Seven Things You Need To Know Before You Become A Member Of A Nonprofit Board

Congratulations! You have been asked to join a nonprofit Board of Trustees. That is certainly an honor, but it comes with many caveats and responsibilities you should know before you accept. You should know that beyond the demands on your time, there may also be demands on your financial resources far beyond your capacity to anticipate them. This article will give you a thorough checklist of the things you need to analyze.

1. What is the culture of the Board? Is it an active Board that challenges the Executive Director on recommendations and points of policy, or is it a passive Board that takes its marching orders from the Executive Director. Ask to see minutes of past meetings, and if you see that each motion was passed unanimously, you can conclude that the Board all plays to the same drummer. On the other hand, if the minutes reflect spirited debate, and a split vote, they you can assume you are being asked to join a Board that takes the lead in setting directions.

2. Who is on the Board? Is there anybody you know well enough to discuss your prospective appointment? Are there people on the Board you do not like? How do you see your personality engaging with the Executive Director’s? Is the Executive Director a member of the Board (not recommended)? Is there a rapid turnover on the Board with former members not serving their full terms? Do you perceive the Board as composed of people who were selected for their talents, or because of the financial contributions they give?

3. Does the nonprofit have a lot of money? While this may be an asset to the nonprofit, it can be a substantial liability to you personally. When you go on a nonprofit Board, you assume “fiduciary responsibility.” That means that if something goes terribly wrong, and the consequences involve substantial losses for the nonprofit, you can be held personally liable, along with your other Board members, up to their ability to pay. That means, for example, that if there is a loss of money due to neglect or malfeasance, you and your colleagues on the Board can be ordered to make it right.

4. Additionally, this doctrine of fiduciary responsibility extends into the management of any endowment or retirement assets that the Board manages. Be sure the Board has an “Investment Committee” composed of highly qualified financial professionals (they do not have to be members of the Board) who meet regularly to review the performance of the funds in their care.

5. Be sure that any funds are being managed professionally by people chosen by your Investment Committee. In their contracts, it should be clearly stated that they assume fiduciary responsibility for the preservation and growth of those funds. More about the functions of this Committee in a future article.

6. Insist on a full orientation. Meet members of the staff. Talk with other Board members. Tour the facilities. Examine the financials. Most important, be perfectly clear about what is expected of you as a member of the Board.

7. If you do not have the time, or you know you will not be able to attend the Board meetings regularly, or participate in whatever committees you join, do not accept the appointment to the Board. It deprives the nonprofit of your talents, and greatly exposes you to any liability that may arise as a consequence of the Board not exercising oversight.

If you can satisfy yourself that the costs and liability are not too great for you to assume, join the Board and enjoy doing an important act of selfless commitment.

Jim Gould

Post Author: mark

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