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Board Essentials: What Every Board Member Should Know 2

Last week, this blog addressed Parameters that a nonprofit board of directors must be aware of to conduct its business in an effective, focused way.  The Parameters include bylaws, IRS rules regarding 501(c)(3) status, and other boundaries that impact on the work of any public benefit organization with nonprofit status.

This week our focus is the Role of a nonprofit board.

  • We link to last week’s topic by noting the legal and fiduciary duties of a board of directors. By law of the State in which the nonprofit is incorporated, there are statutes that generally address the responsibility of the board to abide by applicable law. And that the assets (financial, property, value of brand) tangible and intangible must be used in ways that serve the mission and purpose; and not personally benefit a member of the board.
  • States generally require board members to pledge their loyalty to the nonprofit. This applies to prohibitions of self-dealing: serving on a board for personal gain. Many if not most boards have a policy on ethics to explicitly address this. Nonprofit organizations have a public purpose, so meetings and decisions made at meetings should be available to all interested. The loyalty issue isn’t so much about the ability of members to keep secrets. It is about awareness of intellectual property of the nonprofit that may be proprietary: for the use of that nonprofit and only to be shared by agreement.
  • Members of the board should be clear on theirRole in raising money. In the terminology of Kay Sprinkel Grace, which members are “askers”? Comfortable going on calls and asking for donations from known and prospective givers. And are all board members expected to give to the annual campaign?  Today, the majority of nonprofit boards have a giving policy that applies to the board. If this isn’t the case at your board, I do recommend that this topic get on a meeting agenda and that an open discussion follow. Boards that have a development or fundraising committee are in a good position to address this.
  • Another Role is to review the performance of the chief executive of the nonprofit, and to see to it that there is a process in place for review of all staff in a process overseen by the CEO.  Deciding who conducts the CEO review and how it’s done should be discussed with the executive. The board and executive settle on a process that works well, and assures that performance is objectively reviewed.  Committing to the concept of “continuous improvement” is a positive way to address areas where improvement is clearly indicated.

This post is not the be-all and end-all for board of directors Roles and Responsibilities. But it’s a good beginning. There are great resources to dig in for more detail.  I strongly recommend that my clients use materials published by BoardSource. Their website: http://www.boardsource.org.

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