Becoming a Nonprofit Board Member (Part 1)
You are a community-minded citizen who has just been asked to join the board of a local nonprofit organization that contributes in a significant way to the betterment of your city. You are pleased and honored – as you should be – by the invitation, but as you think about the situation, you begin to wonder to yourself what this board member business is all about. What do you need to know, and what do you need to do? Well, I am glad you asked.
The first thing you need to understand is that while being a member of a nonprofit board of directors is indeed an honor, it is also a job – and sometimes a difficult, time-consuming job. If the organization is well-governed, your fellow directors already recognize this. Your candidacy will have been vetted before the existing board of directors who have decided you have the knowledge, skills, abilities and personality to contribute in a positive way to the future of the organization.
The first question that might come to your mind is “What does the board do?” The short answer is that the board guides the strategic direction of the organization and is the keeper of the mission, vision and values of the organization. The board also oversees the performance of any chief executive hired to carry out the activities of the organization.
Like its counterparts in the for-profit arena, the board is responsible for representing the “owners” of the organization and ensuring that the organization meets the owner’s expectations of performance. The big difference is that the mission of your nonprofit is not to earn a financial return for the owners. Instead, the mission is to perform some positive service for the community.
Another major difference between nonprofit boards and their for-profit counterparts is that the ownership of the organization is not as clear as it is with the for-profits, whose owners are defined by the ownership of stock in the corporation. In the nonprofit world, your “owners” are community “stakeholders.” Stakeholders would include the membership of your organization (if applicable), your volunteers, the beneficiaries of your service, and the public in general. If your organization has been certified by the Internal Revenue Service as tax exempt under the terms of Section 501(c) of the IRS code, you are considered a public charity and any assets held by the organization are held in the public trust. The rights of your “owners” may be represented in your state by the Attorney General who speaks on behalf of the organization’s stakeholders with regard to the management of the organization.
So how does the board carry out this responsibility? A leading source of knowledge regarding the management of nonprofit organizations is BoardSource (a nonprofit organization dedicated to improving board governance). In their book, The Nonprofit Board Answer Book, BoardSource lists 10 basic responsibilities of the nonprofit board. These responsibilities are:
- Determine the organization’s mission and purpose.
- Select the chief executive.
- Provide proper financial oversight.
- Ensure adequate resources.
- Ensure legal and ethical integrity and maintain accountability.
- Ensure effective organizational planning.
- Recruit and orient new board members and assess board performance.
- Enhance the organization’s public standing.
- Determine, monitor, and strengthen the organization’s programs.
- Support the chief executive and assess his or her performance.
To this list I would add that boards can, and often do, assign other responsibilities to themselves if they deem it appropriate. Some of the other common responsibilities that boards assign themselves are risk management, fund raising, and investment management. You will want to learn what other responsibilities your board has assigned itself.
The most important thing to note is that nowhere in this list does it say that the board manages the operational details of the organization or runs the day-to-day operations of the organization. These functions are not within the purview of the board. The role of the board is governance, strategic direction and oversight. The operational management of the organization falls to either a professional staff or volunteers working under the guidance of the board.
If you are coming to the board from its operational ranks, you need to leave the operations world behind. Take with you your knowledge and experience in the organization, but you must resist the temptation to continue to try to manage the operational details – regardless of how much fun and how rewarding this aspect of organizational activity can be. Failure to do this can result in a serious distraction of the board from its governance mission.
To be sure, there may be instances where individual board members or groups of board members have to perform management or operational functions because of the size of the organization. When this occurs, it is important for the board member to remember that he or she is not performing as a board member when performing those duties. Instead, he or she is serving as a volunteer for the organization and performing operational responsibilities. This may entail the board member reporting to a staff executive or another volunteer for the performance of those duties.
As a new board member, you also need to clearly understand that you have legal responsibilities to the organization. Yes, legal responsibilities! These responsibilities can have significant personal ramifications for you if you fail to carry out your responsibilities in a reasonable and prudent way. Do not despair. In my next two columns, I will discuss these duties as well as the rights you have as a director and how you can avoid any problems associated with being a board member.