Building a board of directors for a nonprofit

A nonprofit’s success often depends on the board of directors who oversee the organization’s finances, fundraising activities, and operations. Building an effective board of directors sets the direction of an organization for its initial formation and into the future.

This makes defining the structure of the board and recruiting board members critical for the organization’s success. Building an effective board of directors is something that needs to take place from the onset. The attorneys for nonprofits at San Luis Obispo’s Toews Law Group, Inc, have the expertise to advise the founders of new and existing nonprofits on all aspects of creating a nonprofit and structuring the board of directors.

The board of directors is responsible for overseeing the direction of the nonprofit’s finances and mission. The responsibilities of the board include:

• Creating and approving the bylaws
• Approving the budget, spending, and investments
• Overseeing key operations of the organization
• Fundraising
• Hiring or appointing the Chief Executive Officer (CEO) or President of the Board, depending on the title specified in the bylaws
• Hiring an Executive Director who oversees the daily operations of the nonprofit
• Representing the organization to the public
• Other duties as defined in the bylaws or by the board’s decision

An overview of the function of a board directors

The basic structure of the board of directors generally includes the President of the Board, Vice President, Secretary, Treasurer and any number of board members.

• Some organizations establish an honorary board for past board members
• Some organizations have a board of directors for fundraising and another to oversee operations, and both of those boards report to an executive committee
• Not all board members must have voting power
• Some board members serve as committee chairs for functions such as marketing and publicity or some other activity critical to the mission. For example, an art organization may have an exhibit committee that is chaired by a board member, or a local symphony may specify a board member to chair the concert committee.

Decide how to structure the board of directors before setting about recruiting members. The attorneys at Toews Law Group, Inc. can advise about the best structure for a board of directors as well as other details such as how long a member can serve and for how many terms.

Board members are generally not paid for their services but may be reimbursed for out-of-pocket expenses. Some bylaws allow for certain compensation to certain board positions. These matters are best defined at the outset.

An initial board of directors is defined in the Articles of Incorporation when the nonprofit is established. These founding members guide the organization through the early stages of formation, including filing the articles of incorporation, writing bylaws, establishing the mission statement, initial fundraising, even defining the structure of the permanent board of directors. Some founding members may remain on the board for a new term once the organization is established.

Building the board of directors

The most effective boards are comprised of board members with the experience that is valuable to the organization, such as fundraising, event planning, personnel management, accounting and legal. A board of directors is most successful when members with specific skills are invited to join. And contribute their skills and experience to the organization.

The answers to certain questions help determine how many board positions are needed, and what skills and experience are best.

• What is the organization’s mission?
• What skills are needed to support that mission?
• Which of those skills can a board member provide?
• How is the organization being funded at startup?
• What is the budget for the first year and projected budgets for the next five years?
• What skills are needed on the board of directors to fund the organization?
• How long do board members need to serve to be effective?

Once the desired experience is determined, write a job description for each function to be filled by a board member. Think of recruiting members for the board of directors as recruiting executives for a business. The same kinds of management skills are needed to guide a nonprofit to success.

Ways to recruit board members include:

• Asking qualified people to submit their resume or a recommendation
• Advertise in local newspapers, just as a job opening is advertised
• Network with community organizations and the Chamber of Commerce

Set a deadline to fill the board position. Schedule interviews. The existing board generally needs to vote on new board members.

Get the right advice

The San Luis Obispo attorneys for nonprofits at Toews Law Group, Inc. are experienced in all aspects of nonprofits. If you are an officer or director of a charitable group, Toews Law Group, Inc., can provide advice and counsel on legal, tax and management issues, including how to structure the board of directors and how to find insurance for members of the board.