What is a Nonprofit's Board of Directors?

by Staffer Team

A strong organizational structure is crucial for all nonprofits. Based on the state in which your nonprofit incorporates, there are standards for the board. Many of their responsibilities involve making sure the nonprofit follows laws, adheres to its mission, and stays financially stable.

Basic Responsibilities

  1. Determine mission and purpose
  • Create and review a statement of mission and purpose that articulates the organization's goals, means, and primary constituents served

2. Select the Chief Executive

  • Boards must reach a consensus on the CEO's responsibilities and undertake a careful search to find the most qualified individual

3. Support and Evaluate the Chief Executive

  • Ensure that the CEO has the moral and professional support they need to further the goals of the organization

4. Ensure Effective Planning

  • Actively participate in an overall planning process and assist in implementing and monitoring the plan's goals

5. Monitor and strengthen programs and services

  • Determine which programs are consistent with the mission and monitor their effectiveness

6. Ensure adequate financial resources

  • Secure adequate resources for the organization to fulfill its mission

7. Protect assets and provide financial oversight

  • Assist in developing the annual budget and ensure proper financial controls are in place

8. Build a competent board

  • Articulate prerequisites for candidates, orient new members and periodically and comprehensively evaluate their performance

9. Ensure integrity

  • Ensure adherence to legal standards and ethical norms

Legal Responsibilities

Under principles of nonprofit corporation law, a board member must meet certain standards of conduct and attention in carrying out their responsibilities. These standards are usually described as the duty of care, loyalty and obedience.

Duty of Care

  • Describes the level of competence that is expected of a board member and is commonly expressed as the duty of "care the an ordinarily prudent person would exercise in a like position and under similar circumstances."

Duty of Loyalty

  • A standard of faithfulness; a board member must give undivided allegiance when making decisions affecting the organization
  • Board member can never use information obtained for personal gain, but must act in the best interests of the organization

Duty of Obedience

  • Requires board members to be faithful to the organization's mission
  • Basis for this rule lies in the public's trust that the organization will manage donated funds to fulfill the mission
  • Requires board members to obey the law and the organization's internal rules and regulations