When registering a nonprofit organization and developing its constituent documents, the most important thing is to form the structure of the governing bodies that meet the requirements of the law. So, what are the legal responsibilities of the board members?
The board of directors in the nonprofit organization
Nonprofit governance refers to the practice and process of providing leadership to the members of a nonprofit organization (NPO), helping to guide it towards achieving its goals. Governance often appears in this context as a board of directors, usually known simply as a board.
The nonprofit board is the governing body of an organization established for purposes other than generating income. The council’s function is not to manage the organization’s day-to-day operations but to oversee its higher-level problems. The board’s scope is related to the organization’s mission and includes the development of initiatives and strategies for its implementation. Governance, in contrast, is the jurisdiction of volunteers or paid employees and includes the fulfillment of a mission defined by the board.
The main value of the board is that it is a collegiate body. The board represents the interests of the NPO’s many stakeholders, and this collective leadership helps the organization stay true to its mission and oppose the interests of particular groups or individuals. In this sense, the board complements the head of the organization, who brings his talent, charisma, vision, and influence to leadership.
Collective leadership also has practical advantages. Since the board is still a group, compared to the sole leader, he has wider horizons and richer experience. At the same time, being a single body, the board forms a common opinion from many points of view, thus acting as a unifying force of the organization.
Legal responsibilities of NPO board members
Although the board members act as part of a common collegiate body, they also have personal responsibilities. Board members are expected to attend meetings regularly, participate actively, and put NPO interests ahead of their own, professional or corporate. A detailed list of board members’ responsibilities can help them better understand their role and how best to fulfill it.
The description of duties should include the following items:
- know and support the mission of the organization;
- regularly participate in meetings of the board;
- prepare in advance for meetings;
- observe confidentiality;
- offer reasonable and unbiased recommendations;
- avoid conflicts of interest and not impose their agenda;
- participate in the work of committees and special events;
- support the leadership of the organization;
- participate in the development of the resources of the organization;
- promote the organization in the community.
In addition to the main ones, the board can delegate some specific responsibilities to its members. For example, a finance expert may be authorized to oversee the preparation of an organization’s annual budget, or a lawyer on the board may be assigned to manage the legal affairs of an NPO. The granting of such powers must be approved by the board and cannot be automatically extended to board members on a professional basis. In addition, it is impossible to limit the duties and powers of board members only to services in their professional field. The first and most important duty of every board member is to contribute to the collective decisions of that body.
All structures of NPOs must exercise their functions solely in the interests of the organization. Otherwise, they can be subjected to disciplinary or material action to compensate for the losses incurred.