- Greg McRay, EA
- Board of Directors/Governance
Whenyou start a charitableorganization, one of the most important decisions you’ll makeis selectingyour board of directors.Your board is legally responsible for governance,fiduciary, and strategic oversight of your nonprofit corporation.This usually includes ratification of your initial bylaws, as well as overseeing budget management.The board has an obligation to the donating public for ensuring that the nonprofit stays on mission and operates effectively.
How to Choose Board Members
The most important question you should askwhenassessing board prospects is: does your prospective board member have a passion for the mission of yourorganization?If they’renotwilling to give their time, money, and resources, they’renota good fit.Board members should also have some business skills andbe willing(and able!) to help make financial decisions.It canbe temptingto seek wealthy or prestigious names to join your board, but if they arenotpeople of action and enthusiasm, they will be a detriment to theorganization.It should go without saying that board members should have integrity and value compliance and transparency.
It is also important to consider your board as a unit when identifying board prospects. Remember, family members and business associates cannot make up a majority of a public charity’s board. Another important consideration is the range of skills and experience that your board represents. Ideally, your board will represent a diversity of skills that will help support all areas of your nonprofit – fundraising, governance, and programs. Even on a private foundation board, which allows for much closer relationships, having a healthy representation of necessary talents is still vitally important.
IRS Requirements & Other Details
The IRS generally requires a minimum of three board members for every nonprofit, but doesnotdictate board term length.What is important to remember is that board service terms aren’t intended to be perpetual, and are typically one to five years. Service terms must be outlined in the nonprofit bylaws.New board members are typically nominated and given an up or down vote by existing board members in traditionalorganizations, and by stakeholder vote in nonprofits that operate via membership.
The IRS expects (and state law usually dictates) that a board of directors should meet a minimum ofoncea year, and best practices suggest four times a year.Duringthese meetings, the annual budgetis passed, andoperationaland strategic decisions requiring votesare discussed.It is important to remember that the board of directors is responsible for the governance of the nonprofit,notthe management.
Strategy & Governance
The board is tasked with setting the strategic direction. It should not be involved in the day-to-day management of the nonprofit. In small organizations, when it is typical for the Executive Director of the nonprofit to also occupy a board role, it’s especially important to mind this difference. This is the key difference between governance and management. Governance oversees operations, approves the annual budget, and sets strategic goals. Management, on the other hand, makes the day-to-day tactical decisions that help the organization achieve those goals.
Conclusion
Selecting your nonprofit’s board members is no small task. These people are legally responsible for governance, fiduciary, and strategic oversight of your nonprofit corporation. They have a duty to the nonprofit’s donor base to make certain it is effectively operating on mission to serve the public. We wish you the best of luck in choosing board members.
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This Post Has 2 Comments
I am owner and CEO of Women of this World Inc (W.O.W. Inc) and I am glad to know people like you are there to help.
l desire to continue driving others to their Kidney Dialysis Appointments;as l once did for my My Beloved Grandmother Josephine Idlette Taylor. In her honor this is a Legacy l would like to be connected with for our Future !
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