What is the responsibility of a nonprofit board of directors?
According to BoardSource, there are three key responsibilities held individually and collectively:
· Duty of Care —the legal responsibility to actively participate in making decisions on behalf of the organization and to exercise their best judgment while doing so.
· Duty of Loyalty —the interests of the organization come before their personal and professional interests when acting on behalf of the organization in a decision-making capacity.
· Duty of Obedience —the legal responsibility of ensuring that the organization complies with the applicable federal, state, and local laws and adheres to its mission.
Frequently, the source of dysfunction stems from board members not understanding their roles. This is especially a problem when there is no staff, and the board is expected to be a “working board.” For example, if a board member is an accountant and is expected to keep the books for the agency, there needs to be a clear understanding that their services are pro bono, and the board member will not be paid.
Another very common example is when a board member treats agency staff as their own employees. It is the responsibility of the board collectively to hire and fire the executive director. The staff of the organization reports to the executive director, not the board members.
Board members who are successful business people oftentimes think that a nonprofit should be run the same way as their own business. When a board member is not willing to accept those differences, they can impact
the work of the board and the effectiveness of the agency.
Additional examples of dysfunctionality are:
Being uninformed and unprepared: a board member should understand the mission of the organization and also be ready to fully participate in board and committee meetings.
Being indecisive: board members make policy decisions and should understand the pros and cons of pertinent issues. They should come to board meetings ready to make decisions and vote their conscience.
Being punitive: The board may not discipline staff members, nor is it appropriate to instruct the executive director to punish, sanction or discipline staff members. Human Resource policies and procedures should dictate the disciplinary actions available to the executive director.
The best way to address dysfunctional boards is to stop it before these actions happen with effective and informative board recruitment and orientation. The orientation should include a board notebook (digital or paper) or a board portal with pertinent documents. Once your board is in place then they receive periodic training and education in board governance best practices. In addition to BoardSource, I also like to recommend BoardBuild, a Fort Worth based nonprofit organization specializing in board development and board member recruitment.
Next week I’ll address a big abuse of power: micromanagement by nonprofit boards.
Michelle Crim, CFRE
Dynamic Development Strategies can help. We offer coaching and fundraising services for our nonprofit clients. We specialize in startup and smaller nonprofits because we understand your challenges. Please contact us for more information.