Is your association’s or chamber’s board of directors performing at peak capacity? Are its members current on federal regulations that affect their governance? Does the board regularly evaluate itself within best practices in board management and administration? Are members clear about their roles and responsibilities?
The world of nonprofit governance is changing rapidly and far too many boards of directors are not keeping up with what they need to know, not only to best serve their organization, but to ensure compliance with federal regulations for nonprofits.
- The board is ultimately responsible for setting the association’s or chamber’s strategic direction.
- Best Practice: The board should schedule annual or bi-annual strategic planning meetings that result in a clear and strategic plan of work for the coming year.
- The board is ultimately responsible for effective and efficient governance of the association or chamber.
- Best Practice: The board holds annual evaluations of its performance and sets goals to improve.
- Best Practice: The board invests in training and is up to date with federal regulations and requirements, such as those found on the annual IRS Form 990.
- The board is ultimately responsible for ensuring the association or chamber operates to serve its mission and purpose.
- Best Practice: The board challenges itself and reviews programs and services to ensure that everything the association or chamber does is mission-specific and mission-critical.
And, Consider These Key Responsibilities:
- The Duty of Care – Board members should act in good faith that an ordinarily prudent person would use under similar circumstances.
- Board members must educate themselves and come to meetings prepared. They must understand financial statements and basic governance strategies.
- The Duty of Loyalty – Board members must put the interests of the organization first, above personal or professional interests.
- Board members should guard against conflict of interest, either the actual or perception of personal or professional gain.
- The Duty of Honesty – Board members must act in accordance with the organization’s stated mission and applicable laws.
- Board members understand and follow the association’s or chamber’s bylaws. They review and understand the implications of the annual IRS Form 990 and ensure it is filed on time. The board has operating policies and procedures.
In recent years, there has been an increased emphasis on the responsibility of the nonprofit board of directors, brought by an organization’s members, its sponsors, and the federal government. This is not likely to decrease in the near future. In fact, there is federal legislation on the horizon that will have a similar effect on nonprofits that the Sarbanes-Oxley Act has had on publicly held for profit corporations.
What Does This Mean for Your Organization?
First and foremost, it means that your association or chamber board cannot be complacent about its roles and responsibilities. Members must be aware of what it means to serve on a association or chamber board and must hold themselves and each other to a high standard of performance.