While a nonprofit board of directors shares many similarities with its for-profit counterpart, there are key differences between the two. For example, in order to ensure the organization achieves its objectives consistently, nonprofit boards have to maintain a fine balance between meeting financial goals and serving those in need. Let’s take a closer look at the main roles and responsibilities of nonprofit boards of directors.
Similarities to For-Profit Boards
Both for-profit and nonprofit boards oversee the organization’s activities. Similarly, they both hold regular board meetings to deliberate and vote on key business affairs. To perform their duties effectively, all board types need good management and governance to make strategically sound decisions that help them reach goals.
Other responsibilities and roles of a board of directors:
- Exhibiting excellent leadership skills to empower and motivate staff.
- Creating business strategies and monitoring their implementation to keep the organization on the right track.
- Ensuring high-quality services and operations.
- Choosing the CEO and evaluating the CEO’s performance in achieving strategic objectives.
Roles and Responsibilities of Nonprofit Boards
Nonprofit boards usually consist of unpaid workers who are accountable for the organization’s performance in achieving goals described in the mission statement and pursuing the nonprofit’s core values. Additionally, nonprofit boards are responsible for the community, the donors, and the clients of the organization.
The nonprofit board of directors has a specific set of responsibilities that determines its success at fulfilling key objectives.
Crafting the Organization’s Mission Statement
Writing a mission statement and ensuring there is a wide-spread understanding of it among all direct stakeholders is the fundamental role of the nonprofit board of directors.
The mission statement describes what the nonprofit stands for, what it does to achieve it, and whom it serves.
To keep the mission statement viable and accurate, the board should review it regularly to reflect the current times and environment. Additionally, the mission statement is the driver for additional, expert board members as well as volunteers and donors. Therefore, all members of nonprofit boards of directors should know exactly what the mission statement means and what the nonprofit represents.
Planning the Business Strategy
Achieving the public-service goals included in the mission statement is critical to the organization’s success. And to realize these goals, the board of directors should actively participate in planning the business strategy that makes the goals realistic.
The nonprofit board of directors identifies current and future opportunities, threats, and risks in its external and internal environments. Equipped with this knowledge, the board of directors determines strategic options viable under the organization’s capability.
It’s therefore important for the nonprofit board members to use their multi-field collective experience to establish short- and long-term plans for success.
Oversight and Management
The board of directors at a nonprofit organization is designated to select the Chief Executive Officer. The CEO implements the strategies developed by the board and manages the day-to-day operations of the nonprofit. The CEO’s performance impacts the overall effectiveness of the organization and determines its development.
Other board tasks are:
- Approving budgets
- Developing policies (e.g., terms of service)
- Scheduling and holding board meetings
- Monitoring the implementation of strategies and business plans
- Hiring an auditor
- Recognizing and eliminating weaknesses
Many nonprofit boards are expected to contribute to the organization. At the same time, the contribution has to be meaningful, if not necessarily high. For instance, a board member can donate less than the minimum yearly contribution in funds but provide critical operational expertise and insight.
Board members at a nonprofit organization should be involved in some capacity in raising money. They can achieve this through active participation in fundraising campaigns or other advertising activities. In fact, some nonprofits set financial goals for every board member.
Furthermore, board members of nonprofits should also actively participate in awareness-raising activities to increase the number of donations.
A steady flow of money and positive financial metrics let nonprofits thrive and fund their efforts to serve the public good.
That said, nonprofits boards need to skillfully develop budgeting plans that help them achieve their mission as well as disperse the funds to cover operational costs (e.g., administrative expenses, staff remuneration).
The Board of Directors Drives the Success of the Organization
Overall, and in many ways, the nonprofit board of directors is similar to other board types. However, the nonprofit’s main objective is steering the organization toward fulfilling the goals stated in the mission statement and representing the public’s best interest. To achieve this, nonprofit boards need diverse, cross-functional skills and appropriate technology that helps conduct board operations in an efficient and streamlined manner.