by Alex Drvol, HBE Accountant
In a 2014 TEDx Talk entitled Modern Nonprofit Board Governance: Passion Is Not Enough!, Chris Grundner, the president and CEO of the Delaware Alliance for Nonprofit Advancement and ex-Senior Vice President of JP Morgan Chase’s credit card division, stated that becoming a not-for-profit board member is “serious business” and a responsibility and time commitment that should not be taken lightly. While the overwhelming majority of not-for-profit board members serve on a voluntary basis, they are vital in ensuring the long-term success of the organizations they serve. Properly fulfilling their role within the organization and assuming all the related responsibilities makes the position of board member both a challenging and rewarding experience.
The primary role of a not-for-profit board of directors is to serve as a fiduciary guiding the organization to a sustainable future by adopting sound, ethical, and legal governance and financial management policies. Board members are ultimately responsible for ensuring that the organization has financial resources to fulfill its mission. For example, the board of directors serves as a financial fiduciary by comparing the organization’s financial performance in the form of financial statements against a budget on a monthly, quarterly, or annual basis and determining whether programs are performing efficiently and effectively. Board members must be able to determine appropriate courses of action to resolve any financial, legal, or management issues that may arise in the course of operations. Board members must also help fulfill the role of the organization’s strategist by adjusting the organization’s overall strategy as deemed necessary to evolving internal and external pressures, challenges, and threats.
The responsibility of the board of directors as a whole can be separated into three major areas: duty of care, duty of loyalty, and duty of obedience. Duty of care refers to the legal responsibility each board member has in fully participating in all board decisions on behalf of and for the betterment of the organization. Duty of loyalty means that each board member must put the interests of the organization he or she is serving ahead of their own professional and personal interests when serving the organization in a decision-making capacity. Finally, duty of obedience is simply the duty that board members have in ensuring that their organization complies with all federal, state, and local laws and regulations.
An individual board member’s responsibilities include the following:
- Knowing their organization’s mission
- Determining if the organization’s mission is still relevant
- Attending all board and committee meetings and functions
- Reviewing and understanding all agenda and supporting materials prior to scheduled meetings
- Keeping up-to-date on all professional and legal developments in the organization’s field
- Following all conflict-of-interest and confidentiality policies
- Assisting the other board members in carrying out its fiduciary responsibilities, such as reviewing the organization’s monthly, quarterly, or annual financial statements
- Hiring, supervising, and, if necessary, firing the executive director
- Securing financial resources through networking opportunities with other for-profit and not-for-profit entities
- Informing others in their professional and personal networks about the organization and its mission
- Recruiting new board members with a variety of applicable skills and viewpoints to strengthen the board of directors
By appropriately fulfilling its roles and responsibilities, a not-for-profit’s board of directors can help ensure the longevity of the organization. Not only does proper board oversight and involvement safeguard the organization’s assets and the employment of those individuals working for the organization, it also, more importantly, guarantees that the organization can continue to help those most in need in our local and regional communities for the foreseeable future.