Roles and Responsibilities of the Nonprofit Board
The following descriptions are provided by Richard T. Ingram’s Ten Basic Responsibilities of Nonprofit Boards.
Members of the board of directors are trustees who act on behalf of an organization's constituents, including service recipients, funders, members, the government and taxpayers. The basic responsibilities of the board of directors include, but are not limited to:
- Determining the organization’s mission and purpose
- Supporting and evaluating the chief executive with the goals of the organization in mind
- Ensuring effective organizational planning
- Determining which of the organization’s programs are consistent with its mission and monitoring the effectiveness of these programs
- Securing adequate financial resources for the organization to fulfill its mission
- Assisting in the development of the organization’s annual budget and ensuring that proper financial controls are in place
- Defining prerequisites for potential new board members, orienting these new members, and periodically evaluating performance
- Adhering to legal and ethical standards and norms
- Clearly defining and articulating the organization’s mission, accomplishments and goals to gain support from the community and enhancing the organization’s public image
- Overall, board members have a duty of loyalty to the organization, its staff and other board members. While differences of opinion will likely arise, board members should keep disagreements impersonal. By practicing discretion and accepting decisions made on a majority basis, the board can accomplish unity and confidence in its decisions.
The board of directors should be open to self evaluation and regularly review their own composition to ensure constituent representation, board expertise and commitment. Boards also are responsible for evaluating and determining compensation for the executive director. Board members perform their responsibilities through regular meetings and a committee structure that is appropriate for the size of the board and organization. Board members are responsible for arriving at meetings well-prepared and ready to engage in thoughtful dialogue.
Legal Responsibilities of the Board of Directors
The board is ultimately responsible for the performance of the organization in all areas of its work and should ensure that the organization is in compliance with state and federal law. The following checklist of tasks nonprofits are legally required to perform is neither intended nor to be construed as legal advice.
- Organizations with more than $25,000 in financial activity should file IRS Form 990 with the IRS and the charities division of the Minnesota Attorney General's Office. Organizations with less than $25,000 in financial activity should file the 990-N e-postcard.
- Complete an audit if the organization’s total revenue exceeds $750,000 in a year, and file the audit with the charities division of the State Attorney General's Office.
- Report a change of name, address or amendments to the articles of incorporation to the Secretary of State and pay any necessary fees for changes.
- Make the IRS Form 990 and Form 1023 available to the public.
- Report any Unrelated Business Income to the State Department of Revenue and the IRS, and send tax payments with IRS Form 990T.
- Withhold taxes from employees, and send withholding payments to the IRS and Minnesota Department of Revenue.
- Comply with laws that affect all employers, including Americans with Disabilities Act, Occupational Safety and Health Organization, Fair Labor Standards Act, Federal Insurance Contribution Acts, COBRA and Family Medical Leave Act.
- Report any lobbying activities on the IRS Form 990, and register as a lobbyist if required by the Minnesota Ethical Practices Board.
- Give receipts to donors for contributions over $250.
- Collect sales tax on items sold by the organization, unless tickets are sold to performances by a performing arts organization.
- Get court approval for distribution of assets.
- Register with the gambling board if the organization conducts charitable gambling activities.
- Pay property taxes or obtain an exemption from the county where the property is located, if the organization owns real property.
- Pay regular bulk mail rate or obtain a nonprofit bulk mail permit if the organization sends bulk mail.
- Comply with the terms of donations; promises made to donors are legally binding. Funds given for specific projects or programs need to be kept separate.
- Comply with Minnesota state law regarding conflicts of interest.
- Make sure any professional fundraisers register with the charities division of the State Attorney General's Office, and file a copy of the contract.
- Obtain city permits for all cities in which the organization actively solicits door-to-door by paid solicitors.
- Record minutes of board and annual meetings.
Individual Board Members' Responsibilities
Individual members of the board are required to:
- Attend all board and committee meetings and functions, such as special events
- Stay informed about the organization's mission, services, policies and programs
- Review agenda and supporting materials prior to board and committee meetings
- Serve on committees or task forces and offer to take on special assignments
- Make a personal financial contribution to the organization
- Inform others about the organization
- Suggest possible nominees to the board who can make significant contributions to the work of the board and the organization
- Keep up-to-date on developments in the organization's field
- Follow conflict of interest and confidentiality policies
- Refrain from making special requests of the staff
- Assist the board in carrying out its fiduciary responsibilities, such as reviewing the organization's annual financial statements