by Dan Schipp
Looking for a way to help nonprofit board members understand what is expected of them?
How about telling them they have the duties of care, loyalty, stewardship, and compliance?
That’s how two presenters at the Fall Joint Nonprofit Conference, sponsored by the Ohio Association of Nonprofit Organizations and the Ohio Attorney General’s Office, summarized the duties of members of nonprofit boards.
With these four aspects of board participation, the presenters, Matt Oyster and Melissa Smith of the Ohio Attorney General’s Office, offered a good framework for thinking about the responsibilities of a nonprofit board. (I have substituted “stewardship” for what the presenters originally defined as the “duty to maintain accounts.”)
Let’s consider what each of these duties entails.
A board member who “cares” for an organization is concerned about, attentive to, and involved with the organization. It means that the board member, at a minimum, prepares for, attends and actively participates in meetings. It means that the board member advocates for the organization and makes sure it is mission-driven and mission-effective. It also means the board member shares her financial resources, as well as her time and talent, to advance the organization’s mission.
The duty of loyalty requires the board member to place the interest of the charity above any personal interest that may come into play in serving the organization. Any potential conflict of interest – personal or business -- must be disclosed. The board member must know and adhere to the organization’s written policy for handling conflicts of interest.
The broad duty of stewardship involves the board in oversight of how the organization is acquiring, using, and managing the resources necessary to carry out its work. The board helps ensure that the organization has in place the systems, policies and procedures for accurately recording and reporting income, expenses, and investments, as well as for developing and monitoring budgets. The board also is responsible for making sure there are in place internal control systems with checks and balance. Most importantly, the board “stewards” the organization by procuring resources (especially through fund raising), by hiring, developing and evaluating the organization’s leadership, and by building and assessing the board itself.
The fourth and final duty of a board member is that of compliance. The board is charged with the task of ensuring that the organization complies with legal requirements and all other obligations. This oversight duty includes federal and state laws, governing documents, contracts, and representations made in fund raising solicitations.
How is your board carrying out its duties of care, loyalty, stewardship and compliance? Does your board come up short in any one of these areas? What can your board do to strengthen and enhance its effectiveness?