The Selection Process For The Board of Directors
You have a mission that you are passionate about fulfilling, and you have decided to start a nonprofit organization to do just that. One of the first measures to undertake toward achieving that goal is the selection of the initial Board of Directors for the organization. While this may be only the first of many steps that must be taken in legally forming the organization, it is arguably the most important and should not be taken lightly. The decision of who to place on the founding Board of Directors must be made after careful consideration of each potential candidate’s unique set of knowledge, skills, and abilities.
In my experience, most founders of grassroots nonprofits are compelled to select members of their family as their trustees. At first glance this method makes sense. When thinking of those individuals that can be trusted to control your organization, most would immediately lean on family. Unfortunately, if you’d like the organization to qualify as a public charity under IRC section 501(c)(3) you must look beyond family members and seek out members of the general public to provide governance.
A primary concern in Board selection is avoidance of partiality. Most would assume that members of the same family will vote in accordance with one another, without first taking into consideration the effects on public interest. This is the principal reason why the IRS requires 51% of a nonprofit Board to be comprised of “disinterested” parties. Disinterested individuals are those who have no relationship with any other Board member, and who do not receive compensation from the organization for any reason. (Keep in mind that your Board should be primarily a volunteer group anyway.)
When looking to the public to make your Board selections, there are several things you’ll want to keep in mind:
- Knowledge- Each member of the Board should be familiar with appropriate, ethical governance practices. Select individuals who have knowledge and experience in the nonprofit sector and who have demonstrated mindfulness for compliance.
- Skills- Members of the Board should be able to contribute something to operations. Select individuals who have skills in accounting, law, or business administration. You’ll also want individuals with experience in your specific activities. For example, if you are an educational program you may want a teacher or school administrator on your Board.
- Resources- Individuals who have good resources in the community are essential on your Board. Select individuals who have contacts in local legislature, with large corporations, or who have relationships with private individuals who may be potential donors.
- Character– Nonprofits must observe the highest standards in order 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, and that of individual board members must be exemplary.
- Passion- The organization’s mission should guide every decision the board makes and thus each member of the Board should be able to articulate and demonstrate a real passion for it and encourage their fellow trustees to show the same commitment.
Establishing a Board who will provide excellent oversight of organizational operations while also representing a cross section of your community is essential. If careful consideration is made before every Board election, your organization will succeed in creating public trust and value.