Responsibilities Of A Not-For-Profit Organization’s Board Of Directors


Responsibilities Of A Not-For-Profit Organization’s Board Of Directors

What are some of the responsibilities of a non-for-profit organization’s board of directors? As the governing body of the organization, the board has many responsibilities. Following are some of the responsibilities your board should be aware of:

1. LEGAL COMPLIANCE AND PUBLIC DISCLOSURE

The organization’s governing board is ultimately responsible for overseeing and ensuring that the organization complies with its legal obligations and detecting and remedying any wrongdoing by management. This responsibility should lead to the development of a code of ethics and conflict of interest policy. The board should also ensure that appropriate information is widely available to the public in order to raise its profile within the community(ies) it serves. In this regard, the board is responsible for review and approval of Form 990 which is a public document and available to the public upon request. The board should not only ensure the correctness and completeness of Form 990 but ensure that the organization’s mission and accomplishments have been accurately disclosed. The board should also be mindful of its responsibility for the administration of employee benefit plans and filing requirements and governmental reporting.

2. EFFECTIVE GOVERNANCE

The board bears the primary responsibility for ensuring that a not-for-profit organization fulfills its obligations to the law, its donors, its staff and volunteers, its clients and the public at large. The board is also responsible for the selection and evaluation of the chief executive. The board must protect the assets of the organization and provide oversight to ensure that its financial, human and material resources are used appropriately to further the organization’s mission. A best practice includes forming an independent board to include members with diverse backgrounds and experience. Additionally, the board should have processes that include regular self-evaluations and reviews of governing instruments and the organization’s mission.

3. STRONG FINANCIAL OVERSIGHT

The not-for-profit organization must maintain complete, current and accurate financial records. The board should receive and review timely reports of the organization’s financial activities and should institute policies and procedures to ensure that the organization manages and invests its funds responsibly. The board should approve the annual budget and monitor actual performance against the budget, noting that a significant portion of its annual budget should be spent to pursue its mission. The board should always ensure adequate resources are available to fulfill the mission. A balance should be maintained between utilizing resources for today’s mission while ensuring the future of the organization.

4. RESPONSIBLE FUNDRAISING

Adequate training and supervision should be provided to individuals soliciting funds on behalf of your organization, and proper record keeping should be expected.

Contributions and revenue from resource providers should be used for purposes consistent with the donors’ intent. Adequate training and supervision should be provided to individuals soliciting funds on behalf of your organization, and proper record keeping should be expected. There should be organizational oversight of fundraising and special events conducted by volunteers. Further, there should be a reasonable rate of return expected from fundraising and special event activities.

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