A board of directors is necessary to incorporate a nonprofit, to get it tax exemption, to apply for a bank account, to properly file annual reports, and to do most important transactions. This is so because the principal roles of the board of directors are to represent the public (or membership) interests in the organization and to represent the organization as its legal voice.
What are the basic responsibilities of nonprofit boards*?
- Determine mission and purpose. It is the board’s responsibility to create and review a statement of mission and purpose that articulates the organization’s goals, means, and primary constituents served.
- Select the chief executive. Boards must reach consensus on the chief executive’s responsibilities and undertake a careful search to find the most qualified individual for the position.
- Support and evaluate the chief executive. The board should ensure that the chief executive has the moral and professional support they need to further the goals of the organization.
- Ensure effective planning. Boards must actively participate in an overall planning process and assist in implementing and monitoring the plan’s goals.
- Monitor and strengthen programs and services. The board’s responsibility is to determine which programs are consistent with the organization’s mission and monitor their effectiveness.
- Ensure adequate financial resources. One of the board’s foremost responsibilities is to secure adequate resources for the organization to fulfill its mission.
- Protect assets and provide proper financial oversight. The board must assist in developing the annual budget and ensuring that proper financial controls are in place.
- Build a competent board. All boards have a responsibility to articulate prerequisites for candidates, orient new members, and periodically and comprehensively evaluate their own performance.
- Ensure legal and ethical integrity. The board is ultimately responsible for adherence to legal standards and ethical norms.
- Enhance the organization’s public standing. The board should clearly articulate the organization’s mission, accomplishments, and goals to the public and garner support from the community through advocacy.
*BoardSource is a recognized world leader in nonprofit board leadership: (https://boardsource.org/about-boardsource/)