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A non profit's board of directors has several important responsibilities to fulfill. This article reviews basic non-profit board governance.
A board of directors is the governing body of a non-profit organization. It has many serious responsibilities, which can be loosely categorized as follows:
1. Setting the policy for the organization. This is done by:
- Creating or updating the mission and vision statements.
- Determining the organization’s programs and services.
- Approving the strategic plan.
2. Monitoring the organization’s operations:
- Hiring and periodically evaluating the organization’s executive director.
- Working with and providing support to the executive.
- Approving the annual budget, annual report, etc.
- Approving major contracts and grants.
- Soliciting and reviewing program evaluations.
- Troubleshooting as necessary.
3. Serving as a public figure for the organization
- Fundraising, by directly donating to the non-profit and soliciting donations from others.
- Advocating for the organization.
4. Fufilling other board responsibiltiies
- Documenting policies and decisions to create an organizational memory.
- Preparing for and attending board meetings.
- Researching and discussing issues before decisions are made.
- Replacing and orienting board members when a vacancy arises.
A board of directors also has certain legal obligations, known as duties. While the details may vary from state to state, here are some common legal responsibilities for members of non-profit boards to:
- Take reasonable care when making decisions for the organization (called “duty of care”)
- Act in the best interest of the organization (called “duty of loyalty”)
- Act in accordance with the organization’s mission (called “duty of obedience”)
- Stand aside when there is a conflict of interest (called “recusal”)
While there a board has many responsibilities, there are also things it should avoid. Basically, board members should avoid being over- or under-involved. More specifically, the board of directors should not:
- Concern itself with the day-to-day management of the organization. That is the executive director’s job.
- Rubber stamp decisions. While the board should take the recommendations of the organization’s director, staff, and members into consideration, the board needs to be an independent decision-making body.
More on Non-profit Boards of Directors:
The copyright of the article Non-profit Board Responsibilities in Non-Profit Governance is owned by Estela Kennen. Permission to republish Non-profit Board Responsibilities in print or online must be granted by the author in writing.
Comments
Jan 29, 2009 8:44 PM
Guest :
I have a question can a acting board president fire an executive director
without the executive board knowing that she did
Mar 12, 2009 3:49 PM
Guest :
Yes unfortunately a board president can (I have seen it done) but
professionally they should tell the ED why they were fired. To not tell
tell them would be sneaky and unjust and most importantly unfair to the
E.D. This happened to a an organization I worked for and it was very
upsetting for the E.D. and for the staff as well. There was a lot of hurt
feelings and anger directed towards the board and that board president.
This could have been handled much better and in a more positive way.
Apr 1, 2009 2:32 PM
Guest :
Estela, I have a dilemma and am seeking opinions. I'm consulting with a
small start-up nonprofit, and we're developing its bylaws. I know that in
many new nonprofits the founder serves as both the president of the board
(a governance role) and the de facto executive director (a staff role).
Most bylaws-- and good practice -- have provisions regarding conflicts of
interest. A specific issue the founder has raised is how he can determine
his initial salary and ensure the agreement of the full board (three total
members so far, the minimum required in this state). As both the salaried
administrator and board president, how can he avoid a conflict of interest
while determining reasonable compensation? How can the bylaws reflect a
policy that reconciles his dual roles?
I'm sure that other
decisions will arise that pose a challenge for the founder in performing
both oversight and operational roles. But despite the fact that such dual
roles are quite common in new nonprofits, I'm surprised to find so little
guidance published on this dilemma. Any suggestions are welcome. Thanks.
Paul
Apr 19, 2009 6:55 AM
Guest :
I do not thinkg the acting board pres can act independently like this.
In a well-managed nonprofit, the hiring and firing of the ED is decided
by a Personnel Committee of the board. This committee is responsible for
hiring: posting a job description for a new ED, interviewing and
recommending (to the entire board) the best candidate with rationale.
Annually, this committee works with the ED and the Board Chair to set up
annual objectives for the ED, and supports the development of the Annual
Appraisal and Management Plan for the ED. If there is a question about the
ED's qualifications, it should be discussed first by the Personnel
Committee and then by the entire board.
May 25, 2009 5:14 AM
Estela Kennen :
Paul,
Sorry for the delayed response.
First, the
founder should choose one role or the other: the day-to-day running of the
organization (ie, Executive Director), or the strategic guidance (Board
President). As a donor, if I see both positions are occupied by the same
person, I am going to have my doubts about that nonprofit.
Nonetheless, it is true that many small, fledgling nonprofits do have
this dual role that goes against best practices. To determine a reasonable
compensation, here is what the founder can do:
-- Follow the
guidelines set forth at
http://non-profit-governance.suite101.com/article.cfm/setting_nonprofit_pay
-- Give a voting proxy to one of the other board members.
--
Leave the meeting room when executive director compensation is being
discussed.
-- Document what was done.
May 27, 2009 2:10 AM
Guest :
Good Day Paul
My Name is Onalenna Mokgara and Im working for
Department of Social Development in Norther Cape, South Africa.
I need your advices on the following:
We are piloting a new
Governing and Management Stracture for the NPO Funded by the Department as
is as follows:
Board-Of-Directors
Chairperson
Deputy
Chairperson
Secretary
Deputy Secretary
Treasurer
and
Organization Executive Committee is as follows:
Projects
Coordinator/Centre Manager
Administrator
FinancialOfficer
Organizer
Supervisors of various projects in the Organizations.
I will like to if:
Is is a feasible Structures?
What is a
relationship between this two structures?
The reason why there is no
Chairperon, Secretary and Treasurer in the Organization Executive Committee
was because we did not want to duplicate porfolios of one organization, e.g
having two (2) chairpersons - one for the board and the otherr for
Executive Committee, is it a reason enough?
What is the
relationship between the Board-Of-Directors and Executive Committee?
What is the Powers of the Board of Director?
What is the Functions
of the Board of Directors?
What is the Powers of the Executive
Committee?
What is the Functions of the Executive Committee?
Where do we drwa the line between this two(2) bodies?
And How do we
avoid two(2) Cnetres of Power?
What are the terms/peiod-of-office of
this two bodies?
Read more: "Non-profit Board
Responsibilities: Overview of Non-profit Board Governance |
Suite101.com" -
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Board%20Responsibilities%20Overview%20of%20Non-profit%20Board%20Governance%
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May 27, 2009 2:16 AM
Guest :
Stela Kennan
Sorry for referring to you as Paul,its my first
visit on your site and I was reading the comments and responses and I saw
the name Paul and I thought it was You.
Ist Onalenna Mokgara,
Looking forward to your responses.
Jul 21, 2009 5:47 PM
Guest :
I work for a non profit agency that has an ED and a small staff of
approximately 10 people. There is no middle management and there is gross
mismanagement from the ED. Do staff members have the ability to go
directly to the Board of Directors to air their complaints
Aug 10, 2009 9:00 AM
Estela Kennen :
This is outside the scopes of most bylaws, though it seems your
organization should create grievance policies if they are not already in
place. It is customary to address the situation with the person you have a
problem with, if possible (perhaps the ED doesn't know there is an issue,
and would reform his/her ways, if approached in a supportive,
nonthreatening matter). If this is not the case, then you are correct in
going up the chain of command. Since the Board is next in line up the
chain, you should indeed go to the Board. Please bare a few things in mind
before you go to the Board:
1-- Some board members will be
"rubber stampers" who are not particularly active participants.
While they might hear you out, do not expect much to change if you air your
grievances to people like this.
2 -- Some board members have close
connections to EDs. After all, the Board chose the ED to represent them in
a day-to-day context. It is crucial to approach a board member who feels
more loyalty to the organization and its mission/values than to the ED.
3 -- Please proceed in a levelheaded, professional manner. You want to
improve the organization, not stage a coup (even if that is what ends up
happening...)
Aug 22, 2009 2:17 PM
Guest :
What are the financial obligations of board members when a non profit
closes because of lack of funding and there are outstanding debts including
the IRS?
Aug 29, 2009 3:32 AM
Guest :
Can a board member profit from the nonprofit. For example, could a board
member sell the use of a trademark and/or services to the nonprofit if the
rest of the board approved it?
Sep 28, 2009 8:10 PM
Guest :
Founders of a non profit that are stepping away want to drain the money
from the non profit as payment for no salary at the start of the business.
Seems kinda slimey to me.
Sep 30, 2009 11:56 AM
Guest :
Question:
I currently work for a midsize nonprofit that has been in
operation for close to 15 years. I was interviewed for the Executive
Director position while employed as a counselor. I was interviewed by the
Board President and another board member. I was turned down for the
position to discover that the Board President who interviewed me was
appointed to the position, Executive Director. the explanation I was given
is that person had more experience. However, that person has zero
nonprofit experience other than serving on the board of directors.
Isn't this an ethical dilemma? or is there some legal action one could
take?
Oct 7, 2009 1:06 PM
Estela Kennen :
To Sept. 30:
I am sorry this happened to you. It certainly looks
bad when the person who interviewed you takes the position. You say you are
a counselor, but you did not say what the Board member does. Nonprofit
experience is not the only relevant experience necessary to be an Exec Dir.
Other pertinent skills might include, but are not limited to budgets, HR
issues, supervising, report writing, fundraising, public relations, etc. So
it might very well be that the other person has more pertinent experience
than you.
Is this an ethical dilemma? At the very least it was
improperly managed, and it has hurt staff moral. At worst, the board hired
someone unqualified. Do you have legal recourse? Probably not. Legally,
people don't need a good reason to hire someone, they just need a reason
that is not protected through the anti-discrimination laws.
Good
luck with everything...
Oct 12, 2009 4:19 PM
Guest :
Can a city government contract with a non profit organization and then
require that the majority of the board members are city employees? Isn't
this a conflict of interest?
Oct 12, 2009 5:43 PM
Estela Kennen :
Dear Oct. 12,
Without knowing the exact circumstances, yes, that
sounds very sketchy indeed. If a city is funding an organization and the
city is providing oversight, then that sounds more like a branch of the
city than an independent non-profit. If the nonprofit's area is in
augmenting the city, then it is proper (and probably a good idea) to have a
non-voting member of the board be a city representantive, to help ensure
that the constituent's needs are being met, and to serve as a liaison with
city officials -- but that is a far cry from what you are describing. Good
luck with your situation.
Oct 17, 2009 5:54 PM
Guest :
We have an Executive Director that we believe is stealing money from our
organization and we have documentation to support this along with our
Director being spiteful and unusually non caring for the Employees. Also
she is constantly trying to fire someone to create drama plus many other
bad faults. We went to the board memebers with this documentation and
letters from more than half the employees to file complaints. they kept
telling us something would be done. However we found out the president
resigned and one other member. They tell us they cannot do anything unless
they have all 5 members agreeing. The employees are so upset that this
continues they are all wanting to walk. Is there anything that can be done
with the members we have left. Oh and we are contracted through the state
also. Please help.
Oct 18, 2009 7:13 PM
Guest :
I have two questions:
1. If the bylaws of a 501(c)(3) do not
specifically state the Board has the right or responsibility to perform a
performance evaluations on staff that is subordinate to the Executive
Director, can they legally do that?
2. Also the bylaws do not state a
grievance policy or procedure if the grievance is being filed against a
board member or part of the whole board. What would be your advice in that
instance?
Context:
My executive board, performed an unprecedented
"job Evaluation" on me without my immediate supervisor present,
our Executive Director. They did this with me only having never done this
before with any employee nor did they do it with the other two employees I
work with under ouyr ED. The year previously (was there only two years
regular part-time.) my ED performed the evaluation and it was above average
and I got a raise and increased hours.
This 3-1 meeting with the
Executive Board was in my estimation, an ambush that was disrespectful,
unprofessional and intimidating. A week later I submitted a respectful,
unemotional grievance/complaint stating my position on all the issues I
felt needed to be addressed and requested an apology and clarification on
policies that were raised and that my supervisor do evals from now on. A
week later without comment from any of them, they made my Executive
Director to fire me, I believe against her wishes.
We live in Idaho
which is a Right-to-Work state where there are really not employee
protections. You can be fired without cause or notice.
What I am
wondering is is this out of line with federal requirements for rights and
responsibilities of a non-profit. Since I am the only technical person at
an operation that;s mission is technically based, have they acted in the
best interest of the organization?
I am seeking advice from a labor
attorney but I am not sure about the non-profit angle. I have looked at
Idaho code and I do not see anything that relates to non-profits and
employees.
Thanks so much for your help and the information you have
provided here.
Technobia
Oct 19, 2009 8:00 AM
Estela Kennen :
Dear Oct. 17,
There are several troubling issues here -- about
the Executive Director's apparent misuse of taxpayer money, about the board
inaction (and why two board members resigned?) It sounds like you need a
lawyer. Since I am neither a lawyer, nor have any knowledge about the law
of Illinois, I would hate to advice you about anything one way or another.
I am sorry I could not be of more help, but I wish you luck going forward.
One thing I would strongly advice is don't do nothing -- action is clearly
needed!
Oct 19, 2009 8:18 AM
Estela Kennen :
Dear Technobia,
I am sorry about what happened to you. I am sure
I am missing a lot of details here, but, while I am glad you have contacted
a labor lawyer, I doubt you have any legal recourse.
"Since I am the only technical person at an operation that;s mission
is technically based, have they acted in the best interest of the
organization?"
Possibly. If you, for whatever reason, where
not the right person for the job, then freeing that position to find
someone better was in the organization's best interest. Even if not, this
is not something that would immediately jeopardize the organization's
nonprofit standing. If they cannot fill your position, if they cannot meet
their objectives, they may loose funding, etc. -- but those are ifs that
cannot be determined just by the unfortunate act of them having fired
you.
If I were you, I would approach the ED as kindly as
possible and ask her what the possibility of using her as a reference
during your job search would be. If your reading of the situation is right,
she should say something along the lines that she think you're a good
performer who got a raw deal, and she'd be happy to help. If she hedges,
then something else is going on -- possibly she fears going against the
Board's wishes, or, faced with an uncomfortable position, she might have
asked the Board to interfere and do your eval in the first place.
I have witnessed nonprofit staff and board members turn against each
other with no good cause. If this is truly the case here, I hope you can
lick your wounds and move on -- that is probably not the type of
organization you would want to be affiliated with anyway.
Oct 19, 2009 7:27 PM
Guest :
Help
I work for a non-profit organization and recently we had four
managers resign.The ED I do not really know because I answer to my manager
. I know and respect the ethic of these managers in a professial way. We
have over 80 volenteers and as a result of the resignation we had a walk
out requesting that the board of directors replace the ED.Well this did not
happen and the Board came in to fix a problem that was not broken. Why
didn't the board make the ED resign ? Can the Board go into a work place
that they have no idea how it works or runs and change things base on
false information ? What steps can the remaining staff take to insure that
the mission of the non-profit organization is met?
Oct 20, 2009 7:16 AM
Estela Kennen :
Wow! Four managers resigning and a walk-out does not sound good. It seems
to me there are two main possibilities:
-- The managers, good as they
may seem, did something bad and were asked by the ED and Board to resign.
Not knowing the ED or why the managers resigned, everyone gets in an
uproar, but the Board rightly sticks to their guns. Maybe the tinkering you
thought was unnecessary really wasn't.
-- The ED is terrible, the
managers resigned as a testament to his/her incompetence, and the Board --
perhaps out of some sense of loyalty to the ED, who is, after all, the
person they know best in the organization, or perhaps out of general
ineptitude -- lets the ED stay.
How do you know which is which?
I would approach the ED and a couple of Board members and ask them what
their vision for the organization's future is and what their plans are for
getting things done. If they're not talking the talk, you know something is
up. If they ARE talking the talk, make sure they are also acting on their
words.
If it seems that the Board and ED are good enough, then
the next step is to get together with the remaining staff and regroup,
focusing the mission of the organization and the actions each individual
can take in realizing that mission. If things stink to high heaven, then
the next step might be to meet with the staff and the managers who resigned
and discussing what options exist. While the Board and ED MAY have acted
unwisely, it doesn't sound like they have done anything illegal -- but
maybe the managers know otherwise. Perhaps legal action can be pursued. Or
perhaps the group can start a new nonprofit.
At any rate, this
sounds like a difficult situation with emotions running high. Before you
take any action, the first step is to get a better understanding of what is
really going on. Only then can you figure out the best way to fulfill the
organization's mission. Good luck!
Oct 28, 2009 6:23 PM
Brooke Austin :
Hello, Estela.
I just began serving on the Board of Trustees at my
daughter's independent school and am also serving as the chair of the
Development Committee. From what I can tell thus far, the Board does not
have any formal procedures it follows and there are certainly no procedures
set forth with regard to the subcommittees. I assumed the role of
Development Committee chair from the chair of the Board; however, the Board
chair has recently made unilateral decisions regarding an event she has
decided to throw together that are directly contrary to policy
"adopted" by the Dev Comm under her leadership (she was
simultaneously chair of the Board). When concerns were expressed regarding
certain aspects of the event, she dismissed them and makes statements
contrary to the policies the Dev Comm determined were in the best interest
of the school. The policies adopted by the Dev Comm were not formally set
or adopted, no vote was taken but agreement was reached, there were no
minutes taken, and now she is conveniently disregarding multiple
conversations and discussions we had as a committee.
How would you
recommend that I address and handle this issue and the problems in general.
She is trying to micromanage not only the Dev Comm, but the Head of School
and newly hired Advancement Director, as well, by dictating how things are
run on a day-to-day basis.
Help!!!
Thank you!
Oct 30, 2009 6:13 AM
Estela Kennen :
Dear Brooke,
I am sorry you are in such a difficult position.
Dysfunctional boards are all too common. I would start by allying yourself
with some like-minded people and instituting some structure into the board.
Please check your state laws, but I suspect you will find that for your
board to be a legally recognized structure, it NEEDS bylaws -- so start
there. In the bylaws, include the need to take minutes, as well as the
function of specific board officers and standing subcommittees, and how
many votes are needed to act on something (ie, the board president cannot
unilaterally make decisions). Then in your own committee, flesh out the
responsibilities by creating a policy document, and appointing a
subcommittee secretary. These processes can take a long time-- extra
meetings might be required or an ad hoc committee created to make the
bylaws.
You have to try to make the chair an ally in this
effort, or at least not see you as a threat. Remember she is trying to do
what she thinks is best for the school, so when you propose changes, you
need to frame it not in the sense of "we need to do things differently
than YOU've been doing", but to stress the need for compliance with
state law for the board to have legitimacy and authority. There are also
limits to the types of fundraising that nonprofits can do -- so if her
ideas aren't in compliance, that's a way of stopping it.
Remember, change takes time... and a lot of dedication. I wish you success
in this.
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