Serving on the board of a nonprofit is not something to be taken lightly. Board members need to pay attention and be willing to make hard decisions. But what should you do if approached to serve on a nonprofit board? What should you look for before making a decision that will affect you in terms of money, time, and perhaps even reputation?
As with any important decision, a potential board member needs to gather information about the organization and its current board. Jill and Daniel Welytok, authors of Nonprofit Law & Governance for Dummies, suggest that you seek answers to the following questions:
Who is on the current board and how did they get there?
Find out, tactfully, about the skills and experience of current board members. This will give you an idea of where the board is strong or weak. For instance, is there someone who has an accounting background or experience in reading financial statements? If not, find out how the board manages its financial oversight responsibilities.
How does the organization get board members? Are they friends of the CEO? Is there a nominating committee that tries to balance the skills board members bring to the table? Do board members have to be elected or approved by the organization's membership?
How long do the board members serve?
Some boards have very long terms, such as five years. Can you be sure that you will be able to serve that long? If the term is very short, say two years, will you have time to make a difference?
How many board members are needed to take action?
The organization's bylaws will specify how many board members there are (usually 6-12), and how many members must be present to do business and vote. That number is called a quorum. Ask also if that quorum requires members to be physically present or if you can vote by phone.
What committees does the board have?
Common ones are audit committees, programming committees, fundraising committees, public relations committees, and nominating committees. Make sure that you will be assigned to the committee/s that most interest you and that suit your skills. If you are interested in the financials, you likely won't want to serve on the PR committee.
Can you can see the books and records of the nonprofit?
A nonprofit's tax return is called the 990 and it has to be made available to the public. Small nonprofits, under $25,000 income, do not have to file a 990 but they should have some kind of accounting system that they can offer for your inspection. If an organization balks at your request to see financial information, consider that to be a red flag.
How large is the overall budget?
Look at the allocation of funds. Although most revenue should be going to programs, not administration, make sure the organization isn't starving for lack of infrastructure, equipment, and other tools to do its job well. Check out the salaries for top executives...do they seem reasonable?
What are responsibilities of the directors?
Is the board advisory only? Or is it a real, working board? At minimum board members usually have legally defined duties such as determining the group's mission and purpose; selecting the executive director; overseeing organizational planning; raising funds; and serving as a "court of appeal" for staff and stakeholders who believe the nonprofit is not fulfilling its mission.
Conflicts of interest on the part of board members can put the entire organization in peril. Make sure that you have none before you agree to serve.
Are the payroll taxes of the organization up-to-date and/or is it being sued?
If a nonprofit fails to pay its taxes, the IRS can impose harsh penalties on it. Furthermore, board members could be sued for allowing such penalties to accumulate.
Is the board being sued or has it ever been sued? Being sued is not a reason to run from a nonprofit, but you should certainly know about and understand any lawsuits. It can indicate a tendency for the board to operate outside the scope of its authority and thus get itself into trouble. Board members are only protected from liability as long as their actions remain within the boundaries the organization has set up.