Strong boards make strong nonprofits: What you need to know

A nonprofit is more like a public company than a private enterprise in that it’s governed by a board of directors as well as its executive team.   

Federal and state laws require a nonprofit’s board members to assume responsibility for the organization’s well-being–meaning it can be held responsible if something goes wrong financially or operationally. That’s why setting up the board’s structures and bylaws with care is one of the most important things a nonprofit founder can do. Otherwise, it can make life difficult for subsequent chief executives.  

Candid recently debuted two webinars on nonprofit boards: How to Build Your Board and Your Board and Fundraising (to be offered in 2025.) Here are some of the most frequently asked questions: 

What’s the difference between an advisory board and a governing board? 

An advisory board makes non-binding recommendations to help nonprofits make decisions. By contrast, a governing board is bound by law to oversee management of the organization. The IRS requires that 501(c)(3) organizations form a governing board with a minimum of three board members. But the board composition, structure, and rules—such as the maximum number of members, their relationship to the organization, frequency and duration of meetings, term limits—are mostly up to the nonprofit (though state laws sometimes apply). Having a good board agreement and bylaws in place—with the help of legal advice—at the beginning can head off some of the challenges discussed below. The board agreement is signed by board members and spells out their responsibilities, while the bylaws lay out the composition, structure, and rules under which the board operates.  

How do I find board members? 

Nonprofit leaders will often default to asking people they know and trust to serve on the board, but friends and family are not always the best choice. Once installed, the board has authority over the leaders and staff of the organization, so it pays to choose carefully. Board members must be not only enthusiastic about the organization’s mission but also willing and able to devote time, talent, and/or treasure to the nonprofit. Diversity is important, too, as board members should come from, or at least be familiar with, the communities served. A diversity of skill sets is another consideration—some members may be good at fundraising or marketing, while others may be well-connected or able to provide specialized services. 

Can the executive director serve on the board? 

Some states allow the executive director to serve on the board, but it’s not considered best practice. After all, one of the board’s responsibilities includes evaluating the chief executive’s performance and setting their salary. Executive directors should certainly attend and/or participate in discussions at board meetings. If the executive director is given a seat on the board, it’s important to have a “conflict of interest” policy on when they have to recuse themselves from certain votes or discussions. 

What do I do if I’ve inherited a board that’s not doing what they should? Or is doing too much? 

It’s important to have a board agreement in place that spells out members’ responsibilities and exactly what they can or can’t do. Without one, all kinds of problems can—and frequently do—arise. You can be stuck with board members who don’t contribute financially or help fundraise, don’t attend meetings or don’t offer helpful suggestions when they do, or try to dictate day-to-day management decisions.  

Unlike for-profit boards, nonprofit boards don’t typically pay their members. In fact, members are usually expected to contribute financially to the organization, which is a common point of contention. A board agreement may spell out an expected dollar amount or percentage of the nonprofits’ annual fundraising goal, or make contributions voluntary. Some organizations may not want to require a financial commitment so they can recruit members who may not have a lot of money but know the community and issues well. But all members can and should help raise funds from other sources–by soliciting other individual donors or using an employee matching gifts program.  

Can we ‘fire’ a board member? 

Sometimes a board member just doesn’t work out or may even undermine the nonprofit’s mission and efficiency. The procedure for removing a member should be outlined in the bylaws. If the member’s term isn’t close to expiring, the board can ask them to leave voluntarily or, failing that, vote to remove them.  

It can be difficult to ask longtime board members to move on in order to change the culture of an existing board. A smooth-running board, however, is critical to advancing your organization’s mission. You can help ensure harmony by having a well thought-out board agreement with clearly defined responsibilities for all. 

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