It’s a great honor to be asked to join a nonprofit board of directors. Most people get asked either because they have specific skills to contribute to the organization or because they have a personal interest or passion in the cause. While it’s flattering to be considered for nonprofit board membership, there are a lot of pros and cons to consider before accepting a position.
Nonprofit organizations are regulated by state laws. It’s important for all board directors to be familiar with laws and regulations that pertain to nonprofits. All board directors are responsible for legal compliance. It’s not enough to assume that another board director has it covered or to assume that everything is being done correctly. Board directors must also be aware of their duties and responsibilities for board directorship. Not knowing your responsibilities doesn’t absolve you from the liability of not knowing and it’s important that all nonprofit board directors are aware of this.
Pros of Nonprofit Board Membership
The number of pros for serving on a nonprofit board are numerous and will benefit you for a lifetime.
First, to have a nonprofit board directorship on your resume will enhance it nicely. Employers will give you credit for doing such noble work. They’ll likely want to know more about your involvement, especially as it pertains to the knowledge and skills that you acquired during your board service.
Serving on a nonprofit board is a fantastic learning opportunity. It’s a chance to learn more about the field that the nonprofit is in. It’s also a valuable opportunity for learning more about governance and leadership. Those experiences will help you to advance in your career and in life.
Nonprofit board membership also offers you new opportunities to expand your network which can be very beneficial in other areas of your life.
Finally, serving on a nonprofit board offer you an opportunity to contribute to your community and change lives in a palpable way.
Cons of Nonprofit Board Membership
If you’re looking to serve on a nonprofit board for the pay, you’ll most likely be disappointed because nonprofit board directorship isn’t usually a paid position. There are a host of other cons to nonprofit board directorship as well.
If you’re considering serving on a nonprofit board, be sure to ask many questions about the board’s expectations for your time commitment. It usually ends up being more than most people expect. You’ll be expected to attend all board meetings so be sure to find out how often they meet and how long they last. At some point, you will probably be asked to serve as an officer or as part of a committee which will entail more of a time commitment. You will be expected to attend events and fundraisers for the group, so it’s wise to ask what kinds of events they hold and how often they hold them.
It’s common for nonprofit boards to recruit board members who can make a strong financial commitment to the organization or who have strong connections of people who could do the same. Either way, best practices for good governance suggest that all board members give some type of donation to the organization annually. The reason for this is because grantmakers look for assurance that board directors are invested enough in the cause that they’re willing to donate their own money. Some donors ask for the dollar amount that board directors donated and others ask for the percentage of donations that board members donated. Even if all board directors donate a small amount, grantmakers would see that there are 100% donations from the board.
Other than the time commitment, candidates for nonprofit board directorship should be aware that they could be held liable for their speech, actions, or inactions in certain situations.
Nonprofit board directors are required to act with reason and prudence, always acting in the best interests of the nonprofit. Board directors who fail to fulfill their duties could be personally sued for wrongful actions. Board directors should know their state laws for compliance. For example, most states have limitations on lobbying and political involvement for nonprofits.
Be sure to ask the board if the organization has anything in their articles of incorporation that helps to limit the personal liability for board directors. The articles of incorporation may state that your liability is only limited to intentional wrongful action, which greatly decreases your chances of being sued for that reason. Another way that nonprofits typically protect their board directors is by purchasing a Directors and Officers liability policy, which most nonprofits will have done. Be careful to read the policy as it will surely contain certain conditions and exclusions.
Another area of legitimate concern over joining a board of directors is that it can limit your ability to conduct business with the organization as it creates a conflict of interest. Conflicts of interest would also apply to others who are related to you unless the organization has a written policy that states otherwise.
Along the lines of conflicts of interest, board directors should know how to recognize one and be willing to address it if it occurs. It’s important to be able to consider alternatives that don’t create a conflict of interest. In addition, board members who are alleged to have a conflict of interest should abstain from voting on such matters and their vote should be reflected as such in the minutes.
Making the Decision to Serve as a Nonprofit Board Director
Before making the important decision to serve as a nonprofit board director, it’s wise to cover as many bases as you can.
Learn as much as you can about the board’s expectation for your time commitment and be sure that you can meet it.
Board directors have special responsibilities called fiduciary duties that require them to act with good faith, due care, and loyalty. Bad deeds and behavior by other nonprofit board directors have caused increased scrutiny by legislators, regulators, donors, and the media and it’s important to keep this in mind during your term.
Your role on a nonprofit board will require you to be an independent thinker who doesn’t give in to groupthink. You’ll need to be aware that your votes should be informed and not just rubber-stamp the opinions of your peers. Be willing to tackle the hard questions and do proper research to support your votes.
Nonprofit board directors should also be aware that their main duties are oversight. Certain situations may call for delegating tasks to board committees or calling in third-party experts.
Part of your responsibility as a nonprofit board director is to be fiscally responsible. You should know how to read and interpret financial statements or be willing to learn.
Many nonprofits are learning that the best way to manage their board is by using a BoardEffect board portal system. It’s the modern governance solution to assisting new and old board directors to serve as responsibly as possible.