SHAPE UP YOUR BOARD of DIRECTORS
By Jean Block
No, I am not going to discuss calisthenics for your Board ... but perhaps the issues surrounding fiduciary responsibilities are just as strenuous!
Federal and State oversight of nonprofits and their Boards is probably a reality for the future. In fact, certain portions of the Sarbanes-Oxley Act apply to nonprofits already, according to BoardSource and the Independent Sector. These include the requirement for a written whistle-blower policy and a document destruction and retention policy.
Source: www.BoardSource.org. www.independentsector.org.
It is simply no longer appropriate for people to join your Board and rely on the “I’m just a volunteer doing good deeds” mentality. Board members should consider carefully the legal responsibilities of serving on your Board. And your organization must take care to provide current and potential Board members with the information and training they need to serve appropriately.
The following is excerpted and condensed from a great resource: Right from the Start: Responsibilities of Directors and Officers of Not-for-Profit Corporations, published by the New York Attorney General. To see the entire resource, go to www.oag.state.ny.us/charities/charities.html
Prospective Board members should:
- Review the Articles of Incorporation, Bylaws and minutes;
- Get a list of current Board members and understand what is expected of Board members;
- Review the recent 990s and financial statements; Assess whether reports have been filed in a timely manner;
- Understand internal controls and policies;
- Review recent audits and management letters; Ensure conflict of interest and code of ethics policies are in place;
- Understand Board and Committee operating structure;
- Ensure Director & Officer liability insurance and employee fidelity insurance are in place;
- Review current budget and cash flow projections… to name a few.
Board members should understand the Duty of Care. This requires a director to be familiar with the organization’s finances and activities and to participate regularly in its governance. Directors must act in “good faith.” They must:
- Attend all Board and committee meetings and participate actively in decision-making, coming prepared to act;
- Participate in strategic planning;
- Ensure adequate internal financial controls and policies;
- Participate in the periodic review of the CEO/Executive Director, and more.
Board members should understand the Duty of Loyalty. This Duty deals strictly with issues involving conflict of interest issues and how to identify and deal with them.
Board members should also understand the Duty of Obedience. Board members must ensure that the organization complies with applicable laws and regulations and its internal governance policies, including:
- Dedicating the organization’s resources to the mission;
- Ensuring the organization does not carry out unauthorized activities;
- Complying with all appropriate laws, filing required reports, paying all taxes;
- Providing copies of appropriate financial reports and documents to members of the public who request them
What
are the responsibilities of individual board members?
Individual Board Member Responsibilities
- Attend all board and committee meetings and functions, such as special events.
- Be informed about the organization's mission, services, policies, and programs.
- Review agenda and supporting materials prior to board and committee meetings.
- Serve on committees or task forces and offer to take on special assignments.
- Make a personal financial contribution to the organization.
- Inform others about the organization.
- Suggest possible nominees to the board who can make significant contributions to the work of the board and the organization
- Keep up-to-date on developments in the organization's field.
- Follow conflict of interest and confidentiality policies.
- Refrain from making special requests of the staff.
- Assist the board in carrying out its fiduciary responsibilities, such as reviewing the organization's annual financial statements.
Personal characteristics to consider
- Ability to: listen, analyze, think clearly and creatively, work well with people individually and in a group.
- Willing to: prepare for and attend board and committee meetings, ask questions, take responsibility and follow through on a given assignment, contribute personal and financial resources in a generous way according to circumstances, open doors in the community, evaluate oneself.
- Develop certain skills if you do not already possess them, such as to: cultivate and solicit funds, cultivate and recruit board members and other volunteers, read and understand financial statements, learn more about the substantive program area of the organization.
- Possess: honesty, sensitivity to and tolerance of differing views, a friendly, responsive, and patient approach, community-building skills, personal integrity, a developed sense of values, concern for your nonprofit's development, a sense of humor.
Information taken from BoardSource
