ESTABLISHING A BOARD OF DIRECTORS
There are two general types of boards:
Advisory board: An advisory board serves in the same capacity as a committee. Their role is to provide support and guidance for the organization’s efforts. They have no regulatory control and no legal responsibility. An advisory board supports the organization by making recommendations only. They have no governing responsibilities and legally may only make recommendations.
Governing board: A governing board carries the weight of local, state, and federal regulations. Their vote determines guidelines, staff placement and salary, and develops program policy. Members serving on a governing board should be aware of their legal responsibilities.
The role of a board member:
A board member should support the efforts of the organization served. They have tremendous ethical responsibilities. Their role is to assist with planning and determine the course for the non-profit. A strong board of directors can guide an organization towards its greatest potential. Board members represent the organizational voice to the community.
A board member should be willing to place the organization goals over personal interests and professional desires. They should conduct themselves ethically and avoid any appearance of personal or professional gain from the activities of the organization.
The organization’s size should be the initial determining factor when considering how many individuals are required to develop a quality board of directors. Diversity in culture, gender, and age should be an important consideration. The board should have sufficient numbers to allow board members to distribute their work evenly. It is important that board members don’t feel overworked.
Good candidates for board membership:
- Dedicated volunteers
- Business owners
- Professionals and members of other civic organizations within your community and the surrounding area.
- Elected officials
Consider the area of expertise that a potential board member can bring to the group. For instance, an organization seeking to enhance its fundraising efforts through endowments might consider an attorney with will and trust expertise. A non-profit seeking to increase contributions from small local businesses should consider established business leaders or local bankers. If corporate donations are the goals for your support, you should include mid and senior level managers from local plants or offices.
Board members should be willing and ready to:
- Work on special projects as requested by the executive team.
- Provide leadership to the organization.
- Attend meetings and events-give time.
- Commit resources and expertise to further develop the organization.
- Accept committee assignments.
- Use their network of relationships to benefit the organization.
Board members should support:
- The organization’s mission and strategic/action plan
- Specific programs and events
- The financial development of the organization through active fundraising and grant seeking efforts
- Fostering new donors to the organization
- The organization with a personal membership donation
Board term length:
An average term of office is three years. Many organizations place term limits for board members such as “ terms are limited to two, 3-year tenures” - or they require a hiatus of one year before they are allowed to be elected for another term. Staggering the board terms- so that no more than 1/3 of your board members is up for re-election in any one year - ensures a balance between new board members and experienced existing members. Term limits will provide an opportunity to seat new members with new thoughts, ideas and resources.
Key elements to a solid board structure:
- Written descriptions for board responsibilities
- Written descriptions for committee responsibilities
- Written statement concerning conflicts of interest
- Directors and Officers liability coverage
Vital materials for running an efficient board:
- Annual report
- Audited financial statements
- Marketing and financial plan
- Current Board roster
- An organizational chart for the board and for the staff
- Documented policies and procedures
- A Schedule of meetings with consistent meeting structure
- Detailed minutes of meetings containing reports on activities and projects
Committees provide a framework for accomplishing an organization’s tasks. All board members should serve on at least one committee. Committees may include community members who are not currently serving on the board. It is important to make certain that committee work takes place outside of board meetings – board meetings are reserved for the reporting of committee work, policy decisions and other official business.
Basic essential committees:
- Executive Committee (made up of board officers, including immediate past president)
- Finance Committee – chaired by the board Treasurer
- Nominations Committee
- Bylaws Committee
- Marketing & Fundraising Committee
- Community Relations Committee
- Communications Committee
- Whatever other committees are required to carry out the organization’s mission.
Can minors serve on boards?
Each state is different. There are specific laws that prohibit minors from signing contracts. It is important that an organization seek legal counsel before allowing minors to serve as a board member. To encourage young people and gain feedback from a youthful demographic, consider adding minors as nonvoting, ex-officio members to the board or allow them to serve in an advisory capacity. Minors cannot take fiscal responsibility for any registered 501(c)(3) organization.
Ethical Implications for Non-profits:
The best way to avoid difficult ethical situations is to establish a set of standards early in the development of a board or organization. At the most basic level, a board should have a statement of ethics detailing prohibited behavior and conflicts of interests. If the organization or board accepts state or federal funds, consideration should be given to the following:
- Personal loans should never be made to other board members, directors, or staff;
- Board members should never work to gain attention for their own profession or place of employment;
- A system for independent audits should be in place;
- Financial statements should be accurate and complete;
- Develop a written formal process to deal with complaints and prevent retaliation;
- Establish a written formal process for document destruction.