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Responsibilities of a Nonprofit Board (The)

By Lisa M. Rose

Graduate Student, Grand Valley State University


Definition

As an entity of the state, nonprofit organizations are guided by laws created by both federal and state governments. The responsibility for overseeing the operation of the organization and assuring the organization's conformance with the law is that of the nonprofit's board of trustees. Unlike a board of directors of a private industry, a board of trustees of a nonprofit organization is exactly that - a board of those entrusted with the care of the organization and is accountable to the public, not the private interests of shareholders (Bryce 2000).

The activities in which nonprofit organizations engage are diverse. The environment in which they operate is demanding, calling for an assertive body of governance to secure that the nonprofit's mission is fulfilled and the organization is held accountable to its main shareholders - the American people:

The trustees...of a nonprofit organization represent the interests of the public, not the private interests of stockholders. Their principal function is to set policies consistent with the public mission of the organization, select managers who can carry out the mission, and monitor the performance of the organization so that public welfare is maximized in a manner consistent with the specific mission of the organization. Their duty, therefore, is to maximize public, not private, welfare. (Ibid., 126)

Public welfare is maximized when the nonprofit's board maintains accountability to the American public. The "Ten Basic Responsibilities of Nonprofit Boards" list the routine governance activities of a board within an organization. They are as follows (Boardsource 2002):

  • Determine the organization's mission and purpose

  • Select the executive staff through an appropriate process

  • Provide ongoing support and guidance for the executive; review his or her performance

  • Ensure effective organizational planning

  • Ensure adequate resources

  • Manage resources effectively

  • Determine and monitor the organization's programs and service

  • Enhance the organization's public image

  • Serve as a court of appeal

  • Assess its own performance


Historic Roots

In the early days before the United States' government had created such institutions as public education, organized health care, fire departments, and other social services, it was up to the people of the community to take on social problems such as public health and poverty (Salamon 1999, 11). These were the early forms of nonprofit organizations (or nonprofit associations).

The U.S. has evolved into a very complex society. Its diverse social, economic, and political needs are managed by a structure that is divided into three sectors: the public sector, the private sector, and the nonprofit sector. It is the role of the nonprofit sector that makes the United States an interesting case study. Since the settlement of the first communities in America, nonprofit associations, although not as formally structured as they are today, played integral roles in the development of our communities.

It was American individualism and a desire for a decentralized government that have created an environment allowing nonprofit associations to flourish (Salamon 1999). Nonprofit associations have assisted in the development and growth of our social welfare system, public education system, arts institutions, and cultural programming. Nonprofit organizations also exist to protect consumers' rights and have assembled to educate the public and our elected officials about important social, economic, and political issues that affect our everyday lives.


Importance

The board of trustees of a nonprofit organization ensures that its organization upholds the interests of the public. This is the foundation on which the nonprofit sector is built. When the sector is held accountable to the American people, pluralism will continue to flourish, as so eloquently put by John W. Gardner:

"Americans have always believed in pluralism - the idea that a free nation should be hospitable to the many sources of initiative, many kinds of institutions, conflicting beliefs, and many competing economic units. Our pluralism allows individuals and groups to pursue goals that they themselves formulate, and out of that pluralism has come virtually all of our creativity." (in O'Connell 1993, 14)

In addition, learning more about the sector and the roles of its boards, would further citizens' civic roles and their expectations of nonprofit organizations. Understanding the role of the nonprofit in conjunction with the private and public sector in American society is important as no sector operates in isolation, and each influences each other's actions a great deal. Likewise, knowledge of the roles and responsibilities of a nonprofit board of trustees assists in the understanding of the nature of nonprofits, their function, how they operate, and why they exist.


Ties to the Philanthropic Sector

Nonprofit organizations are reliant on many sources of revenue, from grants to governmental support to fees for services that the organization provides. It is the role of the nonprofit board to create the goals of its fund development strategy; a creative board must be able to orchestrate different fundraising approaches to ultimately provide the organization with sustainable and stable funding resources. To combat the struggle of declining governmental resources, the executive and its board must also be proficient in the political marketplace to ensure their voice is heard at the various levels of government, in order to influence budget appropriations in their favor. A political know-how is an important trait for the nonprofit board member, and excellent lobbying skills and tactics are helpful.

In addition to being politically savvy, the trustees of nonprofit organizations are expected to maintain and strengthen the various relationships within the community and beyond. These ties help them to secure funds and become aware of changing conditions that would affect these relationships. A networking strategy allows for resources to be continually leveraged within the community — resources varying from foundation support to individual charitable gifts. Ultimately, it is the responsibility of the board to create a fund development strategic plan that is both diversified and progressive to successfully uphold the tenets of the mission and vision of the organization.


Key Related Ideas

To understand the roles and responsibilities of a nonprofit board of trustees is to understand the primary ideas behind nonprofit governance. Governance is the authority a board has to set policies that guide the organization's work and operations. To better understand nonprofit governance, a number of important issues relate to the activities of nonprofits. These include:

  • Ethics in the nonprofit sector

  • Fundraising

  • Nonprofit management

  • Organizational accountability

  • Philanthropy

  • Strategic planning

  • Volunteerism


Important People Related to the Topic

John Carver: With his extensive experience working with boards of the nonprofit sector, John Carver has developed a number of resources addressing nonprofit governance. They are designed to assist board members and executives with various problems and issues commonly experienced. Carver is most known for his theory, policy governance model in nonprofit organizations. The theory is designed to enable boards to be accountable to shareholders by using an integrated system of governance.

Mark Light: Like John Carver, Light has had extensive experience within the nonprofit community. He believes that the "strategic board is neither an operational board mired in the minutia of day-to-day detail or a rubber stamp board controlled by the executive director, the board chair, or committees" (Light 2001, vii). Light also asserts that the strategic board "focuses its energy on making sure that the organization achieves its chosen destiny" (Ibid.). This perspective is the basis on which his strategic board model of governance theory is formed.


Related Nonprofit Organizations

Association for Fundraising Professionals, formerly National Society of Fund Raising Executives, is an excellent resource for professional fundraisers. AFP encourages the development and understanding of philanthropic practices at the community level by "advancing philanthropy through education, training and advocacy" (http://www.afpnet.org).

BoardSource, previously known as the National Center for Nonprofit Boards, is an organization that addresses governance issues that members of a nonprofit may encounter. Its goal is to be "the premier resource for practical information, tools and best practices, training, and leadership development for board members of nonprofit organizations worldwide" (http://www.boardsource.org). Its Web site provides access to topic papers, answers to board members' most common questions, information on consulting and training offered by BoardSource, and an online bookstore.


Related Web Sites

The Chronicle of Philanthropy Online is "the newspaper of the nonprofit world. It is the No. 1 news source, in print and online, for charity leaders, fund raisers, grant makers, and other people involved in the philanthropic enterprise" (http://philanthropy.com).

The Dorothy A. Johnson Center for Philanthropy and Nonprofit Leadership located on the Grand Valley State University Web site, offers resources, Web links, management support, publications, information on Center programs, and more helpful to those interested in the nonprofit sector and philanthropy (visit at http://www.gvsu.edu/philanthropy/). An outstanding resource of the Center is the Nonprofit Good Practice Guide, a clearinghouse of nonprofit information addressing not only governance issues, but other topics such as fundraising and financial sustainability, staff development, accountability, volunteer management, operations management and leadership, communications and marketing, advocacy and technology (available at http://www.nonprofitbasics.org).

The Kids Care Clubs Web site helps young people, families and schools find fun ways to heal their world through compassion and community service. The mission of the organizations is "to develop compassion and the spirit of charity in children through hands-on service projects that benefit the needy in their local and global community" (http://www.kidscare.org).

Network for Good is a nonprofit organization dedicated to using the Web to help people get more involved in their communities. The Web site offers opportunities to sign up for volunteering in one's local community, or to make online donations, or to become an online advocate (http://www.networkforgood.org).


Bibliography and Internet Sources

Boardsource. What are the Key Duties of the Board? [cited 19 September 2002]. Available from http://www.nonprofits.org/npofaq/03/01.html.

Bryce, Herrington. Financial and Strategic Management for Nonprofit Organizations, third edition. San Francisco: Jossey-Bass Publishers, 2000. ISBN: 0-7879-5026-2.

Carver, John and Miriam Carver. Carver's Policy Governance Model in Nonprofit Organizations. [cited 19 September 2002]. Available from http://www.carvergovernance.com.

Estess, Patricia Schiff. Kids, Money, and Values. Betterway Publishers, 1994.

Kids Care Clubs. Homepage. [cited 26 September 2002]. Available from http://www.kidscare.org.

Light, Mark. The Strategic Board: The Step-by-Step Guide to High Impact Governance. New York: John Wiley & Sons, 2001. ISBN: 0-472-40358-X.

O'Connell, Brian. The Board Member's Book. New York: The Foundation Center, 1993. ISBN: 0-87954-502-X.

Salamon, Lester M. America's Nonprofit Sector: A Primer. New York: The Foundation Center, 1999. ISBN: 0-87954-801-0.