What is the role of the nonprofit board? What exactly are the non-profit board’s responsibilities? How does the board contribute to a nonprofit’s success?
Nonprofits play a valuable role in society, tackling issues not normally addressed by business or government. As such, the public puts a tremendous amount of trust in nonprofit organizations: donating funds and placing beneficiaries in their care. The nonprofit board provides the leadership and oversight necessary to ensure this trust is fulfilled with dignity and honor.
This and other questions are examined periodically by BoardSource in their Leading with Intent study. The 2017 report illustrated some interesting trends in the composition of nonprofit boards.
Leadership
A nonprofit board sets the direction and defines the mission of the organization. It maps out the work of the organization, what it sets out to accomplish—its purpose. As part of this, the board also often establishes the values of the organization—how it gets its work done. By being disciplined in its commitment to this mission and the organization’s values, the board helps drive success for the organization.
This also provides a clear set of criteria for recruiting new board members. Those who are committed to the organization’s mission will prioritize strategies and decisions that align with this mission and help keep the organization on course. When everyone is working toward the same purpose, the organization succeeds.
Oversight
The nonprofit board also supervises the organization to make sure this mission is accomplished with integrity. This involves putting into place policies and practices that ensure accountability and transparency, such as:
- Addressing conflicts of interest—The board needs to be vigilant that its members do not have conflicts of interest with other organizations. This can be addressed with:
- Written conflict-of-interest policy.
- Signed annual disclosure of potential conflicts.
- Providing Financial Accountability—As custodian of donated funds, the board ensures that all finances are managed properly and that the appropriate information is transparently conveyed to the public. These practices include:
- Conduct an annual external audit.
- Meet with auditors without staff present.
- Post financial statements to the organization’s website.
- Review the IRS Form 990 before it’s filed.
- Post the IRS Form 990 to the organization’s website.
- Obtain liability insurance for directors and officers.
- Ensuring Privacy and Security—Increasingly, concerns over the protection of personal information are causing nonprofits and their boards to step up their privacy and security protocols. At the minimum, the following policies need to be put in place:
- Written privacy policies.
- Written data security policies.
What is Your Experience?
What are your thoughts about the role and responsibilities of the nonprofit board? How do you help your board meet these responsibilities? What approaches have you found that work? How do you work together with your board to ensure your organization’s success? Please share your thoughts in the comments below. We appreciate your insights.
