Chapter 9., Section 4. Developing an Ongoing Board of Directors — Main Section | Community Tool Box

• What is a Board of Directors?

• Why do you need a Board of Directors?

• How does a Board actually work?

• How do you go about putting a Board together?

• How does the Board get started?

Once you have an organization, you may decide that you need a Board of Directors or another governing body. A well-functioning Board can strengthen an organization by safeguarding its mission, helping set strategic direction, overseeing finances and legal and ethical responsibilities, selecting and supporting the chief executive when there is one, helping ensure adequate resources, and connecting the organization with the communities it serves.

Board service also gives people an opportunity to contribute their knowledge, judgment, lived experience, relationships, and skills to a cause they believe in. Board membership is a significant governance responsibility, however, not simply an honorary volunteer role. Potential members should understand what the role requires before agreeing to serve.

This section will give you information about what a Board of Directors is and how it differs from advisory and other bodies. It will explore why many organizations can benefit from Boards, what governing Boards actually do, how they work, how to recruit members, and how a new Board can get started.

What is a Board of Directors?

A Board of Directors is the governing body of many nonprofit organizations. Its specific legal responsibilities depend on the organization's form, governing documents, and applicable law, but generally the Board provides oversight and accountability for the organization's mission, strategy, finances, resources, legal and ethical integrity, and chief executive.

Board members generally have fiduciary responsibilities commonly described as duties of care, loyalty, and obedience. In practical terms, members should make informed decisions, put the interests and mission of the organization ahead of personal interests, follow applicable law and governing documents, oversee the responsible use of organizational assets, and disclose conflicts of interest.

For example, a Board might adopt a policy establishing ethical standards for accepting certain donations. The Board would then provide oversight to make sure organizational fundraising and acceptance practices remain consistent with that policy.

• The Board provides financial oversight. It reviews financial information, approves budgets as appropriate, helps ensure adequate financial controls are in place, monitors the organization's financial condition, and asks questions when financial information is unclear or concerning. A Treasurer or Finance Committee may help lead this work, but financial stewardship is a responsibility of the governing Board as a whole.
• The Board selects, supports, and evaluates the chief executive, if there is one. The Board defines the chief executive's responsibilities, hires the person who will fill the role, provides appropriate support and oversight, evaluates performance, establishes or approves compensation through an appropriate process, and may replace the chief executive when necessary. Ordinarily, the chief executive manages day-to-day operations and supervises other staff rather than individual Board members doing so.
• The Board safeguards the organization's mission and purpose. It helps ensure that strategy, programs, policies, resources, and major decisions remain consistent with the organization's mission and with the responsibilities the organization has to the communities it serves.
• The Board provides legal and ethical oversight. Board members are expected to understand the legal and fiduciary responsibilities associated with their role and to help make sure the organization follows applicable laws, governing documents, contracts, financial requirements, and ethical standards. The extent of individual liability and the protections available to Board members depend on applicable law, the organization's structure, and the circumstances.

Organizations may provide indemnification for Board members as permitted by law and may purchase directors-and-officers liability insurance. These protections can be important, but they do not make Board members immune from claims or excuse misconduct, conflicts of interest, intentional wrongdoing, or failure to meet legal responsibilities. Organizations should understand the law that applies to them and obtain appropriate legal or insurance advice when necessary.

• In some organizations, Board members may also perform operational or volunteer work. This might happen if:
  • The organization is very small or has little or no paid staff, and Board members volunteer for tasks needed to carry out the mission.
  • The organization intentionally uses a working-Board model in which directors take on defined program, fundraising, administrative, or community roles in addition to governance.
  • Individual Board members participate in particular activities to remain connected with the organization's work and community.

When Board members perform operational work, be clear about which role they are acting in. Their authority as directors should not automatically extend into day-to-day staff responsibilities, and operational involvement should not interfere with the Board's ability to provide independent oversight.

Other types of boards or governing bodies:

Not every organization needs a traditional Board of Directors, and not every group called a "board" has governing authority. A short-term initiative, coalition, project, or unincorporated group may use another structure, depending on its legal status, responsibilities, and purpose.

A Steering Committee may help guide an initiative, coordinate activities, recommend direction, or exercise authority specifically delegated by a larger group. Its responsibilities should be clearly defined rather than assumed from the name alone.

An Advisory Committee or Advisory Council provides recommendations, expertise, lived experience, community knowledge, or other guidance to an organization. Unless specific decision-making authority has been formally delegated to it, an advisory body is not the governing Board and does not carry the Board's fiduciary responsibilities.

For example, an advisory council for a school-based program might include students, parents and caregivers, educators, and administrators. It could help identify priorities, review program ideas, connect the program with community resources, and describe how participants experience the program. The organization should make clear how the council's recommendations will be considered and communicate what happens as a result of its advice.

Organizations can also design governance structures that distribute participation and decision-making more broadly while still meeting their legal obligations. Depending on the organization and applicable law, a Board might:

• Create meaningful opportunities for staff, volunteers, participants, and community members to contribute to planning and governance
• Use advisory councils, membership structures, committees, or other participatory processes to inform major decisions
• Delegate appropriate authority while retaining the responsibilities that belong to the governing Board
• Include people directly affected by the organization's work as governing members and create other meaningful ways for those communities to influence decisions

Whatever model is used, be clear about who has governing authority, who advises, who manages day-to-day operations, which decisions may be delegated, and how each group is accountable.

Why do you need a Board of Directors?

Governance, legal structure, funding, and tax-exempt status

One important reason for creating a Board is that many nonprofit corporations are required by state law to have a governing body. The specific requirements -- including the minimum number of directors and their qualifications -- depend on the jurisdiction and the organization's legal form.

Nonprofit organizational status and federal tax-exempt status are not the same thing. Nonprofit corporate status is generally established under state law. Federal tax-exempt status, such as recognition under section 501(c)(3) of the Internal Revenue Code, is governed by federal law. Organizations should determine which structure, registrations, governing documents, and applications apply to their circumstances.

Funders, government agencies, lenders, contracting organizations, and other partners may also have governance requirements. These vary, so don't assume that every source of funding requires the same structure.

For organizations recognized under section 501(c)(3), the federal tax rules also place important limits and responsibilities on the organization. Among other requirements, the organization must operate for its exempt purposes and avoid impermissible private benefit or inurement.

A 501(c)(3) public charity may engage in some lobbying within applicable limits. Lobbying and political campaign activity are not the same thing. Section 501(c)(3) organizations may not participate or intervene in a political campaign for or against a candidate for public office, although nonpartisan voter education and other nonpartisan civic activities may be permissible.

Compensation for executives and other insiders should be reasonable for the services provided under comparable circumstances. There is no single salary amount that automatically determines whether compensation is appropriate. Organizations should use an appropriate approval process, consider relevant comparability information, document decisions, and address conflicts of interest.

Strengthening connections with the community

A thoughtfully composed Board can help an organization maintain relationships with the communities, organizations, institutions, and systems connected with its work. Board members may bring different lived experiences, geographic perspectives, professional knowledge, cultural knowledge, community relationships, and other forms of insight.

Board composition alone, however, does not tell an organization what "the community" wants or needs. No Board member should automatically be expected to speak for an entire neighborhood, demographic group, or population. Organizations still need direct and continuing ways to listen to and involve the people most affected by their work.

Building organizational accountability and public trust

A responsible Board can strengthen public trust by providing oversight, acting transparently, following ethical and legal standards, asking difficult questions, and holding the organization accountable to its mission. Community trust should come from the quality and integrity of governance and the organization's relationships and results, not simply from attaching prestigious names to the Board.

Attracting committed people to your organization and cause

Board service may appeal to people who want to contribute substantially to a cause, participate in governance, use their experience in a new way, or help an organization grow. An invitation to serve should be clear and voluntary. Explain the fiduciary responsibilities, time commitment, meeting expectations, term length, fundraising expectations, committee work, and other obligations before someone agrees to join.

Using Board members' knowledge, skills, and experience

A Board can bring together people with useful knowledge in finance, law, community organizing, communications, public policy, health, education, technology, fundraising, program delivery, lived experience, and many other areas.

Board members should not be expected to provide free professional services simply because they have a particular occupation. When a Board member or their business provides professional services to the organization, consider possible conflicts of interest, follow applicable policies, and distinguish clearly between the person's governance role and any professional or contractual role.

People directly affected by or participating in the organization's work may also bring essential knowledge about whether programs, policies, communications, and services are practical and relevant.

Maintaining accountability and appropriate balance

A strong governance structure can help prevent too much authority from becoming concentrated in one person or small group. The Board should provide oversight of the chief executive and major organizational decisions while also respecting the authority delegated to management and staff.

Clear roles are important. The Board governs; the chief executive generally manages day-to-day operations and supervises staff. The relationship works best when responsibilities, decision rights, information-sharing expectations, and evaluation processes are clearly defined.

Safeguarding the mission

Staff, executives, volunteers, and Board members change over time. A governing Board can provide continuity by keeping records, reviewing the organization's mission and strategy, preserving important institutional knowledge, and ensuring that major decisions remain aligned with the organization's purpose.

Safeguarding the mission does not necessarily mean preserving every original program or method. Communities, evidence, resources, and circumstances change. The Board should protect the organization's purpose while being willing to reconsider strategies when better ways of advancing that purpose become available.

How does a Board actually work?

The Board's procedures are usually described in bylaws and other governance policies. Bylaws may address matters such as Board composition, terms, officers, meetings, voting, committees, vacancies, and amendments. Organizations should make sure their bylaws are consistent with applicable law and review them periodically as circumstances change.

Boards should also consider policies appropriate to the organization, which may include conflict-of-interest, confidentiality, whistleblower, document-retention, financial-control, reimbursement, investment, gift-acceptance, executive-compensation, and other policies.

Meetings

A Board should meet often enough to provide responsible oversight and carry out the duties required by its bylaws and applicable law. There is no single meeting schedule appropriate for every Board. The frequency will depend on the organization's size, complexity, stage of development, financial condition, risks, and amount of work between meetings.

Meetings should be purposeful, accessible, and organized around governance rather than routine reporting that could have been handled another way. Provide Board members with agendas and relevant information early enough for them to prepare, maintain accurate minutes, and leave enough time for discussion of strategy, finances, risks, mission, community impact, and major decisions.

Depending on applicable law and the organization's bylaws, Boards may meet in person, remotely, or through a hybrid format. Consider technology access, disability access, language access, scheduling, confidentiality, and other factors that affect meaningful participation.

Officers

Many Boards elect officers, although the titles and responsibilities vary according to bylaws and applicable law. Common positions include:

• A President or Chair who leads the Board's governance work, facilitates Board meetings, helps maintain an effective relationship between the Board and chief executive, and helps ensure that the Board fulfills its responsibilities.
• A Vice-President or Vice Chair who carries out responsibilities defined by the bylaws and acts for the Chair when necessary. Whether this person later becomes Chair should be determined by the organization's succession process rather than assumed automatically.
• A Secretary or Clerk who is responsible for ensuring that Board records, meeting notices, minutes, and other required governance documentation are maintained accurately. Staff may assist with these tasks, but the officer remains responsible for making sure the governance requirements are met.
• A Treasurer who helps the Board carry out its financial oversight responsibilities. The Treasurer may chair or work closely with a Finance Committee, review financial reports and budgets, and help other Board members understand the organization's financial position. Financial oversight remains the responsibility of the full Board, not the Treasurer alone.

Some Boards also have an Executive Committee made up of officers or other designated Board members. Its authority should be defined in the bylaws or other governing documents. An Executive Committee can handle appropriate matters between full Board meetings, but it should not become a substitute for full-Board participation or exercise authority that applicable law or governing documents reserve for the full Board.

Committees

Boards may form committees or task forces when they help the Board carry out its responsibilities efficiently. Not every Board needs the same committees, and a committee should not be maintained simply because it has always existed.

Each committee should have a clear purpose, responsibilities, membership, authority, and relationship to the full Board. Committee assignments should take into account members' interests, expertise, availability, development goals, and the work that needs to be done. Avoid overloading a small number of Board members.

Two broad types of committees are common:

1. Standing Committees address continuing areas of Board responsibility.

Depending on the organization's needs, examples might include:

• A Finance Committee that helps the Board review budgets, financial reports, internal controls, long-term financial health, and other financial responsibilities
• An Executive Committee, when appropriate, whose authority and limits are clearly established
• A Governance or Board Development Committee that supports Board recruitment, orientation, bylaws, policies, succession, Board education, and evaluation
• An Audit Committee, when appropriate, that helps oversee independent financial review, audit, risk, and related accountability
• Resource-development, public-policy, community-engagement, program-oversight, or other committees needed for the organization's mission and governance responsibilities

2. Ad Hoc Committees or Task Forces are formed to complete a defined task and then disband when the work is complete. Examples might include a bylaws review, chief-executive search, facilities decision, strategic-planning process, or specific fundraising project.

Board Tasks

Board members may represent the organization publicly, participate in fundraising and advocacy, serve on committees, attend organizational events, develop community relationships, and help secure resources. These activities should support the Board's governance responsibilities rather than distract from them.

In a working-Board organization, members may also carry out operational tasks. Be clear when members are acting as directors and when they are acting as program or administrative volunteers.

How do you go about putting a Board together?

Once you've decided that your organization needs a governing Board, the next step is determining what the Board needs in order to govern effectively. Rather than beginning with a list of prestigious people you hope will say yes, begin with the responsibilities of the Board and the perspectives, competencies, relationships, and experiences needed to fulfill them.

What kind of Board do you want?

Every governing Board has fundamental oversight responsibilities, but Boards may place different emphasis on particular areas depending on the organization's stage, mission, staffing, resources, and strategy.

For example:

A working Board

A small or emerging organization with little paid staff may need directors who are willing to carry out operational work in addition to governance. Members should understand both roles and be willing:

• To participate consistently in Board meetings and governance decisions
• To serve on appropriate committees or task forces and carry out agreed-upon assignments
• To perform clearly defined operational or volunteer responsibilities when the organization needs them

A Board with strong community connection

Every Board should understand the communities affected by the organization's work. An organization may intentionally recruit directors with lived experience, trusted community relationships, geographic knowledge, cultural knowledge, or relationships with important partners.

These members should be full governing participants, not names placed on stationery simply to improve appearances. All directors should understand their responsibilities, prepare for meetings, participate in decisions, and meet the expectations established for Board service.

A Board with relevant knowledge and competencies

A Board may need members who collectively understand areas such as:

• Finance, accounting, budgeting, and financial oversight
• Law, regulation, governance, risk, or compliance
• Communications, public engagement, fundraising, advocacy, or technology
• Issues directly connected with the organization's mission
• The experiences of people and communities directly affected by or participating in the organization's work

Remember that the Board does not need every director to be an expert in every subject. It should have enough collective knowledge to ask appropriate questions, understand information presented to it, recognize when outside expertise is needed, and make informed decisions.

A Board with responsibility for resource development

Helping ensure that the organization has adequate resources is an important Board responsibility. Expectations for individual Board members should be clear and appropriate to the organization.

Board members may:

• Help identify and build relationships with potential supporters, partners, and funders
• Make personally meaningful contributions when that is part of the organization's stated Board expectation and financially feasible for the member
• Explain the organization's mission and impact to potential supporters
• Participate in appropriate fundraising strategies and events
• Make introductions or help cultivate relationships when they are comfortable doing so

Personal wealth should not be a prerequisite for governance unless an organization's particular legal or structural arrangement requires something different. Requiring large personal contributions can exclude people whose perspectives and experience are essential to the Board's work.

A mission-centered Board

Every governing Board should understand and safeguard the organization's mission. Directors should be willing to govern in accordance with that mission while also remaining open to evidence, community feedback, changing circumstances, and strategic approaches that may evolve over time.

What do you expect your Board's relationship to the organization to be?

Be explicit about the relationship among the Board, chief executive, staff, volunteers, members, advisory bodies, and community. Which decisions belong to the Board? Which are delegated to management? Which require community consultation or participation? What information does the Board need to provide responsible oversight?

An advisory council should not be described or treated as though it has governing authority when it does not. Likewise, a governing Board cannot simply give away its ultimate fiduciary responsibilities because the organization prefers a collaborative culture. Participatory governance and clear legal accountability can coexist when responsibilities are designed thoughtfully.

How big do you want your Board to be?

There is no universal ideal Board size. First determine any requirements under applicable law and the organization's bylaws. Then consider the organization's mission, complexity, workload, committee needs, community relationships, decision-making process, and the range of perspectives and competencies needed.

A Board that is too small may lack needed knowledge or place too much work on a few people. A Board that is too large may make meaningful participation and decision-making more difficult. The goal is a size that allows directors to participate actively while providing the range of perspectives and abilities required for effective governance.

Some really important points:

Whatever the size and particular needs of your Board, consider:

• Match recruitment with the responsibilities the Board actually needs to fulfill. Give prospective members a clear description of expectations before they join.
• Build a Board with different experiences, perspectives, skills, relationships, and backgrounds while also recruiting people who can work constructively across disagreement and participate in collective decision-making.
• Make sure prospective Board members understand the mission, fiduciary responsibilities, organizational values, and legal and ethical expectations associated with the role.
• Be straightforward about the time commitment, term length, meetings, committee work, fundraising expectations, financial condition, organizational challenges, conflicts-of-interest requirements, confidentiality expectations, and other significant responsibilities.
• Consider how the Board will include perspectives of people directly affected by the organization's work and how the organization will remain accountable to those communities beyond Board membership alone.
• Plan for Board orientation, continuing governance education, accessibility, succession, and regular assessment of how well the Board is functioning.

How do you find people who match your vision for the Board and invite them to join?

Board recruitment can begin with existing relationships, but don't stop there. Recruiting only through the networks of current members can reproduce the same backgrounds and perspectives over time. Consider a deliberate process for identifying what is missing and reaching beyond familiar circles.

Possible sources include:

• Current participants, volunteers, partners, supporters, and community members
• People with relevant community trust, lived experience, professional knowledge, or leadership experience
• People whose work or responsibilities connect with the issue
• Members or staff of partner organizations and community networks
• People directly affected by or participating in the organization's programs, policies, or mission
• Open calls for nominations or expressions of interest when broader recruitment would improve access to Board service

Talking to potential Board members:

The first conversation should help both the organization and the prospective member decide whether Board service is a good fit. It is not simply a recruitment pitch.

Some guidelines:

• Explain why you are considering the person and what perspectives, experience, relationships, or abilities you believe they could contribute.
• Give an accurate picture of the organization, including its mission, finances, programs, strengths, challenges, current priorities, and Board responsibilities.
• Ask what interests the person about Board service, what they hope to contribute or learn, and what conditions would help them participate effectively.
• Answer questions fully and provide relevant written materials.
• Discuss the person's ability to participate constructively in collective governance, manage conflicts of interest, respect confidentiality, and work across differences.
• Be clear about meeting schedules, expected preparation, committees or task forces, term length, fundraising responsibilities, and other time commitments.

Issues to consider in choosing Board members:

• Does the Board include enough difference in perspective to make thoughtful decisions rather than simply reinforcing what everyone already believes?
• Can potential members disagree constructively and still work together toward the organization's mission?
• Are Board procedures and materials understandable and accessible to all members? What orientation, governance education, language access, disability accommodations, technology, reimbursement, mentoring, or other support will help everyone participate fully?
• Does anyone have an actual or potential conflict of interest that needs to be disclosed and managed?
• What perspectives, competencies, or community relationships are still missing from the Board?
• How will you communicate respectfully with interested candidates who are not selected?

A mechanism for choosing Board members:

Many Boards use a Governance Committee or Nominating Committee to help identify, recruit, interview, and recommend prospective directors. The committee can periodically assess the Board's current composition and future needs rather than recruiting only when a seat becomes empty.

The selection and election process should follow the organization's bylaws. Depending on the structure, Board members may be elected by the existing Board, elected by organizational members, appointed through another authorized process, or selected in some combination of these ways.

When someone is not selected, communicate clearly and respectfully. The decision may reflect the Board's current needs, available seats, conflicts of interest, time requirements, or mismatch with the responsibilities of governance rather than a judgment about the person's overall value.

Someone who is not selected for Board service may still be interested in another role, but don't assume they should volunteer elsewhere. If appropriate, let them know about other opportunities and allow them to decide whether any are a good fit.

Avoid making every departing Board member solely responsible for finding their replacement. That practice can narrow recruitment to existing social networks. Recruitment should be a continuing Board responsibility guided by the organization's strategic and community needs.

How does the Board get started?

Once the initial Board has been selected according to the organization's governing documents or formation process, it needs to organize itself. The exact steps depend on whether the organization is newly forming, already incorporated, or transitioning from another governing structure.

The first meeting should take place in a setting that is accessible, reasonably comfortable, and appropriate for confidential governance discussions. Remote or hybrid participation may also be appropriate where permitted. Provide materials in advance so members can arrive prepared.

A temporary chair or incorporator may facilitate the meeting until officers are selected according to the bylaws or other governing documents. Someone should ensure that accurate minutes are taken.

The first meeting or initial series of meetings may include:

• Introductions and discussion of members' roles and expectations
• Board orientation, including the duties of care, loyalty, and obedience and the distinction between governance and management
• A report on the organization's current condition, including mission, programs, finances, staffing, partnerships, risks, and immediate priorities
• Review, adoption, or amendment of bylaws and the Board's governance structure as appropriate
• Review or adoption of conflict-of-interest and other priority governance policies
• Discussion of the organization's mission, strategic priorities, and the Board's responsibilities for helping the organization pursue them
• Discussion of committees or task forces actually needed for the Board's work
• Election of officers according to the organization's governing documents
• Appointment of committee or task-force leadership when needed
• Committee or task-force assignments when appropriate
• Review of major financial information, banking or signing authority, insurance, required filings, and other immediate fiduciary matters
• Discussion of how the Board will communicate with the chief executive, staff, advisory groups, organizational members, and communities affected by the work
• Establishment of an appropriate Board meeting schedule
• Identification of Board education, recruitment, succession, and self-assessment needs
• Other matters important to establishing effective governance

Not every decision has to be completed at the first meeting. It may be better to orient members thoroughly and give them time to understand the organization before making some committee or leadership assignments. What matters is that the Board leaves the initial process understanding its authority, responsibilities, immediate priorities, and next steps.

In Summary

A well-functioning Board of Directors can be a significant asset to a nonprofit organization. Its central role is governance: safeguarding the mission, setting and monitoring strategic direction, providing financial and legal oversight, ensuring ethical integrity, securing adequate resources, selecting and supporting the chief executive, and remaining accountable to the communities the organization exists to serve.

Board service should not be treated as an honorary position, a way to borrow someone's prestige, or simply a source of free professional services or donations. Directors assume real fiduciary responsibilities. Organizations should recruit people who collectively bring the judgment, lived experience, community relationships, knowledge, skills, and commitment needed to govern effectively.

The Board should also maintain a clear distinction between governance and day-to-day management. In smaller organizations, directors may sometimes perform operational work, but everyone should understand which role they are playing and where authority lies.

Good governance depends on more than the names around the Board table. It requires preparation, transparency, financial stewardship, conflict-of-interest safeguards, constructive disagreement, community accountability, continuing education, self-assessment, and a willingness to change as the organization and community change.

A Board that fulfills those responsibilities can help an organization remain mission-centered, trustworthy, financially responsible, legally and ethically sound, connected with its community, and prepared to pursue its goals over the long term.