Authored by Laurie A. Gatten, CPA, CFE, Director
A not-for-profit organization’s board of directors helps guide the organization by adopting sound, ethical, and legal governance, as well as financial management policies, to ensure the not-for-profit has enough resources to achieve its mission.
Volunteering your time and skills to a position on a not-for-profit’s board comes with several benefits, but it is important to consider the opportunity carefully before accepting.
A board seat can be a rewarding learning opportunity, expanding your knowledge of governance and leadership as well as the field that the organization operates in. The position also offers networking opportunities and a chance to give back to your local community.
However, it is usually not a paid position, and the time commitment may end up being more than initially anticipated, as board members are often expected to attend all board meetings and are sometimes even asked to help with events, fundraisers, and committees.
Are you ready to offer your time and talent to a not-for-profit’s board of directors? Here are five core areas to perform due diligence before committing to a board seat.
1. Mission and Values
As a board member, you will be a public champion for the not-for-profit organization’s mission. It is imperative to choose an organization that has a cause you are passionate about; this passion will help motivate your work when board service becomes demanding.
Ask yourself, do your personal values align with the organization’s purpose? And will serving on the board of directors help advance an issue you are genuinely committed to?
2. Financial Health and Governance Hygiene
An organization’s board of directors must manage the not-for-profit’s assets responsibly and protect its reputation. Before committing to a board seat, review the organization's most recent Form 990, as well as its audited financial statements and management letter. Inquire about any deficits, restricted assets, and reserves. Ask how frequently the board receives information on the organization’s cash flow, revenue diversity, and key financial ratios, as donors and rating agencies typically expect transparent reporting.
3. Time, Fundraising, and Participation Expectations
When you commit to a board seat, you must be present and engaged. To ensure your expectations align with those of the organization, ask about meeting schedules, committee work, and outside events, such as site visits and retreats, that you are expected to attend. You’ll also want to understand your role in donor solicitation, as well as any reading packets, financials, and other strategic materials that you are expected to review before meetings.
4. Fiduciary Duties, Liability, and Risk Protection
Not-for-profits often require their boards of directors to be loyal and obedient to the organization, and board members can sometimes be held liable for indiscretions. Before committing to a board seat, confirm that the organization carries an adequate Directors & Officers (D&O) insurance policy and that its bylaws provide broad indemnification to board members. Understand the statutory duties you’ll assume and the potential for penalties if they are violated.
5. Board Culture, Composition, and Structure
A healthy, diverse, and well-run board of directors amplifies a not-for-profit organization’s impact, while a dysfunctional board drains energy and creates risk. Before joining a board, observe a meeting to see whether the chair fosters respectful debate and partnership with the organization’s CEO. Assess the diversity of board members’ backgrounds and lived experience, as boards that closely reflect the communities they serve often outperform their peers. Clarify the lines between governance and day-to-day management to ensure the board operates within expectations.
A Checklist for Assessing a Board Position
Performing due diligence in these key areas may seem overwhelming as you consider a position on a not-for-profit board or compare positions on two or more organizations’ boards. Use this checklist to streamline your decision-making process.
1. Gather documents. Request the following documentation from the organization:
- Bylaws
- The two most recent Form 990s/audits
- A board roster
- The organization’s strategic plan
2. Interview leadership. Talk with the organization’s board chair and CEO about expectations in each of the five areas.
3. Attend a board meeting as a guest. The organization’s culture and processes are easiest to assess in real time.
4. Weigh the mission against capacity. If any area raises concerns that cannot be remedied, be prepared to politely decline the board position.
Evaluating board invitations through these five lenses helps you protect your time, reputation, and assets while positioning you to bring real value to a mission you care about.
Our not-for-profit practice group understands the environment in which organizations operate, the issues they face, and the need for them to be fiscally prudent to stay on mission. Contact us for more information.