Last Tuesday, I had the pleasure of speaking on a panel at an event for the Young Nonprofit Professionals Network San Francisco Bay Area Chapter (YNPNsfba) on “Leadership Through Board Service” with Bruce Marcus, San Francisco State University Instructor of Volunteer and Board Management, Ann Lehman, Planning and Policy Specialist and Partner at Zimmerman Lehman, and John Power, Executive Director of The Volunteer Center serving San Francisco and San Mateo counties. This event introduced the topics of board culture, roles and responsibilities of serving on a board, considerations when serving on a board, legal issues related to board service, and fundraising. I’d like to briefly highlight some resources from my discussion on some of the legal issues related to board service and share other insights from the panel’s discussion with the attendees.
What is a board and what is the authority of a board?
Every nonprofit corporation is required to have a board of directors. A board of directors has the responsibility of ultimate oversight and governance of the organization.
While a board can delegate responsibility to others, it can never delegate its ultimate oversight responsibilities. For more on non-delegable duties of a board, please view our previous posts, “Advisory Board v. Board of Directors – A Distinction with a Difference” and “Everything You Wanted to Know About Nonprofits & Committees, Part One.”
What are fiduciary duties?
Although directors only have the authority of the board when they act as a group, each director has legal responsibilities in the way he or she carries out his or her role as an individual director. These are called fiduciary duties. Directors should be aware of the three fiduciary duties of care, loyalty, and obedience.
Gene Takagi provides a helpful explanation of these duties in his 2006 article, “Governance Issues and the Nonprofit Integrity Act.”
What types of liabilities is a director exposed to and what protections are available?
A director will want to be familiar with the issues surrounding personal liability, and the protections available through indemnification, D & O insurance, other insurance policies such as Commercial General Liability insurance, and statutory protections for volunteer directors.
Some excellent resources on insurance for nonprofits and directors can be found at the following websites:
- Nonprofit Risk Management Center
- Nonprofits’ Insurance Alliance of California
- Alliance of Nonprofits for Insurance
- Do not be afraid to ask for a job description. Knowing what is expected of you is an important component in being a better board member.
- If you’ve seen one board, you’ve seen one board. Get to know the specific board(s) you are interested in joining.
- A strong board means a stronger organization, but the board should not be so intrusive that it becomes overpowering and steps into areas that should be handled by the executive director and/or staff.
- Do not be discouraged if you are not connected to big donors. Keep in mind that individual giving is by far the largest component of all charitable contributions and the sum of many small parts can sometimes be substantial. At the same time, avoid committing to a fundraising obligation that you are not comfortable with. The requirements and expectations of board fundraising varies among organizations.
- Utilize various resources for finding board positions – online postings, word of mouth or personal connections, and in-person events such as The Volunteer Center’s Board Match event.
- The decision to serve on a board does not have to be all or nothing. If you are interested in board service but it isn’t the right time for you right now, consider other ways to get involved such as volunteering with the organization’s programs or serving on a committee or an advisory board.
Thank you to YNPNsfba for having me and to the fellow panelists and attendees for a great discussion at this event!
For more information about considerations regarding board service, please see our previous post, “Not Just a Resume Booster: Tips for evaluating a nonprofit before joining the board of directors.”