The board of directors play a very important role within a nonprofit organization, providing the framework for its operations. Just as for any corporation, the board of directors of a nonprofit has three primary legal duties known as the “duty of care,” “duty of loyalty,” and “duty of obedience.”
Duty of Care: Take care of the nonprofit by ensuring prudent use of all assets, including facility, people, and good will;
Duty of Loyalty: Ensure that the nonprofit's activities and transactions are, first and foremost, advancing its mission; Recognize and disclose conflicts of interest; Make decisions that are in the best interest of the nonprofit corporation; not in the best interest of the individual board member (or any other individual or for-profit entity).
Duty of Obedience: Ensure that the nonprofit obeys applicable laws and regulations; follows its own bylaws; and that the nonprofit adheres to its stated corporate purposes/mission.
However, a board of directors does not exist solely to fulfill legal duties and serve as a fiduciary of the organization’s assets. Board members also play very significant roles providing guidance to nonprofits by contributing to the organization’s culture, strategic focus, effectiveness, and financial sustainability, as well as serving as ambassadors and advocates. A nonprofit board must oversee the nonprofit organization's operations and make sure that its staff and volunteers act legally and ethically.
Beyond fulfilling legal duties, board members can be important resources for the organization in multiple ways such as:
- Determining the organization’s mission and purpose. It is the board’s responsibility to create and review a statement of mission and purpose that articulates the organization’s goals, means, and primary constituents served.
- Selecting the chief executive. Boards must reach consensus on the chief executive’s responsibilities and undertake a careful search to find the most qualified individual for the position.
- Providing proper financial oversight. The board must assist in developing the annual budget and ensuring that proper financial controls are in place.
- Ensuring adequate resources. One of the board’s foremost responsibilities is to provide adequate resources for the organization to fulfill its mission.
- Ensuring legal and ethical integrity and maintain accountability. The board is ultimately responsible for ensuring adherence to legal standards and ethical norms.
- Ensuring effective organizational planning. Boards must actively participate in an overall planning process and assist in implementing and monitoring the plan’s goals.
- Recruiting and orienting new board members and assess board performance. All boards have a responsibility to articulate prerequisites for candidates, orient new members, and periodically and comprehensively evaluate its own performance. Long-range planning and continual recruitment are effective ways to ensure the board’s continuity.
- Enhancing the organization’s public standing. The board should clearly articulate the organization’s mission, accomplishments, and goals to the public and garner support from the community.
- Determining, monitoring, and strengthening the organization’s programs and services. The board’s responsibility is to determine which programs are consistent with the organization’s mission and to monitor their effectiveness.
- Supporting the chief executive and assess his or her performance. The board should ensure that the chief executive has the moral and professional support he or she needs to further the goals of the organization.
