Preview: The Obligations and Responsibilities of a Nonprofit Board

Nonprofit Board Presentation Board Obligations in Texas February 2012

Purpose • Review the du,es and obliga,ons of nonprofit board members. • Introduce statutes and case-‐law governing nonprofit board members. -‐ More Texas specific but some Federal law discussed. • Not going to focus on every facet like fundraising, e,queFe and strategic planning.

Agenda • Discuss nonproﬁt organiza,ons as a business.

• Discuss the du,es and obliga,ons of board members.

• Provide guidance on the day-‐to-‐day decision-‐making of board members.

• Address a few good best practices.

• Brieﬂy go over some good resources to refer to.

Non-profits Are A Business

Nonprofit Corporations in the Texas Business Organizations Code Nonproﬁt Corpora,ons are governed by Chapters 20 and 22 of ,tle 2. General Powers of “domes0c en00es” addressed in 2.101 of 0tle 1 Note, the government felt it prudent to repeal the Texas Nonproﬁt Corpora0on Act and bring them under the BOC

A “Nonprofit” Defined • A nonprofit corpora,on is a corpora,on that does not permit distribu,ng of any of its income to its members, directors, or officers [Tex. Bus. Orgs. Code § 22.001(5)]. • The word "nonprofit" only refers to the prohibi,on on dividends, profit-‐sharing, or bonus-‐style distribu,on of income. [Tex. Bus. Orgs. Code §§ 28.41[3][i], 28.90[2][b], 28.93]. • At the end of the day a Nonprofit Corpora,on is just that, a CorporaAon. • Mis-‐concep,on is that opera,ng a non-‐profit is much easier than a for-‐profit or that they are an excep,on in most instances.

Exceptions Are Few And Far Between.... • Contrary to popular belief, nonproﬁts are subject to many of the same laws for-‐ proﬁts are. A few examples: -‐ Privacy laws enacted by the FTC -‐ Financial regula,ons such as Sarbanes-‐Oxley and The Dodd-‐Frank Act -‐ Health Insurance Portability and Accountability Act (HIPAA) -‐ Americans with Disabili,es (ADA)

Regulatory Agencies Specific to Nonprofits • Texas AForney General (watchdog over your business structure) -‐ Able to involuntarily dissolve an organiza,on, bring suit to prevent ac,on and levy fines and/or liens on nonprofit property. • Internal Revenue (watchdog over your exempt status) -‐ Can strip an organiza,on of its tax exempt status and levy taxes and fines.

Being a Board Member (Duties and Obligations)

Board Responsibilities • Ensure certain records are kept -‐ Books and records, minutes of board, commiFee mee,ngs

• Board v. Advisory commiFee -‐ Not just about socializing • Manage the Execu,ve Director

• Serve as trustee of assets -‐ Ensure the organiza,on is ﬁnancially sound through reports and audits

• Create ethical and compliance overtones

-‐ Oversee not micro-‐manage • Be knowledgeable -‐ AFend mee,ngs and know what’s going on.

-‐ Enforce and carry out by-‐laws and policies

Full presentation can be found at: https://www.ideaencore.com/item/obligations-andresponsiblities-nonprofit-board-presentation

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