A nonprofit corporation structure is established at the time a nonprofit is created. If you’re considering establishing your own nonprofit, there’s a lot to consider regarding effectively appointing the right people to roles that match their strengths.
Each board member is a crucial stakeholder who helps maintain legal and ethical compliance while driving your nonprofit to fulfill its mission. Here’s what you should understand about the structure, roles, and requirements of assembling a nonprofit board and how Mosey can help you keep track of state compliance.
What Is a Nonprofit Board?
A nonprofit board is an internal government that runs a nonprofit organization. Each board member plays a different role in the nonprofit’s government, and each role comes with unique responsibilities.
Nonprofit board members are responsible for upholding the nonprofit’s mission and goals by implementing and overseeing a strategy that complies with legal and ethical standards. The board is like a crew that sails a nonprofit safely in the right direction.
Is a Nonprofit Organization Required To Have a Board?
Nonprofit organizations receive special tax treatment, which comes with additional responsibilities.
For one, nonprofit organizations must appoint a board to assure accountability and legal compliance. This nonprofit board of directors will act as accountability officers. Each board member has a different responsibility in maintaining compliance and necessary transparency.
How Is a Nonprofit Board Structured?
The line between a board and a nonprofit can sometimes be blurry. While there may be some overlap between board members and managing employees, the board and the nonprofit’s management should operate independently. They should communicate and work in unison but are technically two distinct bodies.
The board’s primary overseer is its president, while secretaries oversee recordkeeping and treasurers oversee finances. This trio of members sits at the top of the board and is subject to the most responsibility in maintaining the nonprofit’s affairs.
How Many Board Members Should a Nonprofit Have?
Most states require a nonprofit organization to have at least three official board members. Having an odd number of board members is important to prevent situations where a decision cannot be reached. An odd number prevents a tie when voting on pressing business matters.
Smaller nonprofits can have as few as three board members, but larger and growing nonprofits often have many more. Each board member plays a crucial role in assuring the organization’s compliance, and more members allow for a better distribution of responsibilities.
Can Nonprofits Have Board Members Without an Official Position?
A board serves as an internal government for a non-profit organization. A board member without a position does not serve an organizational purpose. Every board member elected into office is there to fulfill a specific function, just like in a real government body.
Rather than electing a single person to an undefined role, nonprofits sometimes appoint “board members-at-large.” These individuals act as assistants to members in positions of authority, helping them advance the company’s goals. They don’t have a clearly defined list of responsibilities, but may help when asked.
Their status as board members without an official position does not relieve them of their responsibilities to the board. They must still attend all board meetings, vote, and uphold board decisions. To maintain their member status, they must also be members of at least one committee and make at least one donation to the nonprofit per year.
What Are the Official Positions of Nonprofit Board Members?
Most nonprofit organizations utilize four distinct positions to provide structure for their board, optimize their decision-making processes, keep accurate records, and effectively manage their funds. The president, vice president, secretary, and treasurer work together to perform most of the heavy lifting involved in operations.
Board President
The board president, sometimes called the board chair, works directly with all high-ranking nonprofit members to advance the organization’s mission and goals. The board chair is the primary facilitator of communication and accountability between the nonprofit and the board and is responsible for working with the organization’s executive director.
The board president carries many responsibilities, including but not limited to:
- Acting as the official spokesperson or face of the nonprofit
- Prepares for board meetings, creating meeting agendas or matters of action
- Manages performance evaluations for the nonprofit and its board members
- Assists with the recruiting process of new board members or committee members
- Prioritizes the organization’s mission statement with every decision
The board president may have other special duties unique to the type of nonprofit or highly specific to the nonprofit’s mission, such as living a specific lifestyle or participating in certain hobbies and activities.
Board Vice President
The vice president, sometimes called the vice chair, remains aligned with the board president. They must be as informed as the president and privy to the same knowledge should the president be unable to act as board chair.
The vice president’s most important role is to ensure that the board never goes without leadership, but they are also responsible for the following:
- Assisting the board president in fulfilling duties
- Acting in place of the board president if the president cannot attend a meeting
- Can be a spokesperson or face for the nonprofit’s brand
- Helping to make or enforce major decisions
Board vice presidents often operate under the assumption that they may someday become board chairs. They often utilize their opportunity to serve as the vice chair to learn the president’s job thoroughly.
Board Secretary
The board secretary has one of the most important roles on the board.
Although the title isn’t as prestigious as “president,” the board secretary’s work is among the most vital for keeping a nonprofit compliant:
- Responsible for scheduling all board meetings
- Takes attendance and records minutes
- Maintains and stores all board records, contracts, and documents
- Oversees legal and ethical compliance responsibilities and obligations
- Tracks status and term lengths of all current and former board members
The secretary is the glue that keeps the board together. A secretary can make or break a board regarding legality and efficiency. Every nonprofit board must have a detail-oriented, thorough secretary that the board can rely on.
Board Treasurer
The treasurer acts as the board’s official accountant. A non-profit must utilize its budget effectively and maximize the reach of every dollar. In this regard, the treasurer is responsible for making sure that available funds align with proposed goals and initiatives. The treasurer will also handle financial reports and have access to bank accounts for the nonprofit.
In total, the major responsibilities of the board treasurer include:
- Overseeing the nonprofit’s budget
- Preparing, performing, and presenting the nonprofit annual report
- Maintaining all financial records and financial statements
- Leading the finance committee
A board treasurer is usually someone with accounting or banking experience. This individual must be as accurate as possible to avoid causing significant financial damage to the nonprofit and to prevent issues with the IRS.
Shared Duties
Everyone with a seat in the boardroom shares three duties: the duty of loyalty, the duty of care, and the duty of obedience. These duties are exactly what they sound like — serving on the board requires loyalty to the organization, care for the organization, and adherence to all decisions enforced by the governing body.
Everyone on the board, from the chairperson to the least involved members, must uphold the organization’s mission as part of their responsibilities.
How Long Can Someone Serve on a Nonprofit Board?
Nonprofit board roles aren’t intended to be lifetime appointments. The overwhelming majority of nonprofits structure their board with term limits. The most common approach is to provide members with a maximum of two consecutive terms, each lasting three years.
When term limits are reached or someone decides to step down, a new person steps into their role. Vice presidents often become presidents, while a treasurer or a secretary may assume a vice-presidential role.
It’s also common for nonprofits to hire someone with a successful track record fulfilling the same role with another nonprofit or to appoint a board member at large who has achieved significant success for the organization.
Nonprofits also stagger term limits. If everyone’s term expires simultaneously and an entirely new board must be appointed, it can create confusion and disorganization. Ideally, at least one or two experienced board members should remain sitting on the board when a new member begins their term. This strategy facilitates a seamless transition that won’t stall goals.
What Type of Experience Is Necessary To Serve on a Nonprofit Board?
No official educational or experience requirements exist for someone to serve on a nonprofit board. You don’t need to have a specific degree.
Some nonprofits implement their own requirements regarding experience or credentials, such as choosing treasurers with accounting experience or secretaries with secretarial experience. Your skill set is often prioritized above the nature of someone’s degree, as serving on a board is regarded as a labor of love.
It’s common for the founder of a nonprofit to serve as the board’s first president. This approach allows the founder to set the tone with their vision and establish a system that aligns with the goals they envisioned when they first began the company.
Although specific experience isn’t required, nonprofits generally avoid conflicts of interest that may arise by appointing family members or spouses. It may give the impression that someone is skirting the term limit rule by appointing a close confidante to carry out their will in their absence.
Instead, many nonprofits allow close associates to act as committee chairs with less significant power. This strategy avoids the appearance of impropriety while allowing family members and close associates to participate in a nonprofit that is close to their hearts.
How Does a Nonprofit Board Manage Compliance?
Most compliance responsibilities rest with the nonprofit board, which assumes the task of maintaining requirements. The board is also responsible for financial accounting, making ethical decisions, and helping the nonprofit create strategies to achieve its objectives.
All board members should be equally informed about compliance issues to ensure that every choice they make and record they keep helps them meet the legal requirements assigned to their nonprofit status. Compliance is one of the most important responsibilities a nonprofit board fulfills, with the secretary and the treasurer responsible for the brunt of the heavy lifting.
Make Nonprofit Compliance Simple with Mosey
At Mosey, we use compliance automation to help nonprofit organizations stay on track. Our dashboard helps nonprofit board members view, update, manage, and fulfill state-specific nonprofit compliance requirements.
As a board member, you want to hold effective board meetings to discuss your strategy, fundraising efforts, and the change you’re trying to make in the world. Let Mosey keep track of your compliance issues so you can spend more of your time doing good.
Schedule a demo with Mosey to learn how we can simplify the process of nonprofit compliance with our compliance management platform.
