Thursday, December 20, 2007

The safety check before joining a nonprofit board

Many business people are asked to join a nonprofit organization's board of directors. Here are some key issues to consider beforehand, from Marks Paneth & Shron, a New York accounting firm with extensive nonprofit experience.

1) Do you know the nonprofit board's real mission? And are you fully aware of the duty of care, obedience and loyalty you will be subject to?
2) Did you receive and review the nonprofit board's packet that contains bylaws, descriptions of committees and functions and charter information. Review the materials before you make your decision about joining.
3) Does the organization have a whistleblower's policy? There should be a confidential way for organization employees to bring up and discuss matters regarding management indiscretion and other problems.
4) Does the organization carry a directors and officers insurance policy? This is important to protect you and other board members from unforeseen lawsuits and judgments.
5) Are there conflict of interest guidelines? You should know what constitutes a conflict of interest so you can both monitor and have input over other board members' activities and make judgments about your own.
6) What's the tone at the top of the board? Is there too much focus on connections and personal networking to fulfill the mission and make sound decisions?
7) How does paid management carry out its fiduciary responsibilities? If the executive director or other staff members have override over the board, proceed with extreme caution. Beware if management doesn't provide periodic internal audit statements.
8) By expanding the board, is the nonprofit going for quantity over quality? Since board members usually give, there's real incentive to expand a board. Is the quality of members and their insights high?
9) Is the board just a powerless group of donors, rather than a body with serious impact? It's important to decide if one wants to be part of a board if the real power and traditional board responsibility rests solely with the executive committee.

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