The Role of Nonprofit Boards: Part 1

New board members can bring contagious energy to a board meeting and help reinvigorate the organization’s growth. However, they may not have the necessary background to make an impact. It’s up to the executive director and the other board members to identify the actions that they should be taking to drive the organization’s goals. This will help them develop effective strategies and make their mark on the board.

Educating and engaging new and existing board members on their responsibilities will help them make an informed decision regarding the organization’s goals and actions. As a nonprofit board leader, you are responsible for ensuring that the members follow through with their ethical and legal duties.

Organizational Planning

Planning an organization’s operations is the most time-consuming task a nonprofit board can perform. It’s up to the members to develop effective plans to meet the community’s needs and the organization’s mission.

Depending on the complexity of the organization and its size, the planning process can be carried out at various levels. Most boards focus on developing a comprehensive plan that addresses the different topics that affect the organization’s operations.

The staff directors and board members of a nonprofit organization should regularly meet to review the progress of the organization’s strategic plans. This allows them to make informed decisions and improve the organization’s performance.

Resource Allocation

After developing a comprehensive plan, it’s up to the board to provide the necessary resources to support the goals and objectives of the organization. Besides regular meetings, the members should also be involved in the organization’s fundraising efforts. Whether they’re contributing their own money or using their connections to raise funds, they should be able to help develop and implement a fundraising plan.

One of the most critical factors that a board can consider when implementing a fundraising plan is monitoring and managing the organization’s fundraising efforts effectively. A clear understanding of the members’ expectations will help them make informed decisions and improve the organization’s performance.

Legal Oversight

Many executive directors of for-profit organizations assume that tax-exempt organizations are in a regulated environment. However, this is not the case. To maintain their status, tax-exempt organizations must follow various rules.

Board members should regularly monitor and ensure that tax-exempt organizations are following the regulations set by the IRS and state agencies. Not doing so can lead to various penalties, such as the loss of tax-exempt status and the inability to accept donations. In addition, failing to file a Form 990 can also result in late fees and other penalties.

Besides these, board members should also be aware of other potential issues related to the operations of their organizations. For instance, they should be mindful of the penalties for engaging in political activities and excessive lobbying. Doing so can lead to costly fines and a poor public image. Having a board training program is also an excellent way to ensure members are aware of the legal requirements of their organizations.

Financial Oversight

One of the most critical factors that a board should consider when it comes to maintaining the financial health of its organization is the proper management of its revenue. Since tax-exempt status allows them to carry out their functions, the board’s responsibilities extend beyond the organization’s stakeholders. Although board members don’t need to be accountants to serve on their organizations’ boards, they should understand the organization’s financial operations well.

Besides monitoring the financial activities of their organizations, board members should also ensure that the program spending is appropriate. Having a board management system that has a comprehensive document management capability can help them keep track of all of the organization’s financial transactions.

Board members should regularly communicate with various stakeholders to develop and implement a financial plan. They should also consider their suggestions with the other organization members. Having the proper financial management can help boost the operations of an organization.

Originally published at https://chartwestcott.net on October 18, 2022.