5 Things No One Tells You About Nonprofit Board Of Directors That’s Really Really Important To Know
STAGE ONE
So you’ve started your nonprofit, and you’re ready to start going after funding. Before you jump in too deep, there are some things about your Board of Directors you should know. These will make a huge difference in the way you get funding—and how much—for your organization.
The first thing you should know about your Board is that one of their primary roles and responsibilities is to fundraise. That’s huge and really, really important for you to know as a Founder.
Here’s why.
There are so many Founders who try and do it all. It leaves them broke, exhausted, and burnt out. You don’t want that to be you. One way to ensure that doesn’t happen is to use the support system the IRS created for you—your Board of Directors.
This is important for you to know very early on in your organization’s development because this knowledge—and how you use it—can significantly change the trajectory of your nonprofit. One of the first questions I ask potential new clients is, “Who is on your board?”
It’s usually Uncle Pete, Cousin Angie, and a BFF or two. People with no board experience and no network that they can leverage to help support the organization. Knowing that this is what they are responsible for should help Founders do more diligence when recruiting future board members.
I can’t count on my hands, the number of times I’ve had a Founder say they “just want people who are willing to work” as members of their board.
No!
You want people with Board experience and access to resources. Board experience is important for two reasons:
1. If you are an inexperienced Founder, an experienced Board member will help reduce your learning curve. They can guide you and keep you from wasting precious time “figuring things out.”
2. Experienced Board members know what they are supposed to be doing, and that means you spend less time convincing/training them to do their job. That translates into money in the doors quicker. Very, very important.
The more seasoned members you have on your board, the easier it will be to make big transitions like hiring paid staff because the board knows that’s their responsibility. Novice Board members may feel intimidated by committing to large numbers year after year, especially if they don’t have access to resources.
Speaking of Board expectations and responsibilities…
The second thing that is really, really important to know is that Funders expect board members to demonstrate their commitment to the organization. A board “Give” or board dues is a demonstrative way to show that board members are personally invested in the organization’s solubility. Board dues are common practice, contrary to popular belief that board members should receive payment for being on the board (commonly confused with for-profit boards who do get compensated for their board service). Board dues are also unrestricted and give the Founder money to use to fill in gaps not covered by restricted funds.
For example, let’s say you have a grant that only covers program costs. Board dues can be used to fill the gap and over salaries, or maybe it can cover food for programs that are not typically approved by government agencies but are an important part of programming. Sometimes, a grant will require a match—you can use that unrestricted money for the match.
Board dues is money you should be able to count on every year. Seasoned board members will expect the board “Give and Get.” The “Get” is the amount the board members commit to securing; it could be an additional monetary contribution (i.e., $10,000, or 10 tables, in table sales for your annual fundraising event), but usually, it’s in products and/or services (i.e., printing, training, supplies, etc.) that the organization would usually spend from the budget.
The Board Give/Get is something established and enforced by the officers (President, Treasurer, and Secretary) of the board. If your board is filled with newbies, that responsibility falls on you. That’s why it’s important that your initial board recruitment is strategic. If your board is comprised of friends and family with no board experience or network, then you as the Founder will bear the brunt of the fundraising responsibility on your shoulders—and that’s on top of the day-to-day operations you will be responsible for.
Many nonprofit leaders are quick to fill the board roles with friends and family and it creates more work for them in the end. Understanding the board role will simplify your life and help reduce your workload.
That’s why it’s important that board recruitment is not an oversight, but rather something that you spend time strategically mapping out.
Despite the fact that most Founders/Executive Directors are the drivers behind the organization, the IRS has given the Board the legal authority to function as the decision-makers of the organization. Their official purpose is to govern and fundraise. The role of the Executive Director and paid staff is to implement the vision established by the Board of Directors. This is really, really important to know, and understand because it means the Board is responsible for ensuring staff gets paid a salary.
Let me repeat that: it is the responsibility of the Board of Directors to ensure the salaries of staff are covered. The Board has to approve the organization’s annual budget. That act says, “We agree to raise enough money to cover this budget.” So, whatever goes into that budget is what the Board agrees to raise money for. That is how the volunteer Executive Director transitions into a paid Executive Director—get that position listed as a line item in the annual budget!
If you have a seasoned Board, they may start the process by agreeing to cover a percentage of the Executive Director’s salary for the first year (maybe 50% in year one, then the remaining 50% in year two). It all depends on how engaged and motivated the Board is to fundraise. But this is the process for how to make that transition from volunteer to paid Executive Director.
Many Founders don’t transition into a paid position for 3-4 years, and it’s because they have to figure out how to cover their own salary (usually it’s after several successful years of a signature fundraiser or after securing a grant). But it is the Board’s responsibility to fund the Executive Director’s position because the Executive Director reports to the Board. This is crucial because even if you founded the organization and invested personal funds, the board has the legal authority to fire you if you function as the Executive Director.
Some Founders opt to keep their friends and family on their board because they know that these individuals love and support them and will not fire them. The flip side to that, however, is even though you may have job security, you carry the weight and responsibility of funding the organization, practically by yourself.
A better approach is to create a strategic and streamlined process that ensures you select people who share your vision, don’t have personal agendas, and that you stay completely engaged in the board recruitment process (i.e., require board vetting interviews and ensure that you sit in on them). Get a feel for the potential candidate and whether they have the following:
Board Experience
The ability to pay the Board Get
The ability to secure the Board Give
A team-oriented approach to board governance
Access to a network of financial resources
If you want to build a board that will position your nonprofit for success, check out these tools: