Private Wealth Matters

The Important, No, Vital, No, REQUIRED Role of the Not-for-Profit Board

The Important, No, Vital, No, REQUIRED Role of the Not-for-Profit Board

Engaged donors are often asked to sit on advisory councils or boards of directors for the charities they support. Such an appointment or election is considered a great honor but, of course, comes with great responsibility. It is incumbent on potential board members to understand their roles and responsibilities before accepting such an assignment.
First, make sure you understand if you are being asked to sit on an advisory board, which is more akin to a committee and has no legal standing on its own or if you are being asked to sit on the legal board itself, the overall governing body of the organization. While advisory board or council membership requires that you participate in a legal, ethical and responsible way, it does not confer on you the same level of responsibility that board membership does. Today’s discussion focuses on the actual board that runs the organization.
I have found from personal observation and experience that the level of sophistication embodied in not-for-profit boards ranges from professional and seasoned to shockingly unsophisticated and naïve. In some cases, board members come in with all their personal and professional qualifications at the fore to help advance the cause of the organization, coupled with a willingness to learn that which they do not know. In other cases, these otherwise intelligent, rational, successful and well-meaning individuals check their brains at the door and let their emotions run amok. (Ancillary example: United States Congress, Unfortunately, presidents and executive directors have to work with both types of individuals and, if they are successful, will develop the latter into the former. Actually, they had better; the board serves a vital and legal role in guiding and overseeing the organization it serves and ignorant or incompetent board members will weigh it down. It is, by no means, an overstatement to say that the board can truly make or break the organization.
Let’s get down and dirty and crass – some boards are what we call “money” boards – the only way one gets appointed to such a board is by being a significant and consistent donor to the cause, on the theory that such donor will be able to attract other such donors. To varying degrees, many large, national, wealthy, entrenched charities fall into this category. Other boards are what we call “working” boards – members are appointed based on the expectation that their skills and talents will be put directly to work serving the organization. Dollars may be secondary on such boards, but the expectation of financial contribution is and should always be there. Even if you support its cause wholeheartedly, if you are asked to serve on an organization’s board, it is imperative that you determine which type of board it has so that you can be reasonably sure that your experience as a board member will be a positive one. Diff’rent strokes for diff’rent folks – some people want to roll up their sleeves and get their hands dirty with the work while others prefer to don their finest attire and attend gala fundraisers – only you know for sure which camp you fall into.
Generally speaking, most boards fall somewhere in the middle but, in any event, ALL boards have legal and fiduciary responsibilities for the organizations they serve and such responsibility flows directly downhill to each and every board member. (Hint: does the organization that is asking you to serve as a board member have a reasonable level of directors and officers liability insurance (“D&O”)? It should, and you should also consider augmenting such insurance with personal coverage as well. See the recent WS+B blog post “Not-for-Profit Board Member Liability.”)
BoardSource, a not-for-profit organization itself, works with nonprofit boards providing training and publications to enhance the effectiveness of the boards and the organizations they serve. They published a terrific little book written by Richard T. Ingram entitled Ten Basic Responsibilities of Nonprofit Boards. It is a great starting point for individuals considering board service and for boards providing training for their members or reassessing their own approach to their responsibilities. It is not just about giving money or attending meetings. Woody Allen once said that “80% of success is showing up;” while that may be the case, the remaining 20% is far more important. According to Ingram, the ten basic responsibilities of nonprofit boards encompass best practices and constitute a rudimentary job description. If you are or will be a board member, learn these basic rules, take them seriously and live them. You will be acting in the most responsible manner possible:

  1. Determine mission and purpose
  2. Select the chief executive
  3. Support and evaluate the chief executive
  4. Ensure effective planning
  5. Monitor and strengthen programs and services
  6. Ensure adequate financial resources
  7. Protect assets and provide financial oversight
  8. Build a competent board
  9. Ensure legal and ethical integrity
  10. Enhance the organization’s public standing

Previous Post

Next Post