Creating a Nonprofit Board of Directors: Everything You Need to Know

A nonprofit board of directors guides the mission, strategy, and financial security of an organization.
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Your nonprofit board of directors is vital to your organization. The board assists with decision-making and keeps your organization moving in the right direction.

Once you’ve made a decision to form a not-for-profit or charitable organization, one of the first steps you take should be to form a board. Not only is this a good idea in general, some states actually require that you list the names of your board members in your request to incorporate.

Here, we’ll look at everything you need to know before creating a new board of directors. You can also use this guide to help with board succession planning as you select new directors. 

Roles and Responsibilities of a Nonprofit Board of Directors

Serving on a board for a nonprofit comes with responsibilities and duties that a person should be aware of before taking the role. You want to select board candidates that have high integrity and a desire to help your organization.

While some nonprofit board of directors positions are compensated, this is often a volunteer role that requires time and dedication. Having board members who understand the responsibilities and want to serve the organization will help you create a healthy, active board. 

Some of the primary responsibilities of a nonprofit board member include:

  • Governance
    • Establishing policies.
    • Setting organizational goals.
    • Overseeing the organization’s overall performance.
  • Financial oversight
    • Ensuring the organization’s financial stability.
    • Reviewing financial reports and documents.
  • Fundraising
    • Supporting the organization’s fundraising efforts.
    • Helping to secure financial resources through programs like donor stewardship.
  • Fiduciary responsibility
    • Ensuring the organization operates in an ethical and legal manner while fulfilling their legal duties as a board member.
  • Strategic planning
    • Participating in the development of the organization’s long-term strategy, goals, and vision.
  • Representation
    • Serving as an ambassador for the organization’s mission and values to stakeholders inside the organization as well as the general public.

Main Duties of Board Members

While every board is a little different the financial duties of a nonprofit board member are similar and imperative. You can break them down into three key fiduciary duties:

  1. Duty of care: Each board member has a legal responsibility to participate actively in making decisions on behalf of the organization. They are expected to exercise their best judgment while doing so. Failure to fulfill the duty of care can result in personal liability for board members and damage to the organization’s reputation.
  2. Duty of loyalty: Each board member must put the interests of the organization before their personal and professional interests when acting on behalf of the organization in a decision-making capacity. The organization’s needs come first. The duty of loyalty helps to ensure that your organization is managed in a responsible and ethical manner, with protection of your assets and reputation.
  3. Duty of obedience: Board members bear the legal responsibility of ensuring that the organization complies with the applicable federal, state, and local laws and adheres to its mission. The duty of obedience also requires board members to understand and follow the organization’s mission, as well as its bylaws, articles of incorporation, and any other governing documents that outline the purpose and objectives of the organization.

Each of these duties is an important element of a healthy nonprofit organization. As you onboard new leaders, consider having a packet of information that includes roles and responsibilities for your nonprofit board of directors. Onboarding documents set clear expectations and can help your board function productively.

Overview of Board Roles

While every nonprofit board of directors can be made up of different chairs and titles, one thing is almost always the same – the makeup of the executive board. The standard is a board with the following positions: president/chair, vice president/chair, secretary, and treasurer.

The executive board plays a critical role in ensuring that the organization is well-managed and operates effectively. Furthermore, the board works closely with the rest of the board of directors to achieve the organization’s mission.

  • Chairperson
    • Responsible for leading meetings, representing the board, and serving as the organization’s public face.
    • Works closely with paid staff, including the CEO or executive director to set the agenda and priorities for the organization.
    • Often a signor on financial accounts.
    • May also serve on the larger board of a nonprofit’s parent organization, such as a regional chapter chairperson working on a national level.
  • Vice Chair
    • Acts as a second to the chair, assuming the chair’s responsibilities in their absence.
    • Helps to plan and lead meetings, and may have other specific responsibilities assigned by the board.
  • Secretary
    • Responsible for keeping accurate minutes of your nonprofit board of directors meetings and other important events.
    • Maintaining the organization’s records.
    • Ensuring that board meetings are conducted in accordance with the organization’s bylaws.
  • Treasurer
    • Responsible for overseeing the organization’s finances, including:
      • Managing its budget.
      • Ensuring that financial reports are accurate.
      • Providing regular financial updates to the board.
    • The treasurer also works with the rest of the board to develop and implement fundraising strategies.

This team works together to help set policies for the organization, manage staff, provide oversight of finances and programming, dictate strategy, and represent the organization internally and externally. Your board should even be involved with the creation of your organization’s mission and vision statements.

Responsibilities of a Nonprofit Board of Directors

A high functioning board works together to set, plan, and fulfill the needs of a nonprofit. From developing a strategy to help with fundraising or awareness of an organization, board members are key players to ensure your success.

All members of your board should understand the responsibilities that come with the honor of serving your organization. While specific roles may be somewhat different by organization, all of the responsibilities generally fall into six categories.

Strategic Planning

Board members are expected to direct and assist with planning, implementation, and monitoring goals. For nonprofits with a paid staff or director, the board works in direct collaboration with this team. The board should work to create short-term (potentially campaign-based) and long-term strategies and goals.

Fundraising

Board members can be some of the most valuable fundraisers on your team. They can provide your nonprofit with adequate resources to fundraise, connections to other potential donors or funding sources, and fulfill missions.

Financial Oversight

From developing budgets to signing for financial transactions, board members need financial literacy to understand financial documents and work with third-party resources (accounting, legal, etc.) to maintain the financial health and stability of the organization.

Legal/Ethical Compliance

Not just directors of strategy, your board also provides the legal guidepost and ethical foundation for the organization. Many boards will have at least one person with a legal background to help guide this role.

Representing the Organization

Garnering support through advocacy, board members should be some of your strongest supporters. It’s important that they are respected in their roles with your organization and represent your nonprofit in an acceptable manner. Board members that aren’t in alignment with your mission can create awkward public interactions or fractionalize your efforts.

Providing Support and Guidance

Board members can mentor paid staff or anyone associated with an organization to help direct the nonprofit, create a succession plan, and provide professional and moral support to help you reach collective goals.

A Strong Board is an Engaged Board

A nonprofit board of directors can be one of the most important groups associated with the success of a nonprofit organization. They should help direct the overall strategy of the organization, serve as financial stewards, and be the organization’s biggest advocates.

Help them understand your goals and mission with easy to read reports and tools that provide information about your organization. Reporting features in GiveWP make it easy to create reports about campaigns and fundraising so that you can get that information to your board members quickly and efficiently.

Learn more or request a demo.

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