Sometimes things get messy and not everyone agrees on how to move forward. It is not easy being a volunteer board member, but there are rules and regulations that need to be followed. The Wright Firm assists with navigating the sometimes confusing path of serving on a nonprofit board. Shahara assists with Board of Director Disputes, Board of Directors Roles and Responsibilities, and Board of Directors Management issues.
- Advise clients on Bylaw Requirements and Interpretation
- Review documentation and applicable state and federal law regarding Board Membership
- Advise client on the proper procedures/process to resolve conflict and identify a solution
- Draft Board Resolutions
- Advise on board structure and best practices for nonprofit board of directors
For more information about pricing and how to work with The Wright Firm, PLLC, Contact Me!
Nonprofit Board Management FAQs
The duties of a nonprofit board member vary depending on the size and complexity of the organization, but they typically include the following:
- Set the organization’s mission and vision. Board members are responsible for ensuring that the organization has a clear and concise mission statement that articulates its purpose and goals. They also need to develop a vision for the future of the organization and make sure that all board decisions are aligned with this vision.
- Oversee the organization’s finances. Board members are responsible for ensuring that the organization is financially sound. This includes reviewing the organization’s budget, financial statements, and fundraising efforts. They also need to make sure that the organization complies with all applicable financial regulations.
- Hire and fire the executive director. The board is responsible for hiring and firing the executive director, who is the organization’s chief executive officer. They also need to provide the executive director with the support and resources they need to be successful.
- Approve the organization’s budget. The board is responsible for approving the organization’s budget, which is a plan for how the organization will spend its money. They need to make sure that the budget is aligned with the organization’s mission and vision.
- Develop and implement the organization’s strategic plan. The board is responsible for developing and implementing the organization’s strategic plan, which is a roadmap for how the organization will achieve its goals. They need to make sure that the strategic plan is aligned with the organization’s mission and vision.
- Oversee the organization’s programs and services. Board members need to oversee the organization’s programs and services to ensure that they are effective and meet the needs of the organization’s beneficiaries. They also need to make sure that the programs and services comply with all applicable laws and regulations.
- Ensure that the organization complies with applicable laws and regulations. Board members need to make sure that the organization complies with all applicable laws and regulations. This includes ensuring that the organization has the proper licenses and permits and that it is following all applicable tax laws.
- Represent the organization to the public. Board members are responsible for representing the organization to the public. This includes speaking on behalf of the organization at public events and interacting with donors, volunteers, and other stakeholders.
- Recruit and retain new board members. Board members are responsible for recruiting and retaining new board members. This includes identifying potential board members, and interviewing and selecting new board members.
In addition to these specific duties, board members also have a general duty to act in the best interests of the organization. This means that they need to be honest, ethical, and responsible in their decision-making. They also need to be willing to volunteer their time and expertise to help the organization achieve its mission.
Being a board member of a nonprofit is a challenging but rewarding experience. Board members have the opportunity to make a real difference in the lives of others, and they can also learn a great deal about the nonprofit sector.
The best solution for a conflict of interest among board members for a nonprofit organization depends on the specific circumstances of the conflict. However, some general principles that can be followed include:
- Disclosure: The board member with the conflict of interest should disclose the conflict to the board as soon as possible. This allows the board to assess the impact of the conflict and take appropriate action.
- Abstention: The board member with the conflict of interest should abstain from voting on any matter where the conflict could be a factor. This ensures that the board is making decisions in the best interests of the organization, not in the interests of any individual board member.
- Waiver: The board may decide to waive the conflict of interest if it determines that the conflict is not material or that the board member can still act impartially. However, this should only be done after careful consideration of the potential impact of the conflict.
- Resignation: If the conflict of interest is too great, the board member may need to resign from the board. This is a drastic step, but it may be necessary to ensure that the board can make decisions in the best interests of the organization.
In addition to these general principles, it is important to have a conflict of interest policy in place. This policy should define what constitutes a conflict of interest, how conflicts should be disclosed, and how they should be managed. The policy should also be reviewed and updated regularly to ensure that it is up-to-date with the latest laws and regulations.
By following these principles, nonprofit organizations can help to ensure that conflicts of interest are managed effectively and that board decisions are made in the best interests of the organization.
Here are some tips on how to ensure that your nonprofit complies with state and federal regulations:
- Identify the applicable regulations. The first step is to identify the applicable regulations. This will vary depending on the type of nonprofit you are operating, the state and federal jurisdictions in which you operate, and the activities you are engaged in.
- Develop a compliance plan. Once you have identified the applicable regulations, you need to develop a compliance plan. This plan should identify the specific steps you will take to ensure compliance with each regulation.
- Implement the compliance plan. Once you have developed a compliance plan, you need to implement it. This means putting in place the necessary policies, procedures, and controls to ensure compliance.
- Monitor compliance. Once you have implemented the compliance plan, you need to monitor compliance on an ongoing basis. This means reviewing your policies and procedures, conducting audits, and investigating any potential violations.
- Take corrective action. If you discover any violations of regulations, you need to take corrective action. This may involve changing your policies and procedures, implementing new controls, or taking disciplinary action against employees.
Here are some additional resources that you may find helpful:
The National Council of Nonprofits: https://www.councilofnonprofits.org/
The Nonprofit Risk Management Center: https://www.nonprofitrisk.org/
The IRS website for nonprofits: https://www.irs.gov/charities-non-profits/charitable-organizations
The potential legal consequences of failing to comply with state and federal regulations can vary depending on the specific regulations that are violated. However, some common consequences include:
- Civil penalties. The government may impose civil penalties on organizations that violate regulations. These penalties can be significant, and they can also include fines, restitution, and other financial sanctions.
- Criminal penalties. In some cases, failing to comply with regulations can also result in criminal penalties. These penalties can include fines, imprisonment, and other sanctions.
- Damages. If a violation of regulations results in harm to individuals or businesses, the organization may be liable for damages. These damages can be significant, and they can include compensation for medical expenses, lost wages, and pain and suffering.
- Reputational harm. A violation of regulations can also damage an organization’s reputation. This can make it difficult to attract donors, volunteers, and other supporters.
In addition to these legal consequences, failing to comply with regulations can also have other negative consequences. For example, it can lead to:
- Product recalls. If a product does not comply with regulations, it may be recalled from the market. This can damage the organization’s reputation and financial performance.
- Loss of licenses or permits. If an organization fails to comply with regulations, it may lose its licenses or permits. This can prevent the organization from operating legally.
- Increased scrutiny from regulators. If an organization has a history of violating regulations, it may be subject to increased scrutiny from regulators. This can make it difficult to operate and could lead to further enforcement actions.
It is important to note that the potential legal consequences of failing to comply with regulations can be serious. Therefore, organizations need to take steps to ensure compliance with all applicable regulations.
The bylaws of a nonprofit organization are the governing documents that set forth the rules and procedures for how the organization is to be managed. They typically include provisions on the following topics:
- Board composition: The bylaws will specify the number of board members, the qualifications for board membership, and the process for electing or appointing board members.
- Board powers: The bylaws will define the powers of the board, such as the power to hire and fire the executive director, approve the budget, and make policy decisions.
- Board meetings: The bylaws will set forth the requirements for board meetings, such as the frequency of meetings, the notice requirements, and the quorum requirements.
- Board committees: The bylaws may authorize the board to create committees to help with specific tasks.
- Board conflicts of interest: The bylaws will typically include a conflict of interest policy that defines what constitutes a conflict of interest and how conflicts should be disclosed and managed.
The bylaws of a nonprofit organization are important because they provide the framework for how the organization is to be managed. They should be carefully drafted and reviewed to ensure that they are clear, concise, and up-to-date.
Yes, it is important to draft board resolutions for nonprofit organizations. Board resolutions are formal documents that record the decisions made by the board of directors. They serve as a record of the board’s actions and can be used to protect the organization from liability.
Board resolutions typically include the following information:
- The name of the organization
- The date of the meeting
- The names of the board members present
- The issue being addressed
- The decision made by the board
- The signature of the board secretary
Board resolutions can be used to record a wide range of decisions, including:
- Approving the budget
- Hiring or firing employees
- Approving new programs or services
- Making changes to the organization’s bylaws
- Entering into contracts
Board resolutions are an important part of good governance for nonprofit organizations. They help to ensure that the board’s decisions are made in a transparent and accountable manner. They also provide a record of the board’s actions, which can be helpful in the event of a legal dispute.
Several things can be done to protect a nonprofit from liability. Some of the most important include:
- Having a strong board of directors: The board of directors is responsible for the overall management of the nonprofit, and they play a critical role in protecting the organization from liability. The board should be made up of experienced and knowledgeable individuals who are committed to the nonprofit’s mission.
- Having clear and comprehensive policies and procedures: Policies and procedures should be in place to cover all aspects of the nonprofit’s operations, including hiring and firing, financial management, and volunteer management. These policies should be clear, concise, and easy to understand.
- Ensuring that employees are properly trained: Employees should be trained on the nonprofit’s policies and procedures, as well as on the laws and regulations that apply to their work. This training should be ongoing and should be refreshed regularly.
- Having adequate insurance: Insurance can help to protect the nonprofit from financial losses in the event of a lawsuit or other liability event. The type of insurance that is needed will vary depending on the nonprofit’s activities and the risks that it faces.
- Being proactive: It is important to be proactive in managing risk. This means taking steps to identify and mitigate risks before they become problems. It also means being prepared to respond to a liability event if it does occur.
By following these steps, nonprofits can help to protect themselves from liability and ensure that they can continue their important work.