Nonprofit Board Members: Start (And Keep) Your Tenure on the Right Track

You’vebeen invited to join a nonprofit board of directors – what an honor! It’s rewarding to be part of a nonprofit organization that serves a community or purpose that’s personally meaningful. But wait – are you the only attorney on the board? Are you concerned that you’ll be the go-to person, tapped to answer or address all the nonprofit’s legal questions and issues, including those outside your area(s) of expertise? Are you already on a nonprofit board, wrestling with this concern? Are you on a nonprofit board, and need clarification on your legal responsibilities to the nonprofit?

Nonprofit Resources

Pro Bono Partnership of Ohio (“PBPO”) can help! PBPO is an organization (also a nonprofit) solely dedicated to strengthening qualifying 501(c)(3) nonprofit organizations that serve the greater Dayton and Cincinnati communities by providing pro bono transactional legal services in partnership with attorney volunteers.

If you’re a member of a nonprofit board, PBPO can provide legal expertise where you and other board members may not have the background or time on which to focus, freeing you to support the organization in other ways. [If you’re an attorney who wants to share your skills with nonprofits, you can volunteer with PBPO (more on that later)].

PBPO also offers dozens of educational seminars, webinars, and publications to keep nonprofits and their leaders up to date and compliant with legal regulations applicable to the operation of nonprofit corporations.

Fiduciary Duties of Nonprofit Board Members

For example, do you know that nonprofit board members have specific fiduciary duties to the organization? Unlike a for-profit corporation, a nonprofit corporation asks for the trust and resources of their communities, so a governing board is expected to represent that public trust by ensuring that the nonprofit’s resources are responsibly managed and are used in furtherance of their missions.

Failure to meet these requirements can potentially lead to civil and even criminal penalties for individual board members (ie, not just the organization as a whole) and can result in the loss of the public’s trust in the nonprofit. The board’s fiduciary duties are the same whether the nonprofit is small and community-based or a large national organization. In Ohio, these include the duties of care, loyalty, compliance, and the duty to manage accounts. Let’s look at each duty: o This includes preparing for, attending, and actively participating in meetings; establishing policies; and selecting and supporting the organization’s key staff members. o This involves establishing and complying with a Conflict of Interest policy that includes procedures to avoid transactions that unfairly enrich leaders.

• Duty of Care: Board members are expected to handle the affairs of the organization with the same care and attention they would handle their own affairs.

• Duty of Loyalty: Board members must place the interest of the organization above any other personal interest.

• Duty of Compliance: Board members must ensure the organization is complying with federal and state law, governing documents, and contracts.

For more information on the fiduciary responsibilities of board members, please see the Guide for Charity Board Members published by the Ohio Attorney General’s office and the IRS publication on good governance practices for 501(c)(3) organizations linked on the website:www.irs.gov o This includes complying with registration and reporting requirements for the IRS, the Ohio Secretary of State, the Ohio Attorney General, and other states if applicable. o This involves maintaining accounting records, developing policies and procedures, creating budgets, and ensuring minutes accurately reflect informed discussions during meetings; making fundraising goals, assisting with resource acquisition and ensuring fundraising is conducted honestly and fairly; prudently investing assets and making informed purchasing and expenditure decisions; and establishing adequate internal financial controls.

Nonprofits and Attorneys Needed!

These fiduciary duties are significant and are just one area of concern for board members. If you are on a nonprofit board or affiliated with a nonprofit, please tell them about PBPO and the services we provide.

If you’re ready to help a nonprofit, we need you and your expertise. You will meet lots of inspiring people, can work remotely and at your convenience.

For more info, or to volunteer, visit www.pbpohio.org, or contact Suzanne Beck, Dayton Counsel, at suzanne@pbpohio.org or directly at (937) 396-2131).

• Duty to Manage Accounts: Board members must maintain, manage, and protect the organization’s resources.

By Suzanne Beck Esq., Dayton Counsel Pro Bono Partnership of Ohio suzanne@pbpohio.org | (937) 396-2131