Written by Janet Bandera, JD
This article was originally published by and used with permission from the Journal of Practical Estate Planning by CCH, Incorporated. Copying or distribution without the publisher’s permission is prohibited.
The question is: What does a good board member do? Raise money? Stuff envelopes?
In seeking to answer that question for others, I have begun to answer it for myself. A good board member helps the organization stay focused on its mission. Thus, the most important job of all board members is to be informed and to govern. So, what do we need to know? The search for this answer has resulted in the following work-in-progress.
Before undertaking his or her role, each potential board member must review the background, history and related details of a nonprofit organization (“NFP”). The following are some issues to consider prior to accepting a position and during your term.
In order to qualify under Code Sec. 501(c)(3), the NFP’s exempt purpose must be stated in the organizing document. A director is measured by the success or failure of the pursuit of accomplishing this exempt purpose. A director is also measured by the course taken by the organization in getting there. Thus, it is important to review the NFP’s activities to determine whether they are consistent with the purpose set out in its organizing documents.
Organizational Details and Documentation
After you find that the mission of the organization resonates with you, you’ll want to know whether it can accomplish the mission. The first questions are who are the people guiding the way; what skills and experience does each contribute; and is the foundation for effectively accomplishing the mission in place? The devil is in the details: So what are the details? The following is not an exhaustive list; it is meant to alert the conscientious prospective board member that he or she has a duty to the organization that goes beyond lending a name and/or raising money or having fun.
What is the organization’s stated purpose?
Review the Application for Exemption (IRS Form 1023) and the Mission Statement. Is the organization a corporation or a trust; who formed it and when? Review the Articles of Incorporation or trust agreement. Have Bylaws been adopted? Review the Bylaw and any amendments. How many directors are there and what do they do? Have there been changes in the directors; how are they appointed; how often do they meet; how many are a quorum; how many are required to approve actions; are adequate records of their actions kept? Review the Bylaws, resolutions and minutes.