An excellent nonprofit board of directors is essential for a charity. One of the things you should consider is that boards serve as a bridge between your group and community. In other words, because nonprofits are tax-exempt, there’s a higher standard to which society holds them. As an example, they are supposed to be more transparent than businesses. And, this transparency is even more critical because they serve to improve communities.
Boards are responsible for the strategic direction and obtaining the resources needed to operate. As a result, that means that boards have to help leadership teams to get everything they need to do their work. For instance, they are supposed to serve as the fundraising leaders to ensure a group has money. And, if an event requires volunteers, they are supposed to be the first to help.
However, we know that lots of times, that’s not the case. And, it can be true for small organizations where there is a limited understanding of what boards do. So, in the next few weeks, we’re going to share with our readers everything you need to know about a nonprofit board of directors. If you follow our blog, you’ll have a better understanding of board, which will help you improve on what you’re already doing.
Duties of Boards
The first place to begin is to understand the governance duties of a nonprofit board of directors. And, it’s essential to know that the following three functions are legal responsibilities of a board at any nonprofit:
1. Duty of Care
Nonprofit boards have a responsibility to ensure that the organization has everything needed to operate. In other words, it’s their job to ensure that nonprofit groups have offices, money, staff, etc.
2. Duty of Loyalty
Nonprofit boards have a responsibility to ensure the advancing of the mission of the organization. Their commitment is to the organization and not to themselves. As a result, they should not have conflicts of interest. And, they need to do what’s best for the organization.
3. Duty of Obedience
Nonprofit boards have a responsibility to ensure that the group follows all federal and state laws. And, they also have to make sure to adhere to the bylaws of the charity.
What Nonprofit Board of Directors Don’t Do
Unfortunately, it’s an open secret that at a lot of nonprofits, boards can be dysfunctional. The reason for it is simple. Often, boards don’t understand their strategic role for the organization. And, so they might get involved in the day-to-day business of the nonprofit. Therefore, one of the best activities is to have a nonprofit board of directors training each year. It will help ensure that everyone understands their roles and responsibilities.
One of the best ways to get a sense of what nonprofit boards should do is to know what they shouldn’t do.
1. Don’t Micromanage
Nonprofit boards are responsible for the strategic direction of a charity. In other words, they are not responsible for day-to-day operations. For instance, they are responsible for helping lead fundraising efforts. But, they are not responsible for coming up with the plan for fundraising. That’s the role of the executive team. However, once the executives of the nonprofit have presented the plan to the board, and the strategy has been approved, boards are responsible for leading efforts to raise money successfully. They are also responsible for ensuring good governance, including succession planning.
2. Don’t Forget Governance
The best nonprofit boards ensure good governance. So, what does that include? It means that nonprofit boards make sure that charities have bylaws. And, it also means that the group is complying with federal and state laws and obligations. Governance also means that nonprofit boards make sure that charities, where they serve, have written policies. For instance, nonprofits need conflict of interest, data management, and anti-discrimination policies. All of these policies should be reviewed and updated each year by all board members and staff.
3. Don’t Overlook the Executive Director
One of the critical responsibilities of a nonprofit board of directors is to assess the executive director’s performance. As a result, boards have to ensure they have a good working relationship with the CEO of the group. That means that boards have to ensure there is an annual review of the executive’s performance. The performance should be metric driven. It’s also essential to ensure that the executive has everything necessary to complete the work of the organization. Meaning, once he or she presents an organization plan for the year, and it’s been approved, the board has to make sure the director can get the job done.
4. Don’t Overlook Evaluating the Nonprofit Board of Directors
So, while it’s vital to oversee from a strategic level the work of the CEO, it’s also essential to evaluate the performance of the board. Each year, a nonprofit board of directors should take time for an annual meeting. And, at that annual meeting, there should be a period of self-reflection. Working with a board training expert, your nonprofit board can develop metrics for the board. This way, at the end of the year, you can assess if the board has measured up. For instance, has the board fulfilled its role of governance with success? Has it helped ensure that the group has the fundraising dollars it needs?
5. Don’t Forget You’re Responsible for Fundraising
One of the most significant activities that a nonprofit board of directors has is to do is fundraising. However, many board leaders don’t like to do it. But this is a mistake. Fundraising is an obligation that nonprofit boards have in their roles. So, if your board happens to be one that doesn’t like to fundraise, make it easy. Take time to think about some of the best fundraising ideas in the nonprofit sector. And, consider creative ways to raise money. By taking the lead in helping ensure fundraising revenue, the organization will only thrive.
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