Serving on a nonprofit board presents great opportunities for meaningfully contributing to a worthy cause. But board service also involves significant responsibilities that may feel burdensome at times. How can current board leaders effectively equip newly recruited board members for successful board service? In a nutshell, it’s all about a good fit, clear expectations, and safeguards.
A. Who is the right person for the job?
Nonprofit boards need leadership from individuals who share a passion for the organization’s mission. To help potential leaders understand this mission, make sure that the nonprofit’s corporate purpose statement clearly and accurately articulates the organization’s mission. Ask prospective board members to read the corporate purpose statement. Then ask them to consider the following question. Is this mission something that I believe in, and is it worth committing my best efforts?
B. What will be expected of board members?
Board leaders often speak in terms of “time, treasure, talents” or “wealth, wisdom, work” parameters. These phrases may be helpful to show that board members should expect to contribute some of their time, some of their money, and some of their skills or expertise. But better yet: develop a one or two-page “Board Expectations” document that helps new board members to understand more clearly how they are to contribute meaningfully. Also consider assigning seasoned board members to mentor new board members in their new responsibilities.
A “Board Expectations” document could include the following elements to inform new board members about their roles.
- Specific governance expectations:
- Program oversight (typically through accountability expected from executive-level staff, not “micro-managing” or other administrative involvement)
- Financial oversight as a priority
- Strategic planning involvement
- Independent judgment required for board decisions
- Commitment to maintaining the nonprofit’s mission
- Loyalty to the organization in business decisions
- Time commitment expectations:
- Frequency of board meetings (and any travel)
- Board meeting preparation and follow-through
- Service on committees
- Fundraiser involvement
- Donor communications
- Other volunteer opportunities
- Financial support expectations:
- Specific dollar amount of contributions per year
- Alternatively, a “give or get” option (to contribute personally or bring in other contributions)
- Other cultivation of prospective donations
- Unreimbursed costs (e.g., for board-related travel expenses)
- Knowledge expectations:
- Generous use of one’s talents and wisdom
- Understanding of organization’s bylaws and other key corporate policies
- Familiarity with organization’s other key documents (as contained in a hard-copy or electronic corporate notebook)
- Reasonable inquiry into and evaluation of pertinent facts affecting business decisions
- Attentiveness to needs for outside expertise (legal, accounting, etc.)
- Other expectations for effective board service:
- Constructive and cooperative engagement with the board’s deliberative processes through respectful listening, thoughtful questions, and appropriate follow-up
- Unified support for board decisions, once made
- Willingness to learn and grow through board trainings and board self-evaluations
- Loyal attentiveness to potential growth opportunities (finances, board development, volunteers, other participants and supporters)
C. What could go wrong?
Directors and officers typically enjoy broad legal protections from personal liability arising from their nonprofit board service. Such protection is due to state nonprofit corporation laws, which provide corporate “shields” and indemnification rights, and to state and federal “Good Samaritan” laws. Essentially, so long as directors and officers serve as volunteers and fulfill their fiduciary duties to serve the nonprofit with diligence and loyalty, no personal liability should result.
A few caveats are in order. First, while it is definitely rare, individual nonprofit leaders may be held personally liable in limited circumstances and for specific public policy reasons (e.g., liability arising from personal involvement with organizational failure to pay employment taxes; liability arising from approval of transactions with nonprofit insiders that result in abuse of charitable assets). Second, directors’ and officers’ insurance is extremely important, both to cover legal defense costs and to promote a safety net in the event of actual liability. Third, directors and officers should make sure that the nonprofit’s corporate status is well-maintained at all times in compliance with applicable state and federal reporting laws, for maximum legal protection.
For further guidance on legal aspects of nonprofit board matters and related considerations, please contact one of our law firm’s attorneys at 312.626.1600 or info@wagenmakerlaw.com, or visit us them the web atwww.wagenmakerlaw.com.
This guest blog provided by Wagenmaker & Oberly, LLC, a Chicago-based law firm specializing in legal services for the nonprofit sector. Wagenmaker & Oberly assists nonprofits with the challenges facing charitable, educational, and religious organizations, private foundations, civic groups, trade associations, and other diverse entities under Internal Revenue Code Section 501. For more information, please visit the firm at www.wagenmakerlaw.com .