

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Anastasia-Alexandra Nenova

Born and raised in South Africa, Anastasia-Alexandra is a Bulgarian writer and fighter. When she isn't writing, she's busy training or competing in Judo for South Africa. She's passionate about Judo where she is a 2nd Dan, other martial arts and fitness overall. Her dream is to qualify for the Olympic Games in Judo, and she's doing her best to turn that dream into reality.

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