The Role of the Nonprofit Board of Directors
The board of directors is comprised of individual volunteer board members who collectively serve as the governing body of the organization. Together, the board is responsible for ensuring that the organization fulfills its mission, operates with integrity, and remains accountable to the community it serves. As such, it is vital that the board is positioned and equipped to fulfill their role to lead the nonprofit organizations.
The Role of the Nonprofit Board of Directors
There are over 27 million individuals serving on nonprofit boards of directors across the United States. The board members provide overall governance and leadership for the over 1.8 million nonprofit organizations in the United States. Understanding the role of the board of directors within nonprofit organizations lays a foundation preparing board members to fulfill their roles leading nonprofit organizations to fulfill their purpose.
Nonprofit organizations are established to serve the public good. Through leveraging and utilizing resources raised from individuals, corporations, foundations and government contracts, nonprofit organizations are able to fill the gaps that exists and are not fully met by the private sector or government systems. It is the elected members of the board of directors that provides the oversight and governance of these public resources.
There are three legal duties for board members in nonprofit organizations:
Duty of Care: Directors and officers must perform their responsibilities in good faith and with the same care an ordinary person would use in managing their own affairs.
Duty of Loyalty: Directors and officers must act in good faith and in a manner which does not harm the organization to the benefit of the director or officer. Directors and officers must avoid any conflicts of interest or appearances of impropriety.
Duty of Obedience: Directors and officers must comply with the provisions of the articles of incorporation, bylaws, and state laws, and should safeguard the organization’s mission.
These are the legal requirements the board of directors must fulfill in leading a nonprofit organization. Whether the nonprofit organization has a $10K year annual budget or a $10 billion per year annual budget, these three legal duties are consistent.