Most people volunteer for a nonprofit board because they believe in the work the organization does, knowing that they will be asked to help with fund-raising and programming. However, there are several other board tasks that are vital to the success of the organization – and that can draw unpleasant attention from attorneys general or the IRS if they are not accomplished.
A nonprofit board has three primary functions:
- Supervision of the Executive Director
Governance includes ensuring that the organization has a solid financial basis; fund-raising falls under this function. Other tasks include board recruitment and development, reviewing the mission statement, strategic planning, and budgeting. They aren’t sexy, but it is easy to see why they are important if the organization is going to accomplish its goals.
Compliance is the area that is most “out of sight, out of mind” for many board members. Dealing with IRS regulations and legal requirements is never fun. But if the organization’s money isn’t accounted for correctly and transparently, if tax returns aren’t filed on time and accurately, then the board is going to end up spending much more time on the matter than they would have when doing it right. Most of the financial responsibility falls on the Treasurer, Financial Committee, and sometimes an Audit Committee, but the entire board should be aware of the issues.
One of the board’s most important jobs is supervising the executive director, including setting fair (i.e. not suspiciously high) compensation. Any other staff reports to the ED, but the ED reports to the board. This relationship, at base a business relationship, gets challenging when the board is made up of the ED’s friends, or when the ED founded the nonprofit and is the person who has the most knowledge of what needs to be done. But the board is legally responsible for the ED’s actions, so it should take charge of the relationship. That doesn’t mean micromanaging or brow-beating the ED! It does mean holding the ED accountable for results and for making sure that the organization’s paperwork is done correctly and on time.
These time these tasks takes will differ from board to board and month to month, but they shouldn’t be forgotten in the fun of developing programming or the excitement (or agony) of fund-raising. Done right, they allow a nonprofit to accomplish its goals without distraction or unnecessary problems.