Client Alerts
May 05, 2008

Volunteering for Nonprofit Boards

Stites & Harbison, PLLC, May 5, 2008

by Stites & Harbison, PLLC

Serving as a board member for a not-for-profit organization can be a personally and professionally rewarding experience. But like any other venture, you should have a thorough understanding of what you're signing on for, or have signed on for, when you agree to join a board.

When you volunteer to be a board member you become part of that organization's management team. And not-for-profit organizations can open themselves to legal liabilities just as their for-profit counterparts can. Most state statutes specify the standard of care required by directors of not-for-profit corporations. These statutes usually require that directors discharge their duties in good faith and reasonable prudence. This isn't a reason to shy away from volunteering, but it is reason to fully understand what you're signing on for and what is expected of you.

If an organization has not told you what the responsibilities are for their board members, you should ask for a formal set of requirements and guidelines. While this may seem like a formality for a volunteer role, remember that you are agreeing to help guide and manage that organization. It is in everyone's best interest to have clearly defined expectations.

Get to Know the Organization

Just as you would interview and research a company for employment, you should have a thorough understanding of the not-for-profit with which you align yourself. Talk with current and past board members. Take a tour of the facility and meet the staff and volunteers. Attend fundraisers and events that fulfill the organization's mission to identify strengths and weaknesses. Talk with the management team about the organization's vision and their planned path for maintaining or expanding their services.

Know Your Available Resources

Boards can benefit by including professionals with key areas of specialty, such as accountants, attorneys, human resources and marketing professionals, however a profession's standards of ethics may govern and limit the capacity in which these individuals may serve on the board. For example, while an attorney may rely on his or her general training and education to offer the board meaningful direction, he or she should shy away from giving legal advice to the board. On the other hand, other professionals such as marketing consultants can openly lend their expertise to the board without concern for additional legal exposure as long as they do not have a conflict of interest with one of their clients. To avoid confusion, take the time to clarify each person's role and their goals as a board member.

Financial and Time Expectations

The same goes for fundraising and time commitments. Some boards require a minimum financial donation from their board members. Others require minimum time commitments and committee participation, but both are good ideas to help keep board members active and involved with the organization. The not-for-profit's management team, both executive director and board, should be clear in their fundraising and time commitment expectations with new and prospective board members.

Know the By-Laws

Ask for a copy of the organization's charter and by-laws. These documents should be readily available, kept up-to-date and easily understood by a layperson. When determining how the organization will move forward with programs and evolve with the changing marketplace, it is imperative that the by-laws are referenced so that activities correspond with the organization's intended purpose and are performed in accordance with the operational rules of the organization. This is especially important when it comes to policies and practices that relate to financial matters and affect the long-term financial stability of the organization.

Insist on Well-kept Financials and Insurance

Wherever you choose to volunteer, insist that the organization is well insured and carries D&O (directors and officers) liability insurance. While some not-for-profits may view these as unnecessary or unneeded expenses, they are inexpensive tools that can help to attract and maintain a talented group of fellow board members.

Actively Participate in Meetings

Board meetings must be meaningful and include a full disclosure of operating results so that you and your fellow board members know how the organization is performing. If there are any deficiencies, you must have the information available so that you can diagnose and make decisions about how that organization is being run so the board can take appropriate action.

This also means that you are obligated to regularly participate in board meetings. It's no secret that not-for-profit boards frequently struggle with members who seldom attend meetings or offer little-to-no input or assistance. While excuses are easily made, these meetings are critical to the long-term success of the organization. It may sound heavy-handed, but not taking part in these meetings can be construed as mismanagement, because you have agreed to direct a company and not participating is a violation of the principle of good faith.

The same can be said for committee meetings. Most boards require that their members participate in one or more committees, but not all committees are active or provide reports to the full board. Take an active part by volunteering to chair a committee. Set goals for your committee and give regular reports to the full board. Committing yourself to making these reports will help you and your committee stay focused on tasks that help advance the institution.

Evaluate Successes and Failures

Consistently take a step back to evaluate what you, your committee, the full board, and the staff have accomplished. Did the organization fulfill its mission? Where did the organization find its greatest success and challenges? If specific areas need immediate attention, either because they are underutilized or because they could put the organization or people who interact with the organization at risk, address them in a way that advances the institution. Remember that one of a board member's greatest contributions can be the professional expertise that they take for granted.

We encourage you to support your community by offering your experience and expertise to a not-for-profit organization. Chances are good that there are multiple organizations that you can take an interest in and help. Directors should not fear liability for every potential mishap that can occur in an organization. As long as your actions are responsible and in line with the best interests of the agency, you will be protected from liability. And by being an active part of that organization you'll find a very rewarding experience for years to come, both personally and professionally.

Related Capabilities
Charitable & Non-Profit Organizations Business Litigation Employment Law Trusts & Estates