One of the most essential aspects of starting a nonprofit is the organizational governance. Governance starts with the board of directors. Not surprisingly, setting up the original board of directors trips up people right from the start. We often have clients who come to us with a non-compliant board or with no board members at all. Knowing who can serve on a board, and where to find potential board members will make this initial startup step happen more efficiently.
The first pitfall in establishing board members starts with the IRS’s limitations on related board members. For public charities, a board of directors cannot be composed with a majority of family members or business partners. Often, people want to start an organization with their spouses, children, parents, and in-laws all serving on the board. Such a structure would be perfectly appropriate for a family foundation, but for a public foundation, less than half the board is allowed to be related by blood. People who work together often start nonprofits as well; the IRS considers business partners who collectively own 35% of a for-profit company to be related. For more information about these technical details, visit this blog post about Conflict of Interest. If you are struggling to find dedicated individuals outside of your family to serve on a board, you should look at specific parts of your community as a whole.
Building relationships with those who have similar passions will give you access to good candidates for board members. Study the purpose of your nonprofit, and look at what is going on in your local communities. If you are looking to start a ministry, reach out to people who attend local churches. If your organization has an educational purpose, talk to teachers and administrators in nearby school systems. Get in contact with organizations that implement similar programs to what you are envisioning for your startup nonprofit. They may be able to share information about potential pitfalls you might encounter down the road, along with getting you in contact with potential board members with the right experience.
An organization with a strong structure made up of competent, purpose-driven individuals has a better chance for long-term success. Typically, a nonprofit organization needs at least three board members, consisting of the officer roles: president, secretary, and treasurer. When developing these three roles, it is important to find individuals who have experience, or at least a level of education that will allow them to successfully contribute to the organization. The IRS cannot dictate who is qualified to serve on a board of directors, but keep in mind that the board does need to remain compliant for your application for tax-exempt status to be approved.
Hopefully this gives you a little insight on where and how to find board members so your nonprofit can get off to the right start. Remember, no single individual owns a nonprofit organization. A board must be the governing body of the organization, so figuring out who should be on the board cannot be taken lightly.