Non-profit boards are responsible for a broad spectrum of legal and fiduciary duties. These duties range from advancing their organization’s mission while avoiding any conflicts of interest (aka their duty of loyalty) to ensuring proper use of assets (duty of care), maintaining compliance (duty of obedience), and interfacing with the community. Non-profit boards often work with the organization's leadership to set the strategic direction for the organization and ensure that internal controls are in place to help manage risk. While they are typically not involved in day-to-day operations, they engage in an advisory capacity to ensure the organization's work and execution are aligned with the mission and strategy. Here’s a breakdown of ten of their most basic obligations.
NPO Board of Directors' Basic Responsibilities
1. Determining and upholding the organization’s mission
The board’s most fundamental duty is to ensure that everyone involved with your non-profit understands why it exists. This duty includes writing a mission statement. The mission statement should be clear and concise and reflect the organization's goals. Periodically, the board should review the statement for relevance. The mission statement, at a basic level, outlines:
- What your organization does, and what its goals are
- Who the non-profit serves
- Why its work is important
An NPO board of directors also has the responsibility of working to prevent mission creep by ensuring programs, activities, and services stay in line with the organization’s overall purpose.
2. Conducting strategic planning
To meet organizational goals, a non-profit board of directors must work with staff and volunteers to conduct strategic planning and evaluate the cost and effectiveness of outcomes. Strategic plans may be:
- Operational (to address day-to-day and annual objectives)
- Short-term (to advance specific projects or priorities)
- Long-term (to guide your non-profit’s future direction)
Strategic decision-making often involves setting the direction for staffing, program initiatives, fundraising, and resource allocation. Boards work closely with senior leadership to establish the organization's mission, vision, and strategic goals. They provide input on the organization's direction, priorities, and overarching strategies. Apart from engaging in developing and approving strategic plans, the board regularly assesses plans' implementation and adjusts it as needed.
3. Choosing an executive director
Non-profit boards appoint and supervise the executive director (or chief executive officer) to manage day-to-day operations. The board should conduct a thorough, fair and rigorous selection process to find a qualified leader. It also should outline the roles, responsibilities, and performance expectations clearly. In selecting an executive director, the board typically deliberates and elaborates on the following:
- Assessing the organization’s needs
- Determining essential leadership traits and skills
- Setting clear role expectations and objectives
- Evaluating performance and setting compensation
- Succession planning
The board chair must also liaise directly with the NPO's executive director to further the organization’s mission. The board should provide the CEO with the resources and support needed to lead effectively while holding the executive director accountable, including conducting annual evaluations based on predetermined criteria. The rules for boards and the selection of executive directors for Québec non-profits may vary from those of the rest of Canada.
4. Providing financial oversight
Another vital board obligation is overseeing a non-profit’s financial health by:
- Reviewing and authorizing annual budgets
- Assessing program costs and monitoring budgeted versus actual spend
- Reviewing statements of financial position, operations and cash flows (preferably monthly) and ensuring tax compliance
- Developing internal controls and policies to prevent loss, theft, and financial confusion
Financial oversight is a fundamental responsibility since it is essential for maintaining donor accountability in addition to regulatory compliance relating to the organization's non-profit status.
5. Ensuring legal integrity and accountability
As trustees, an NPO’s board members must keep the non-profit compliant and accountable by ensuring that it:
- Follows all applicable laws and regulations
- Makes annual tax filings and GST/HST payments when required
- Keeps accurate records to meet donor and governmental information requests
- Stays informed about legal obligations and regulatory changes
- Establishes codes of conduct and conflict-of-interest policies
- Promotes openness in reporting and communications
It’s also part of an NPO board of directors' responsibilities to understand their organization’s code of ethics, constitution, and bylaws so they can preserve legal integrity by adhering to them.
6. Maintaining sufficient resources
Your board plays an integral role in maintaining adequate financial resources to fulfill your non-profit’s mission by:
- Developing and approving the annual budget for operations, programs, staffing, and more
- Ensuring resources are allocated to the right activities
- Identifying where additional fundraising may be necessary to maintain cash resources
- Develop and oversee strategies to diversify revenue streams.
Board members should actively participate in fundraising and donor relations. Since every board member should contribute to annual fundraising efforts in some capacity, it’s best to clarify these expectations in writing. This is often outlined in the organization's code of ethics.
7. Monitoring programs and services
To ensure that the NPO's activities stay consistent with its mission, the board’s responsibilities also commonly include:
- Gathering data on who’s using your programs and services
- Monitoring trends around participation and client categories
- Determining how much to budget for specific activities
The board should also work with the NPO's executive director to measure program success and participant satisfaction.
8. Recruiting and training board members
With first-hand knowledge of the board’s strengths and weaknesses, existing members generally take responsibility for bringing on qualified new members. This duty often includes:
- Identifying board skill, insight, or experience gaps and creating position listings to fill them
- Clarifying roles and responsibilities before shortlisting promising candidates
- Creating a conflict-of-interest policy and holding board meetings to discuss whether prospective members can act in the organization’s best interests
- Provide new members with comprehensive onboarding and ongoing development opportunities
- Periodically assess board performance and address areas for improvement
In addition to recruiting new board members, the board should also set these recruits up for success by assisting with onboarding and training.
9. Enhancing the NPO's public image
As a key link between the public and the non-profit organization, all board members should be prepared to:
- Consistently speak well of their organization and advocate for its programs and services
- Help create its public brand through grassroots engagement and community outreach
- Determine who its public spokesperson should be and how the spokesperson should interface with the media and potential funders
- Engage in activities that raise awareness and support for the organization
- Represent the organization positively in the community and media
- Build relationships with stakeholders, including donors, partners, and policymakers
Upholding a healthy public image may also require that the board maintain an ongoing public relations program.
10. Assessing its performance
From time to time, it’s important to assess how well a NPO's board of directors' responsibilities are being upheld. Along with evaluating their own performance every few years, members of the board should earmark areas for development or improvement.
- Review and authorize new programs or significant changes to existing ones
- Establish criteria for evaluating program success
- Use evaluation results to make informed decisions about program adjustments or resource allocation
Since it’s essential to understand what they’re doing right and what isn’t working for the non-profit organization, it may be worth hiring an outside consultant to help facilitate the board’s assessment—especially if there are ongoing issues or conflicts. Having an unbiased, outside opinion is helpful when dealing with board governance and alignment with the organization's leadership team.
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