The expectations and responsibilities of nonprofit Board of Directors may vary depending on the organization’s size, structure, and mission. However, some general expectations and responsibilities are standard. Board members are typically expected to attend regular meetings, serve on committees, and actively participate in decision-making processes. They are expected to act in the best interests of the organization and avoid conflicts of interest.
Board of Directors Expectations: Fiduciary Oversight
One of the key roles of a nonprofit Board of Directors is fiduciary oversight. Fiduciary oversight refers to the responsibility of the Board to ensure that the organization is operating legally, ethically, and financially soundly. This includes:
- Review and Approve Operating Budget: Approving the organization’s budget and monitoring its financial performance. This includes regular review of the organization’s financial statements, and annual review of tax returns.
- Developing a Governance System: Verifying the organization has appropriate financial controls and risk management strategies in place.
- Monitoring Compliance: Assuring compliance with legal and regulatory requirements, including filing required reports with government agencies and maintaining appropriate documentation.
- Recruit and Retain Nonprofit CEO: Recruit, hire and support the organization’s CEO. This responsibility also includes evaluation and compensation of the nonprofit CEO, and management of succession planning.
- Review Investment Decisions: Review and approve investments to safeguard organizational assets.
Board of Directors Expectations: Strategic Counsel & Governance
The Board of Directors of a nonprofit organization has an important role to play in providing strategic counsel and governance, including:
- Nonprofit Policy Governance: The Board is responsible for ensuring that the organization complies with all applicable laws and regulations, including tax laws, employment laws, and nonprofit governance laws. Boards must also help to establish policies and procedures that promote effective and responsible governance.
- Nonprofit Governance System Development: Setting the overall direction and vision of the organization, ensuring that it is aligned with the organization’s mission and goals. This includes setting goals and objectives, developing strategic plans, and establishing performance measures to evaluate progress.
Attending and Preparing for Board Meetings
The Board of Directors has a critical role to play in effective meeting management. Nonprofit bylaws outline expectations, which generally include:
- Attendance at Nonprofit Board Meetings: Board members are expected to attend all meetings, including regular Board meetings, committee meetings, and special meetings as needed.
- Preparation: Board members are expected to prepare for meetings by reviewing the agenda, supporting materials, and any relevant background information. This includes reviewing financial reports, program reports, and other relevant documents that will be discussed at the meeting.
- Participation: Board members are expected to actively participate in meetings by asking questions, providing feedback, and offering insights and perspectives on issues being discussed. This helps to ensure that the Board is able to make informed decisions that are in the best interests of the organization.
- Decision-making: Board members are responsible for making decisions on behalf of the organization, including approving budgets, hiring and evaluating the CEO, and making strategic decisions. Board members are expected to weigh the options carefully and make decisions that are in the best interests of the organization.
- Follow-up: Board members are expected to follow up on action items and decisions made at meetings, ensuring that the organization is taking the necessary steps to implement the Board’s decisions.
Board of Directors Expectations: Lead Board Committees
Board committees are subgroups of the Board that are established to address specific issues or areas of responsibility. Typical Board committees include:
- Nonprofit Executive Committee: a standing committee that meets on a regular basis and is typically responsible for advising the Board and CEO on important matters, as well as hiring and evaluating the CEO.
- Nonprofit Development Committee: a committee formed to support fund development efforts for the organization.
- Nonprofit Board Member Recruitment Committee: supports the development and sustainability of the Board by vetting and cultivating new Board members.
- Nonprofit Finance Committee: provides overall financial oversight of the nonprofit.
- Nonprofit Programs Committee: supports and advises the programs and services provided by the organization.
- Nonprofit Operations Committee: addresses ongoing or procedural issues for the organization, in partnership with the CEO.
Board of Directors Attending Events
Fundraising, community and other nonprofit events provide an opportunity for Board members to connect with nonprofit donors, stakeholders, and other members of the community, and to demonstrate their commitment to the organization. The Board’s role at nonprofit fundraisers other events includes:
- Demonstrating their support for the organization and its mission.
- Networking network with other community leaders, potential donors, and other stakeholders.
- Learning learn about new trends and issues in the nonprofit sector, and to gain insights into how other organizations are addressing similar challenges.
About Capital CFO+
Capital CFO+ LLC is based in Saratoga Springs, New York, providing bookkeeping, accounting, and CFO services. Capital CFO+ helps small firms access the economies of scale, efficiency, and expertise that large companies enjoy. Visit Pearl, our branch manager, at capitalcfollc.com or LinkedIn for more information.