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Nonprofit Board Members – Choose Wisely

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No decision you make regarding your nonprofit organization carries more importance than who is chosen to lead it.  The members of your board of directors make up the governing body of your nonprofit and are legally accountable for its actions.  Practically speaking, they are accountable to your supporters and beneficiaries to oversee the accomplishment of the organization’s purposes.  The buck stops with them…at least it is supposed to!  But that’s another article.

If you are just starting out, who should be asked to serve?  And, if your organization is already established, and vacancies on the board need filling, who should replace the exiting members?  These are questions that are asked by clients of ours quite frequently.  Understandably so.  Concerns of competency, trust, experience and compatibility loom large and demand answers.  In this article, I will attempt to answer these questions, looking first at the issue of installing an initial board, followed by a look at subsequent board positions.

Initial board of directors. Let’s first establish the scenario of a typical, small nonprofit start-up.  One or more people recognize a need and have a desire to establish an organization to meet that need.  Research is conducted into the feasibility of the idea, various program plans are tossed around and, eventually, the decision is made to formally establish an actual entity.  In the course of getting established, the first board of directors must be installed.

Initial board members are usually invited by the incorporators to join the board.  But who do you choose?  First of all, you must select people who share your sense of mission.  If they do not care deeply about the very purpose of the organization, their value is minimal.  Secondly, they must possess a certain level of business or organizational competency.  It is not necessary for them to have prior experience as business leaders, per se, but they should understand principles of good business practices.  They should be long-game strategic thinkers.  They should be willing to give of their time and money to see the organization’s mission accomplished.  They should always understand that their role is governance, not management.  Governance establishes mission and programs, while management actively works those programs under accountability to governance.  And finally, they MUST be people of integrity.  I don’t have to elaborate on that one, do I?

One more point concerning initial board members:  Not every person will have equal measure of the qualities outlined above.  People are by nature more talented in certain areas.  It is important to keep that point in mind as you appoint members and to shoot for balance.

Board vacancies. Qualifications for successive board members are identical to those of initial board members.  As vacancies occur, continue to keep the concept of balance in mind.  A board over-weighted with visionaries will be all over the place.  Likewise, a board that tilts toward execution will lack for ideas.

The bigger issue regarding successive board members is related to the legalities.  Specifically, every nonprofit should have bylaws.  The bylaws are the internal rules of governance that the organization’s board is bound to operate within.  A compliant set of bylaws will contain specific rules that spell out (among other things) the responsibilities of board members, as well as things like length of terms (1 year, 2 year, etc.) and the processes for removing and adding board members.  It is absolutely critical that the bylaws are followed to the letter, lest there be grounds for a legal challenge by anyone so choosing to question the procedures employed.  This is not optional!  State corporate law, as well as IRS 501(c) requirements, demand it.  An important corollary:  Make sure that your bylaws are drawn up by someone who understands these issues.

Odds and ends (or, who not to add). The last point above brings me to…well, my last point.  We are often asked by those forming organizations whether or not they should add a lawyer or accountant to the board.  Great question!  Our answer usually surprises them:  NO!  That is, not unless you are choosing them because they first meet all the requirements laid out above and just so happen to be a lawyer or accountant.  Never, ever put someone on your board because of those credentials.  People get the idea that by having these professionals on the board, they will always have access to competent advice and, the thought goes, the organization won’t have to pay for it.  It never works out that way.  Plus, it is a potential conflict of interest.  Legal and professional help should be independent in most situations.

Hopefully this discussion helps give you a better understanding of how to choose the right people to help you lead.  Having the right people is the best first step to successfully fulfilling your mission.

Got feedback:  We’d love to hear from you.  See the comment section below…

Greg McRay, EA

Greg McRay is the founder and CEO of The Foundation Group. He is registered with the IRS as an Enrolled Agent and specializes in 501(c)(3) and other tax exemption issues.

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mary lou
Guest

Thanks for the info. I find your articles very helpful in managing the organization.

Christian Mendelsohn
Guest

Thank you for your advice– Very helpful in this preparatory time in the selection of directors and initial meeting with them. Cut to the chase type of material– kudos!

Linda Driesbach
Guest

We are in the midst of filling vacancies on our initial board right now so your article is not only very informative but it is timely for us. I always forward yout articles to our board members as another means of self evaluation toward improvement. Thank you!

Imelda Maguire
Guest

Hello RaK and Christopher,

As Linda says, most timely and informative.

The news letter is a great source for those of us just starting out with implementing the first stages of the board.

Thank you so much for sharing your wisdom with us all.

Imelda

Gina
Guest

Can board members receive reasonable pay for service? In other words, how do you draw a salary if you start and run a non profit organization? Another site says board members are volunteers and rarely paid. Can’t support a family like that!

Richard Pratt
Guest
Hi, Our rowing club has 501 (3) (c) status and caters for rowing across all segments of our community including a very active junior program. There have been recent changes to the Board of Directors as per the Byelaws and as a result there are now 4 junior club members on the Board (of 14). These junior Board members are all minors under the age of 18. Our Board also includes several parents of junior rowers. It seems to me that the age of the juniors would not qualify them to act as Board members as described by your article,… Read more »
Andrea
Guest

My sister and I have been assisting with the setup of a 501c3 non-profit organization for children that has the initial support of a church. The pastor of the church recently commented that two family members cannot both be on the board. Is this true? I believe he has other reasons for saying this and cannot find anything related to this online. Can you assist?

Thank you,
Andrea

Dennis
Guest

Being a 501c3, when a vacancy is filled on the board, is there any requirement to notify the IRS other than on the annual tax return?

This is good information. Thank you.

Shelby
Guest

Hi, I am in the process of starting up a non-profit. The problem I’m having is that I don’t know enough people to be board members, and the people I do know either don’t have the time or think I’m crazy. My non-profit will help needy kids in my county so I believe it will work. Do you have any sugestions on how I can find people to join me?I know this sounds like I can’t do it but I am determined to make it work.

Spike
Guest

I am on the Board of Trustees for a non-profit childcare center. We’ve had some turmoil in the center the last couple weeks with the Executive Director and in the last 3 days we’ve managed to lose both our President and Vice President and are now below our minimum 7 members. Question is what do we do now?!

leslie
Guest

Can a foundation member be part of a non-for-profit community organization?

Adrian
Guest

I was wondering, can the board chairman also be the ED of the non profit? Also what is better practice a Board of advisors or a Board of directors?

Craig Jeranek
Guest
My wife and I are starting up a non-profit for Fibromyalgia awareness in our community. There is no other such organization in our area. We have some questions as to who would be "good" board members. I saw your post above about selecting "people who share your sense of mission." Are Doctors that may deal with this good people to have on a board for a cause such as this? Would we be better off trying to find other individuals that have Fibromyalgia? My wife is also concerned about the "board of directors" selection because the board usually appoints the… Read more »
cindy
Guest

A former board member was found guilty of a felony for accounting actions at her work place. Prior to this, she was a valued member of the community and in fact, a community leader. Our 501 (c) (3) board does not believe she should serve another term, but she is anxious to work with us. Is there a legal precedence for not allowing her to serve. We do not have anything in by-laws about staying on the right side of the law!

Herman Jones
Guest

Can you be on the Board of Director’s and a paid employee.

Jamie Sutta
Guest
Hi Greg. Thanks so much for this article. Very helpful. I have a start-up nonprofit and we are currently trying to recruit board members so that we can file our 1023 application. I would serve as the artistic director for a children’s chorus. I have a few questions: 1. In the State of Florida, 3 board members are required. We have 3 very good candidates for the board but I read that the IRS likes to see 5 or more. What are your thoughts on this? 2. My mother-in-law has been instrumental in helping this organization. She is a child… Read more »
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[…] I suggest actively using the check off list below to guide your decision- making.  (Read more here and here for more on recruiting the right board members and retaining […]

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