Pitfalls to being a non-profit board member?

August 6, 2007 9:57 AM

Pitfalls to being a non-profit board member?

I've been asked to become a board member of a local non-profit. Are there any potential legal issues I should be aware of? I'm familiar with the responsibilities of board members of for profit corporations and the possible legal ramifications of such; but this is my first experience with non-profits and I'd like to know what I may be getting into. It is a 501 (c) (3) organization.

posted by white_devil to law & government (11 answers total)

I assume you have Googled this, but if not this page from the Minnesota Council of Nonprofits has a really good list of what your actual legal responsibilities would be. The main FAQ has some more links to what you might or might not be on the hook for legally. That page, which is not legal advice naturally basically says that if you are acting in the best interests of the organization you can avoid direct personal liability AND that insurance can be purchased which will further lessen yor liability.

You might also want to look into the free complete toolkit for boards which I got to from this page on Idealist's Nonprofit FAQ.

As a personal aside, I have been a member of two nonprofit boards: a community health clinic and a community technology program. I enjoyed my experiences but I would likely not do it again. The community technology project was a non-profit arm of a for-profit ISP that was using it as a bit of a tax writeoff and the board was sort of perfunctory and the director didn't really take it seriously. I felt like we were doing things to rubber stamp decisions that were already made and I didn't like it much. The community health center was much more lively, much more challenging, but like many boards, our job had a lot to do with visioning, mission statements (with accompanying weekend-long retreats with chirpy consultants) and of course fundraising. I wanted to help out, but I am not a good fundraiser nor am I very interested in fundraising and the other sorts of expertise I had (technical mostly, outreach and some marketing) were really not needed.

In the time I was on the community health center board we had to navigate through firing the director and dealing with a lawsuit from someone the director had fired who was arguing discrimination. Both issues were very very sticky and while none of it came back to bite me personally on the ass it was mainly due to the fact that we had an excellent lawyer who was a board member who guided us through dotting our i's and crossing our t's as we dealt with that stuff.
posted by jessamyn at 10:16 AM on August 6, 2007 [2 favorites]

Thanks jessamyn, that's just what I'm looking for!
posted by white_devil at 10:30 AM on August 6, 2007

You're welcome! I also neglected to mention that a lot of that wacky paperwork stuff is usually done by people specifically assigned to handling things like that so if you're looking at it thinking "I don't even know WTF these things ARE?!" don't worry too much about that. The real nitty gritty of the way the organization runs is mostly the dirctor's problem to worry about. You are mostly oversight for the director and dealing with "big picture" issues although this varies dramatically from board to board so it might be worth talking to someone on the board already to see what the day to day stuff they deal with is.
posted by jessamyn at 10:43 AM on August 6, 2007

A couple of additional thoughts, from someone who is the director of a non-profit.

A good non-profit will carry liability insurance for Board Members and Executives, make sure they have that in place.

I would suggest you have a candid conversation with both the Director and with one or more Board Members as to what the expectations are.

On behalf of the non-profit, I would encourage you to NOT take the position unless you are able to contribute in a meaningful manner in terms of time, energy, money (this is why you're asking about the expectations that THAT non-profit, there are many levels of Board Member involvement).

And, good for you for considering it carefully before you accept the job!
posted by HuronBob at 10:47 AM on August 6, 2007 [1 favorite]

There's some other due diligence you can do before you decide to join a non-profit board. It mostly boils down to asking a lot of questions:
-If you can, you might try to sit in on a meeting or two to make sure it's a group you want to work with (i.e. not dysfunctional) and they are doing things you want to do (does it seem like they are just going through the motions?)
-Particularly if you have paid employees, make sure you talk to them to understand what they think is working or not, etc.
-If you have a paid executive director/CEO role, they might be the only employee who has to work with the board, so talking to them is a really good idea to get a sense for what they actually think of the board.
-Talk to the other board members and see how much time they spend on their duties.
-Ask if you can see some board meeting agendas and maybe financial reports. It's more fun to work with organizations that are healthy, growing and have people excited (but helping fix broken organizations can be really rewarding, too).

BoardSource is another place that has some resources for non-profit board members. Good luck!
posted by milkrate at 10:53 AM on August 6, 2007

Make sure the organization has its own "Expectations of Board Members" document that includes time involvement, whether you will be expected to go on fundraising calls, and your specific financial commitment including tickets to Galas, subscribing (if a performing group) and outright gifts at a specific minimum level.

In my opinion, if there is no minimum giving level (and for an established organization, this should be at the lowest rung of the major donors level at least), this is a delusional organization. The main moral function of a board (aside form the legal stuff that jessamyn outlined) is the fiscal health of the organization through personal contributions and solicitation of personal contacts like your banker, broker, whatever.

I have consulted for too many organizations whose boards think that they are there to provide professional expertise and sit around telling their Execs "you need to raise more money." If the organization has a professional, paid staff THEY are the professional expertise. Your job, as a board member, is to give and raise money.

thank you. sorry. soapbox. slinks away.
posted by nax at 3:57 PM on August 6, 2007

The main moral function of a board (aside form the legal stuff that jessamyn outlined) is the fiscal health of the organization through personal contributions and solicitation of personal contacts like your banker, broker, whatever.

Whoa. This is so far away from my experience as former staff at a non-profit that my mind has actually factually boggled. (Not in a bad way.) We relied heavily on the Board for professional expertise, and they set the tone and tenor for the association's activities and policy goals via strategic planning. That said, the association I worked for was a national, scientific-oriented one. We never had galas, and our directors never gave money - most of our funding came from 5-year cooperative agreements with the CDC and other scattered agencies. nax's experience may have been more the norm. Did you work mostly with charities, nax?

In any event, her comments illustrate how greatly your responsibilities and expectations may vary depending on the nature of the organization, it's bylaws and articles of incorporation, the state of incorporation, and a variety of other factors. Since you're familiar with the responsibilities of directors in for-profit corps, I'll just say that directors of non-profits are still fiduciaries of the organization, with all that entails.

In addition to the resources jessamyn suggested, you might want to check for regulatory guidance (from the IRS and the state attorney general, for instance) on what's required of boards and their members.
posted by averyoldworld at 10:03 AM on August 7, 2007

averyotherworld:

Probably should have tempered that. YMMV depending on the type of organization. Indeed, my experience is with small and mid-sized arts organizations, where the financial well-being of an organization through personal gifts and direct solicitation of contacts is the chief benefit of an engaged and active board. On a national organization I can see where this function would not be as critical; still I know that even the major arts organizations here in Chicago rely heavily on their "boards" to raise money. I put the term in quotes, because these major arts org boards often comprise hundreds of people, and the real work of the board happens in executive committee. Your name on the "board" is sometimes a reward for giving.

In the types of entrepreneurial arts organizations where I consult, "setting the tone and tenor of an association's activities and policy (or artistic) goals" could become unbearably intrusive in the artistic process. Strategic oversight and knocking starry-eyed artists up-side the head over sure-fire flops, yes. Deciding artistic direction, no.

So we'd really need to know what white_devil's organization is, and why specifically he's been recruited. If for some specific expertise, great, but at any rate, he should be very very clear and not be afraid to ask these questions before joining any board. If the organizational rep is either offended, cannot, or will not answer direct questions about why someone is wanted on a board, and whether a gift is an expectation, well, I say run fast in the opposite direction.
posted by nax at 5:11 PM on August 7, 2007

Thanks everyone for the great input. I attended a board meeting as an observer tonight and came away excited with what I think I can help the organization with. There is much that needs to be done from the business side of things and I really feel that I can be a great help. I was also very impressed with what they have accomplished and how they are making an impact in the community. I think they're trying to bring more business acumen to the board and that is why I was recruited. The organization is a literacy group that primary trains native Spanish speakers in English. The main target is preschool children to give them equal footing with the native English speakers when they enter the public school system. They also provide language, computer, and life management training to the families. I really feel their mission is important and am strongly considering joining once I more thoroughly explore the organization. Thanks for pointing me to some great resources to make an informed decision.
posted by white_devil at 7:57 PM on August 7, 2007

Thanks for the update, nax - your first post made me realize that I knew a lot less about the general state of non-profits than I thought I did.

knocking starry-eyed artists up-side the head
And now I know that if I ever take up an irrational dislike of starry-eyed artists, I can try to get on the board of an entrepreneurial arts organizations, which is a handy thing to know.

Best of luck in joining the board, white_devil.
posted by averyoldworld at 6:31 AM on August 8, 2007

knocking starry-eyed artists up-side the head is all that keeps me going some days...
posted by nax at 6:13 PM on August 11, 2007