A well-functioning nonprofit requires a strong board of directors. As the organization's leaders, board members govern the nonprofit, ensure that it has ethical leadership and adheres to the law. Board members guard the nonprofit's financial health and assist with fundraising. Overall, as nonprofits are tax-exempt entities, boards make sure a nonprofit's mission and operations serves the public's best interests. A nonprofit's leaders must consider several factors in determining a board's composition.
Chair and Vice-Chair
Nonprofits must follow IRS regulations to retain their tax-exempt status. For example, a nonprofit has no stockholders and its funding is not to be used to enrich individuals. Nonprofits must also submit annual informational tax returns to the IRS and not participate in political campaigns. To do their best work, nonprofits boards must have officers, at least a chairperson and a treasurer. The Minnesota Association of Nonprofits also recommends that boards have a vice-chair and secretary. The chairperson oversees board and executive committee meetings, leads the search for a new chief executive for the nonprofit and works with the chief executive to prepare board agendas, ensure board resolutions are followed and develop board committees. A vice-chair, or co-chair, fills in for a chairperson and takes on any duties the chairperson assigns to him, such as overseeing a fundraising event.
Secretary and Treasurer
A board secretary ensures the accuracy of board minutes and acts as a steward of the minutes and other board materials. The secretary also leads meetings when the board chair and vice chair are absent and sends out required announcements of board meetings. The board's treasurer must understand nonprofit financial accounting and ensures that financial reports are provided to board members for review. The treasurer leads the board finance committee and helps guide the board's financial responsibilities, including the board's review and approval of the nonprofit's budget and annual audit. The board members who are not officers have the basic responsibilities of attending board meetings, staying abreast of the nonprofit's activities and providing input. They also serve on any committees they are appointed to, such as the nominating, financial or fundraising committees.
Board Membership and Legal Documents
Before launching a nonprofits, check your state's incorporation laws, which frequently determine a minimum number of board members and officers. A nonprofit's bylaws might also lay out a set number of required members and officers, as well as explain how the board should function. When a nonprofit incorporates, it creates bylaws as part of the process and submits them to the Internal Revenue Service as part of its tax-exempt application. Bylaws specify the required number and of board positions and spell out the protocol for how board members get elected, term length and number of terms, member removals, board committees and what constitutes a quorum.
The Right Board Size
There is no one national standard for the perfect board size. Size depends on factors such as the geographic scope of the organization's mission and its funding requirements, according to Independent Sector, a trade group. Nine to 15 members is a an average size board, although "some boards are much larger," according to The Nonprofit Resource Center. A board works best when its members are active, committed members of its community, who bring unique talents and perspectives to the table. The board hires the executive director and oversees his work, but is not involved in a nonprofit's day-to-day operations. Boards are led by the chairperson and perform much of their work through committees, such as finance, program, fundraising and nominating committees. New committees are added as the need arises.