What are the responsibilities of individual non-profit board members?

shutterstock_275563196In my previous article, I laid out the overarching responsibilities of non-profit boards, which include big-picture strategic planning; selecting executive staff members; overseeing executive leadership; approving the organization’s budgets; overseeing compensation for staff members and leadership; and fundraising.

In this article, I will focus on the responsibilities of each individual board member.

Understand your fiduciary responsibilities

As members of non-profit organizations’ governing bodies, individual board members must adhere to the legal responsibilities of fiduciaries. A fiduciary is a “person who has the power and an obligation to act on behalf of another under circumstances that require total trust, good faith and honesty.”

As fiduciaries, non-profit board members have three specific legal duties:

  1. Duty of Care: To act with such care as an ordinary, prudent person would employ in your position.
  2. Duty of Loyalty: To act in good faith and in a manner you reasonably believe is in the best interest of the organization.
  3. Duty of Obedience: To be faithful to the organization’s mission. You are not permitted to act in a way that is inconsistent with the central goals of the organization. A basis for this rule lies in the public’s trust that the organization will manage donated funds to fulfill the organization’s mission.

Long story short: board members must, at all times, act in the best interest of the non-profit organizations they represent.

Educate yourself on the organization you represent

In order to responsibly serve on a non-profit’s board, members should understand the organization’s mission, strategic vision and financial situation. That means reviewing:

  • Audited financial statements of past years
  • The organization’s Form 990
  • Missions and values of the organization
  • The organization’s bylaws
  • The organization’s most recent strategic plan
  • Current financial statements

Once new board members are initiated, they should review all provided information in advance of board meetings, including financial information, so that each member is prepared to make informed and responsible decisions.

Joining committees to stay involved with the organization

Most non-profit boards have committees dedicated to specific organizational efforts. These committees vary based on the size and operations of each organization.

Individual board members should actively seek out committees relevant to their specific skill sets and interests.

 

Hatch-Michelle-150x150Michelle Hatch is a partner in our Non-Profit Services Group. She oversees audit and accounting engagements for non-profit organizations, including independent schools, trade associations, health and human service organizations and art, cultural and membership organizations. Michelle is also a member of the Employee Benefit Assurance Group and oversees audits for 401(k), 403(b) and defined benefit retirement plans.

The firm, with over 400 professionals and staff, offers a diversity of services, which includes auditing, accounting, tax and business advisory services. In addition, BlumShapiro provides a variety of specialized consulting services, such as succession and estate planning, business technology services, employee benefit plan audits, litigation support and valuation.  The firm serves a wide range of privately held companies, government and non-profit organizations and provides non-audit services for publicly traded companies.

Disclaimer: Any written tax content, comments, or advice contained in this article is limited to the matters specifically set forth herein. Such content, comments, or advice may be based on tax statues, regulations, and administrative and judicial interpretations thereof and we have no obligation to update any content, comments or advice for retroactive or prospective changes to such authorities. This communication is not intended to address the potential application of penalties and interest, for which the taxpayer is responsible, that may be imposed for non-compliance with tax law.

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