Do you have an initial Board of Directors?

A Board of Directors manages every nonprofit organization. These people, referred to as board members, trustees, or officers, volunteer their time to provide direction, guidance, and operate the nonprofit.

Every nonprofit organization requires at least three initial board members. They must fulfill the roles of President, Secretary, and Treasurer. These positions, known as the officers, must be filled by different people in compliance with the IRS rules. While you might want to do all of the work for your organization, it’s essential to find a team of people who not only share your vision but the workload, too.

While three people are the minimum, a Board of Directors can have as many members as it desires. The board may consist of three officers and two additional at-large board members. Or maybe four at-large board members. It is really up to the aims of the organization. When considering the number of board members, know that you will need to consider the eventual cost of Directors and Officers insurance for the board. We’ll discuss this later in the guide. Ultimately the more board members an organization has, the more costly its annual insurance.

The majority of board members (51% or more) cannot be related by blood or marriage. If an organization has a three-person board, no-one related is permissible. There are different rules for Private Foundations, which are explained later in the guide.

Having the right Board of Directors is one of the most important initial decisions a nonprofit makes. One nonprofit interviewed in our research study reported taking two-years to find a Board of Directors dedicated to helping the organization’s ongoing needs. That’s two years not spent on fulfilling your organization’s mission. Avoid this problem by building the right board of directors on the front end.

When recruiting board members, ensure they have a few key traits:

–    Knowledge: Each member of the board should be familiar with appropriate and ethical governance practices. Choose individuals who have expertise and experience in the nonprofit sector and who have demonstrated mindfulness for compliance.

–    Skills: Members of the Board should contribute something to the organization’s operation. Select individuals who have skills in accounting, law, or business administration. You will also want individuals with experience in your specific activities. For example, suppose you are an educational program. In that case, you may wish to include a teacher or school administrator on your board.

–    Resources: Individuals who have vast resources are essential board members. Consider people who not only have financial resources but also connections throughout the community. For example, do you know any local politicians or people in high-ranking positions in local corporations? These are great people to consider for board positions as they may bring access to opportunities and potential donors.

–    Character: Nonprofits must observe the highest standards to retain the trust of the donating public and the confidence of those they seek to help. The board provides the public face of the organization and its behavior. As such, individual board members must be exemplary. The last thing you want is one of your board members getting caught up in a scandal bringing undue attention to your organization. Further, many states ask about the criminal record of board members. While not always a deal-breaker, it is important to know about your member’s history.

–    Passion: The organization’s mission should guide every decision the board makes. Therefore, each board member should articulate and demonstrate a real love for your primary purpose and encourage their fellow members to show the same commitment. Their passion will translate into their volunteer work and promotion of the organization to their friends and family.

Additionally, board members are always volunteers. While board members can fulfill paid staff roles (if they exist), the majority of board members (51% or more) cannot receive any compensation from the organization. For example, in an organization with three board members, one person can also serve as the organization’s Executive Director and draw a salary. The other board members cannot receive compensation, even if they also fill employee roles.

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