Background on Nonprofit Boards A Primer

Nonprofit Organizations Revenue generated by a nonprofit organization (through donations, grants or corporate contributions, for example) is not considered profit and is not shared or distributed to stockholders. Instead, it is reinvested into the organization for programs, services, future development and growth. Many nonprofits registered with the IRS are exempt from federal income tax and donations to their organizations are tax-deductible. Nonprofits have a board of directors composed of volunteers. The board articulates the organization’s vision and mission, and governs the organization. The board is usually headed by at least the following officers: chair or president, vice-chair or vice-president, secretary and treasurer. Many nonprofits have paid staff. The chief staff person is usually referred to as the CEO, president or executive director. Additional staff depends on budget and workload needs.

READ, Inc. Organizational Structure Board of Directors Executive Director Program Director Service Coordinators Volunteer Tutors Community Education Coordinator Office Manager Accounting Clerk Community Relations Manager Grant Writer Administrative Assistant

Vision A picture of the ideal nonprofit; one that can meet all of its challenges and acquire the necessary resources to accomplish them.

Mission A general statement of purpose:  Why we exist and what we do.  Our philosophy and values.  Our target customer.

Board of Directors Composed of volunteers who serve as the “trustees” of the organization. Responsible for organizational vision and mission. Chief job of the board is governance.

The Meaning of Trustee “Institutions need two kinds of leaders: those who are inside and carry on the active day-to- day roles and those who stand outside but are intimately concerned and who, with the benefit of some detachment, oversee the active leaders. These are the trustees.” - Robert K. Greenleaf, The Servant as Leader, 1970

Board Member Qualifications Job description:  Scope  Duties and responsibilities  Commitment (time, money, etc.) Job specification:  Skills  Knowledge  Awareness

Board Job Description Scope: The general purpose of the board member is to participate to the best of his or her ability in governing the affairs of the organization in a socially, fiscally and ethically responsible manner. Duties and Responsibilities:  Help position the nonprofit to be responsive to consumer/client needs.  Attend meetings (call when you cannot).  Serve on at least one committee.  Come to meetings prepared to be an active participant.  Be involved in activities or special events related to the nonprofit. Commitment:  Financially support the nonprofit according to your ability.  Follow through with “pledges”.  Membership in the nonprofit.

Board Skills Interpersonal skills (cooperation and getting along). Constructive, critical analysis. Team player. Ease in public speaking. Sales skills. Ability to organize.

Board Knowledge Expertise or background in a particular discipline (fundraising, public relations). Previous board or leadership experience. Understanding of nonprofit structure and sector (industry).

Board Awareness Community (broadly defined).  Strengths, weaknesses, resources, diversity, “movers and shakers”, politics of effecting change, etc. Self-awareness of strengths. Committed and passionate to organization’s mission. Organization’s expectations. Board member role/function.

The primary job of the board is… Governance … the exercise of power, influence and control over a nonprofit.

Governance v. Management POLICY (Governance): Usually the board’s job. Broad in scope and implications. Commits the nonprofit’s human or material resources in a substantial way. Long-term impact/duration. ADMINISTRATION (Management): Usually the ED/staff’s job. Relatively narrow, reversible scope. Apply the precedent rather than establish it. Shorter-term impact/ duration.

Making Policy

Board Committees Conduct the business of the board and report to the board. Are usually chaired by a board member; however, membership on a committee is not necessarily restricted to board members. Can be standing (permanent) or ad hoc (created as needed, usually for a limited time period).

Typical Standing Board Committees Planning Committee. This committee develops, implements and evaluates organization-wide planning processes. Marketing Committee. This committee creates and sustains an organizational identity in the nonprofit’s relevant market. Development or Fundraising Committee. This committee identifies revenue sources and creates plans to acquire that revenue. Personnel Committee. This committee develops employee policy and practices and conducts the performance management process for the ED. Executive Committee. This committee is composed of officers of the board. This committee is empowered to make decisions in the absence of the board. This committee often meets to develop the agendas and priorities of the board meetings.

Typical Ad Hoc Board Committees Literacy Day. This committee plans and coordinates a special event to promote literacy in the community. Capital Campaign. This committee plans and implements a fund drive to raise money over a period of time (1 to 2 years) for capital expenses such as a new office building.

Executive Director Chief staff person of the nonprofit. Reports to the board of directors; implements the plans, priorities and direction established by board. Participates in the development of policy, plans, programs and direction that is ultimately determined by the board. Responsible for managing the operations and fiscal activities of the nonprofit; ultimately responsible for (but depending on size of staff may only monitor and not actually do) supervision and appraisal of staff (non-direct reports), program implementation and evaluation, marketing and accounting.

Program Director Reports to the chief staff person (e.g., ED). Responsible for creating, implementing and evaluating programs that fulfill the goals and objectives determined by the board of directors. Manages the program staff, which often includes volunteers.

Personnel Committee Responsible for setting the overall human resource direction, policy and procedures. Evaluates the performance of the Executive Director (but not his/her staff). Studies and recommends to the board strategies, solutions and positions on HR issues as they emerge in the organization.