Generally speaking, there are two types of boards of directors: non-profit boards and for-profit boards. The differences in responsibilities are significant. So, what is a non-profit board and what are its responsibilities?
Non-profit boards govern non-profit organisations with a charitable mission and are not subject to corporate regulations. On the other hand, corporate boards seek to maximise profit and increase shareholder value.
There are many things that corporate board members can learn from the non-profit world. Indeed, there is extensive overlap between non-profit boards and for-profit board governance. Here’s an overview of the duties and responsibilities of a good non-profit board.
Eight primary responsibilities of the non-profit board
Despite each non-profit’s unique mission and organisational structure, boards typically share some primary duties. These include:
- Hiring, supporting, and evaluating a chief executive
- Planning, monitoring, and modifying short- and long-term strategies with crucial staff
- Providing financial oversight and securing operating funds
- Establishing an inspiring vision and mission for the organisation
- Securing community and stakeholder support
- Improving program efficiency and effectiveness
- Managing and improving the performance of the board
- Adhering to and exceeding legal and ethical standards
Trust is everything
The trust of the public is crucial for non-profits. Donors and stakeholders must be confident that their funds are being used to advance the organisation’s mission.
A board member’s duty of care is to carry out their responsibilities faithfully according to the organisation’s stated mission while following all applicable laws and internal rules, policies, and regulations.
Here are some of the activities that individual board members typically engage in:
- Reviewing financial statements
- Nominating candidates for the board of directors who could make a significant contribution to the organisation and its work
- Contributing financially to the organisation
- Raising awareness of the organisation
- Keeping up with the organisation’s programs, services, and policies
- Keeping up with developments in the field
- Participation in board and committee meetings and attendance at events
- Evaluation of minutes, agendas, and materials associated with discussions
- Serving on committees and task forces as needed