Governance

A nonprofit’s board of directors is responsible for developing, defining and reviewing the organization’s mission and for providing overall leadership and strategic direction to the organization. Boards are not owners of the organization but are stewards of the organization’s mission and resources. Each nonprofit board should actively set policy and ensure that the organization has adequate resources to carry out its mission, provide direct oversight and direction for the executive director and the organization as a whole, and evaluate its own effectiveness as a governing body, as a group of volunteers and as representatives of the community in upholding the public interest served by the organization.

Board Characteristics and Qualifications

1. Nonprofits should strive to have board members who are representative of the organization’s constituents.
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2. Board members should be committed to the mission and the success of the nonprofit.
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3. Board members should actively develop an understanding of the  mission, ongoing activities, finances, business model and changes in the operating environment of the organization. 
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4. Board members should value diversity and understand the role of broad  participation and the importance of including diverse groups of people in the current and future success of the organization’s work. 
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5. To demonstrate their personal stake in the organization, board  members are expected to volunteer their time, help raise external funds and make personal financial contributions to the organization. 
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6. Board members should receive no monetary compensation for their board duties other than reimbursement for board-related expenses. 
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Board Composition

7. Nonprofit boards should be made up of individual volunteers who are committed to representing the best interests of the organization, its mission and the community it serves. 
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8. To be open to new viewpoints and community members, boards should seek out new potential board members from outside the organization’s traditional circles and should include board representatives from the communities the organization serves. 
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9. To allow for careful, thorough deliberation during decision-making and a diversity of perspectives, nonprofit boards should consist of at least seven individuals. 
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10. Nonprofit boards must have a chair and a treasurer and should have a vice-chair and secretary. No one should serve in more than one officer position in the same organization at the same time. 
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11. If staff membership on the board is deemed necessary, it should be limited to the executive director. The executive director should not serve as the chair, vice-chair, secretary or treasurer. 
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Board Responsibilities

12. Board members should gain a full understanding of their board roles and responsibilities to the organization and to the public by being provided with:

  • a clear set of expectations and responsibilities,
  • bylaws, articles and other key documents of the organization,
  • an introduction to the work of the organization, and
  • ongoing opportunities to discuss and review responsibilities.


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13. Board members are responsible for fully understanding their legal and fiduciary responsibilities and carrying out their duties in the following areas:

  • Strategic planning
  • Policy approval and ongoing review
  • Annual review of the executive director’s performance and compensation
  • Succession planning
  • Setting of compensation structure
  • Annual budget and revenue plans
  • Financial procedures
  • Risk management
  • Regulatory filings


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14. Board members are responsible for the ongoing financial health of the organization and should understand the content and significance of the organization’s financial statements and audit. 
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15. Board members are responsible for keeping suitably informed in order to actively participate in decision-making. 
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16. Nonprofit board members are responsible to make decisions in the best interest of the organization and no other party, including themselves. Each board should have a conflict of interest policy that includes a disclosure form, which is signed by board members annually, and procedures for managing conflicts of interest and handling situations in which public and private interests intersect. 
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17. Nonprofit board members are responsible for upholding the organization’s mission and using its resources wisely and in accordance with the law. 
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18. Board members should be willing to publicly advocate for the  organization, help widen the organization’s reach and develop connections with the community and its leaders. 
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Board Operations

19. Boards should have at least six meetings a year and expect regular  attendance of members. 
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20. To ensure broad public participation, vitality and diversity, the board should establish term limits of no more than nine consecutive years. 
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21. Boards should adopt practices that maximize participation, including accommodating remote or electronic participation in meetings, deliberations or decision-making. 
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22. Boards should organize committees as needed so that they can  effectively structure their roles and responsibilities in order to properly exercise their duties. 
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23. The board chair is responsible for presiding over board meetings. The board chair should also make sure that board members have access to key organizational documents and training. The board chair should pay particular attention to helping the board be aware of its obligations with regard to conflicts of interest, board attendance, board evaluation and compliance with board policies. 
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24. The board of directors, led by the board chair, should annually  evaluate its own performance and review the results with an eye toward improving its practices. 
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Note to Readers: Please be aware that certain words have particular meanings in this document.

  • "Must" is used to describe practices required by stake or federal law, and is noted with a gavel symbol; the online version of the Principles and Practices will soon include direct web links to relevant federal and state statutes and reporting forms.
  • "Should" is used to describe highly recommended practices.
  • "Constituents" describes people with a stake in the success of the organization and may include members, neighbors, clients, volunteers and contributors.
 
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