How to create the ideal board for you nonprofitAn effective board of directors or trustees is critical to your nonprofit's success. But how big should the board be? What are the ideal traits of a board member? How much training is needed? And what about compensation? Answers to these basic questions can help you create the ideal board for your nonprofit.
Be smart about board size
Experts caution against boards larger than 15 people, because it becomes challenging to ensure that everyone is heard. On the other hand, boards that are too small may not allow for enough diversity in perspectives. For example, in the U.K., the Small Charities Coalition and the Charity Commission recommend a minimum of three board members. You'll need to decide for yourself the right number of board members for your organization.
Recruit your board of directors strategically
Putting together a board of directors or trustees involves more than filling seats. Recruiting strategically can help you achieve your organization's mission. That may sound intimidating — but you can make it manageable by considering the expertise, experience and connections your organization needs.
Almost all boards, for example, will need members who are knowledgeable about a the nonprofit's audience or population being served as well as members who have connections to the local community. Look for a diverse group of people who are passionate about your organization's mission and committed to putting in the necessary time, as well as representative of those with a stake or interest in the organization's work (such as a teacher or parent for a charity focused on youth or education). Fundraising skills and financial and management expertise are often valuable assets for a board as well.
Once your board of directors or trustees is in place, the work isn't over. Recruiting must continue as members leave the board. Current board members should be on the look-out for potential recruits. It's also important to remember that board needs may change over time. For example, fundraising may be a particular need if a capital campaign is in the offing.
Periodically the executive director or chief executive and board chair should review the skills and expertise of existing board members to identify potential gaps. This analysis can then be used to guide identification of future board members.
Provide appropriate training to board members
New board members should receive an orientation that explains their roles and responsibilities. You might address:
- Mission and vision. Offer a brief history of the organization. Describe the nonprofit's mission and vision for the future. Explain the services provided to clients.
- Expectations. Tell board members what's expected of them. This might include financial support, meeting attendance and volunteer expectations.
- Staff and volunteers. Provide a current organizational chart, including bios of current board members and key staff. Review job descriptions to clarify roles and responsibilities.
- Policies. Review relevant policies, such as those governing conflicts of interest, personnel management, standards of conduct and ethics.
- Reports. Provide recent financial reports, an annual report, and any other documents that list donors or other funders who support the organization.
- Legal and tax documents. This may include board bylaws, articles of incorporation, certification or documentation from tax authorities or regulators, and a summary of insurance coverage.
- Practical details. Provide board member job descriptions, a list of board committees (including members, charters and current initiatives) and a schedule of meetings for the next year.
Few nonprofits pay their board members directly. Instead, board members typically volunteer their time and seek reimbursement for expenses, such as travel and lodging for board meetings or conferences. As a best practice, your nonprofit should establish an expense reimbursement policy.
Compensating board members in the U.S...
It's not illegal for nonprofits to pay board members if allowed by your organization's bylaws. If compensation is provided, establish safeguards to ensure that the level of compensation is reasonable and in line with compensation provided by similar organizations.
Section 501(c)(6) of the Internal Revenue Code prohibits any part of net earnings benefiting individuals. Section 501(c)(3) contains excess-benefits rules, which bar board directors and officers from profiting from their positions with nonprofits. Paying more than the recognized market average may result in fines and loss of tax-exempt status.
It's also important to note that the protections afforded volunteers under the Federal Volunteer Protection Act of 1997 apply only to individuals who don't receive compensation, other than reasonable reimbursement or allowance for expenses actually incurred.
...and in the U.K.
In the U.K., paying a trustee for normal services as part of his or her role as a trustee isn't normally possible (unless the charity's governing document specifically allows it or the organization has authority from the Charity Commission or the courts). However, a charity can pay a trustee for services over and above normal trustee duties, if the decision to do so is made by other trustees who won't benefit and if certain conditions are met. These services could include a piece of research work, giving a lecture or providing specialist services, such as management consultancy, building or electrical work, or translation. Check with the Charity Commission (or your regulator in Scotland or Northern Ireland) for full details.