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This work is d under a Creative Commons Attribution 4. Permissions beyond the scope of this are available in our Terms and Conditions. Download PDF. Summary All nonprofit organizations need a board. There are legal, ethical, and practical reasons to build a board when a nonprofit is created. These reasons create the foundation for good governance and are explained in-depth in this article from BoardSource. All nonprofit organizations need a board. These reasons shape the foundation for good governance.
These laws deate overall responsibility and liability to that board. State laws generally stipulate the minimum size for a board — varying between one and three members — and other de minimis requirements that define how boards may function or be structured.
Some state laws define the lowest acceptable of independent i. Naturally, in a formal membership organization the members have certain rights to approve major board decisions.
The federal law is even less specific in determining how the board should be structured, but it does expect this fiduciary body to serve as the gatekeeper for the organization. When applying for recognition of tax-exempt status, board members for the new nonprofit must be listed to allow the IRS to determine whether proper oversight has been established. Intermediate sanctions regulations directly deate the board as the body to approve all the major financial transactions in the organization.
Ethical reasons One of the key ethical reasons to build a board is to create a structure that functions to assure the public and all individual stakeholders that the organization is in good hands. The board assumes the responsibility for the achievements, or lack thereof, within the organization. Its role in this capacity is to go beyond the legal requirements and ensure that the organization not only does things right, but does the right thing.
When a supporter, client, or customer relies on the organization to use its funds appropriately or provide trustworthy and quality services, the board sees to it that these expectations are met. Board members are not there to benefit personally from their affiliation; during decision making they are expected to place the interests of the organization above any other considerations.
Oversight is a primary duty for all boards. It consists of working closely with management to ensure that goals are met and that ethical principles serve as the guidelines for all activities of the organization. As overseers, board members also spell out the expectations and evaluate the. A board is made up of individuals who, at one time or another, become worker bees to assist the organization in getting its work done. This is particularly the case in start-up boards that, for example, regularly help draft the organizational documents, hunt for supplies and equipment, and procure funding.
Before staff is hired, board members usually manage the daily affairs and run the programs of an all-volunteer organization. They wear various hats depending on the need of the moment. In most nonprofits, as soon as the situation allows, the board hires the first staff person — often the first chief executive — and delegates the daily affairs to him or her, with the necessary support and guidance. At this point the board can devote its time to governing, providing direction, and securing that the mission of the organization stays on course.
The board also represents the stakeholders of the organization.
A board that is familiar with the constituency and its needs is better able to steer the organization in a direction that is helpful to those it serves. If its composition reflects that of the constituency, this becomes an easier task for the board to accomplish. As a detached body from the daily affairs, the board is able to differentiate the trees from the forest — to look at the organization as part of its larger sphere and not just as an office that carries out the strategic plan.
The perspectives that board members bring to the boardroom complement those of the chief executive. Together, they should be able to ask the probing questions necessary to avoid stagnation and keep the organization moving forward. And finally, the board is the body that provides continuity to the organization. Individuals come and go but the board as an entity remains. When good practices are institutionalized, the changing of the guards does not adversely affect the good work that has been accomplished.
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