Boards of directors are extremely important to the success of every nonprofit organization. The board has the legal and ethical responsibility to govern the organization, set future strategy, define impact, hire leadership, and ensure resources are in place to meet the mission.
Done right, a board of directors can make all of the difference in an organization – but only if everyone involved respects the role it plays, understands the work that’s expected of it, and develops the relationships needed to build an effective governing body.
Below, find a range of ready-to-use resources for understanding, managing, and improving your board and governance processes. You can also reach out to GCN’s Nonprofit Consulting Group for further support and custom solutions.
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Roles & Responsibilities
Boards have three topline legal responsibilities:
- Duty of Care: Boards must make the right decisions for the organization. It is their responsibility to make decisions that support the organization’s mission, ensure its sustainability, and make sure there is the wise use of all assets of the organization.
- Duty of Loyalty: The board must be loyal to the mission and to the organization, putting the organization first when they are in their board role. That includes avoiding all conflicts of interest in accordance with a clear conflict- of-interest policy and set of standards.
- Duty of Obedience: Boards and board members are required to follow the bylaws of the organization and any other legal documents, policies, and procedures approved or established by the board, IRS, and state nonprofit laws.
Learn more about each, and the rest of the board’s responsibilities, with the links below.
Legal Overview
The board of a nonprofit is responsible for governing the organization, and has defined legal responsibilities under federal and state laws. Among the legal considerations that must be addressed are incorporation, registering to solicit donations from the public, and fulfilling the requirements for obtaining and retaining tax-exempt status.
Recruiting & Onboarding
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Recruitment and onboarding of new board members is one of the most important functions of the board. Usually managed by the Governance Committee or a Nominating Committee, recruitment and onboarding is a process that must be standardized, including each of the following.
- Board needs index: Define your goals and the skills and attributes you need to achieve them, then create an index of the qualities your board members possess.
- Committee creation: A Governance or Nominating Committee should be established to focus on recruitment. Recruitment activities should happen either continuously or on a regularly recurring basis.
- Search and cultivation: Prospects can (and should) be identified at any time, based on who board members encounter or observe in their communities. Efforts to engage prospects should be carefully organized: Be sure to designate a point-person for making initial and ongoing contact, and invite prospects into the work of the organization through events, site tours, or casual get-togethers with board members.
- Invitation: Successful cultivation should lead to an understanding that the prospect in question is willing to be considered for the board. Following a positive board vote on the prospect, an official invitation can be extended.
- Orientation: Every new board member must be fully informed of the board’s operational procedures and expectations for board service generally, as well as their particular role.
Don’t forget that the nonprofit’s chief executive should be available to assist with search and cultivation efforts, and must take an active role in welcoming new board members as part of onboarding.
- Board Recruitment Process Outline Template
- Right from the Start: What Your Nonprofit Board Needs in Three Easy Tables
- Strategic Needs Table
- Current Board Inventory Table
- Recruit Attributes Table
- Taking Action on Board Diversity: Five Questions to Get You Started
- Board Member Application Sample
- Board Member Job Description Sample
- Board Orientation Checklist Template
- Board Handbook Contents Template
- Board Engagement Form Template
- Conflict of Interest Statement Template
Fundraising
Fundraising has become an important role for the board as nonprofits move to different types of fundraising models. In addition to making a personal contribution, that can mean everything from participating in fundraising events to hosting them; mounting a social-media-powered peer-to-peer fundraising campaign; using the matching gift program of one’s company; introducing people in one’s network to the executive director; or presenting at a civic club or place of worship.
Financial Oversight
Financial oversight is one of the major responsibilities of a board of directors and part of the legal responsibilities of a board (in particular, the Duty of Care). As directors of a public charity, the board must ensure that money is obtained and used as required by legal and ethical standards. As stewards of all donations and contributions, board members are responsible for all financial matters and action taken. To accomplish this, the board should be receiving financial statements, cash flow projections, and budget comparisons on a regular basis.
Committees & Structure
All boards need structure in order to handle the work required of them in an efficient, organized, and productive fashion. For many boards, that means organizing one or more committees to tackle specific tasks, such as these common “standing” committees for regular or ongoing activities:
- Finance Committee, in charge of financial oversight (though this may be split among a separate Audit Committee and/or an Investment Committee
- Executive Committee, often for larger boards that may need to make decisions at times when the full board cannot be assembled
- Fundraising or Development Committee, focused on assisting the chief executive and development staff in setting fundraising plans
- Governance Committee, covering board member recruitment and board engagement
For all boards, structure is a vital component of board meetings: It’s impossible to run a board effectively without setting formal policies and standards for meetings, including the way an agenda is set and communicated, a code of conduct for participants, a cadence of topics to be tackled over the course of a year, and more.
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Board Leadership
The board is headed by a board chair, who is tasked with a range of leadership responsibilities. This individual should know, going in, that this role comes with a significantly greater commitment of time and effort than a standard board member position, and that it requires working closely with the organization’s chief executive as well as the board itself. This role may even require additional training or other professional development commitments, depending on the chair’s existing skill set as well as the particular challenges or opportunities facing the nonprofit.
Board Engagement
Board engagement is much more than just coming to meetings or sending a contribution: It is working passionately on behalf of the nonprofit. Board engagement is being personally invested in the organization, acting as an ambassador, and working collaboratively with the executive director on strategy, fundraising, board development, and other activities.
Diversity, Equity & Inclusion
For several critical reasons, the practice of diversity, equity, and inclusion (DEI) is a must for every nonprofit board. As stewards of the mission, a board of directors should embody the organization’s commitment to achieving real and lasting change – and in every case, that requires challenging the status quo that has left so many groups outside the structures of power. As a deliberative body responsible for making the best possible decisions with limited resources, the board must be able to draw on a varied range of talents, knowledge, experiences, and understanding. As champions of their community, the board must reflect the full breadth of their constituents, partners, and other stakeholders. This means taking DEI seriously in terms of the board’s makeup, policies, and work.
Board Assessment
To ensure the board is meeting its obligations, and course-correct where needed, it’s important to evaluate the board’s performance regularly. This often takes the form of an annual board assessment, accounting for the overall performance of the board as well as individual board members. This process is generally led by the Board Chair, often in association with the chief executive.
It’s best practice to give each board member a voice in the assessment process, especially regarding individual assessments. As such, each board member should be required to fill out a self-assessment, where they have the opportunity to ask for assistance in carrying out their commitments. It’s important to note that individual assessments should be based on a set of commitments that have been agreed to ahead of time and documented in a Board Member Profile.
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