How many board members should a nonprofit have?

This is often one of the first questions I am asked by clients who are forming nonprofit organizations. I usually begin my response with the typical lawyer answer, “It depends.”

The board of directors (board members are properly called “directors”) by law holds all the authority of the nonprofit corporation. Individual directors have a fiduciary relationship with the nonprofit—they are bound at all times to uphold the best interests of the nonprofit. The board must oversee all the activities of the nonprofit, develop the nonprofit’s strategic direction, set policy, and generally lead the organization as it carries out its mission. This is a lot of responsibility.

Independence of directors is essential—independence of thought, as well as independence in the sense of freedom from direct or indirect conflicts of interest. For this reason, best practice requires all directors to be independent of each other—that is, unrelated as to family or business relationships.

Initially, to form the nonprofit, three directors are sufficient. In fact, in Massachusetts, one person is sufficient to form a nonprofit corporation, but this is not recommended for a nonprofit that plans to seek tax-exempt status. But to actually move the nonprofit assertively into its mission, more will be required.  Moreover, if the first three directors are the founder plus a colleague and a family member (often the case at initial start-up) for example, additional directors should be added to offset these relationships.  To concentrate the power of the nonprofit in one or two or three individuals who, because of their relationships, effectively constitute a voting block, subjects the nonprofit too strongly to their private interests.  Charities, as the IRS has pointed out, must serve a public interest—not a private interest.

The next consideration is the size and scope of the nonprofit. A new nonprofit with one primary activity and no staff can manage satisfactorily with five directors, for example. A large, established nonprofit with staff and a range of programs, strong fundraising and multiple funding streams, and a board that is fully engaged in strategic planning, will need many more board members—perhaps 12-15 at least, possibly more.

Another key consideration is the need of the board for a variety of skills, experience, and contacts, and for a generally diverse make-up. Boards should reflect a range of skillsets, experience, and preferably multiple and different networks of contacts that can be used to the benefit of the nonprofit. For some nonprofits, a board that is representative of its community is crucial.  Does every board need directors who are accountants and lawyers? No. But some financial savvy is essential, along with analytical ability, networks of contacts, and subject matter expertise. If the nonprofit’s board is only three individuals, is all that likely to be covered?

Boards of directors are not static. A board is never finished, set, complete. Boards are more like living organisms—they are born at the time of corporate formation, they grow and develop; they change over time. Indeed, a nonprofit whose board is unchanged many years after formation is likely stagnant, stuck, unable to move forward.

So how many board members does a nonprofit need? The short answer is, “Enough to get the job done.”

Get on Board SouthCoast — We’re re-visioning!

November 9                                         Get on Board SouthCoast!

Thank you for your interest in Get on Board SouthCoast! Unfortunately due to low exhibitor registration, we must postpone the event.  While we are disappointed, we view this setback as an opportunity to gather feedback and re-assess the community’s board recruitment needs. We’d like to invite you to participate in a visioning/feedback session on Wednesday, November 9, 4:30 to 5:30 pm, at the Legal Center for Nonprofits. If you’d like to join us for this session, please RSVP to Linnea@LegalCenterforNonprofits.org.

Fall Programs from Legal Center for Nonprofits!

Nonprofit Finance 101 – Presented by Tom Butero – September 21, 6:00-8:00 pm

Your budget is your blueprint for success.  In tandem with its strategic plan, a nonprofit’s budget is its most important planning tool.  But where does a budget come from? What drives it?  Find our more when Tom Butero explains budgets and financial management, from day-to-day operations to annual requirements, at the Legal Center for Nonprofits, 412 County St., New Bedford, on Sept 21, 6:00-8:00 pm.  $10 per person.  Call (508) 264-5996 or email Linnea@LegalCenterforNonprofits.org to register.

 Looking Ahead – watch for details, coming soon!

  • Board Basics, with Linnea – September 27
  • Get That Government Grant , with Tom Butero – October 12
  • Grantwriting, with Robin Cabral – in 2 sessions — October 18 & 25
  • Onboarding New Board Members, with Linnea – November 2
  • How to Ask for Money returns on Wednesday evening, November 16, with Robin Cabral & Laur Schaberg
  • Employment Law Update for Nonprofits in November

And don’t forget Get on Board SouthCoast!  Visit here for details.

Need Board Members? Save the Date!

Save the date! November 9 – Get on Board South Coast
A first time event to connect local non-profit organizations and public boards/commissions with prospective board members. Presented by the Legal Center for Nonprofits and Leadership SouthCoast, and taking place at The Cove in Fall River from 4:30-7:00 p.m. More details coming soon!

Thinking of Starting a Nonprofit?

Wednesday, April 13,  6:00 – 8:00 pm

Do you have a great idea that will help your community? Maybe it should be a nonprofit! We’ll discuss the difference between nonprofits & for-profits, some preliminary considerations before you take action, and an overview of the steps in the process of getting a nonprofit up and running, with a quick look at getting tax-exempt status. Join us at the Legal Center for Nonprofits, located inside the Inter-Church Council House at 412 County Street, New Bedford, MA. Cost to attend is $10 per person. Pre-registration is recommended. Call (508) 264-5996 or email to Linnea@LegalCenterforNonprofits.org for more information or to pre-register.

 

Nonprofits Must Manage Risk

Nonprofit boards of directors are responsible for risk management in their organizations. Larger nonprofits may have staff to carry out the risk management function, but for most small nonprofits, this falls to the board of directors, with the assistance of the executive director if there is one.

What is risk?

At its simplest, “risk” means “the possibility or chance of loss, danger or injury”. Risk generally involves harm of some type along with uncertainty. To manage risk, the board must identify:

  • What can go wrong?
  • Can it be prevented?
  • Can we insure against it?

Some sources of risk include:

  • Program, such as providing professional, such as counseling or child care, or other services, classes (art, music, cooking), etc.
  • Accidents, slip-and-fall, motor vehicles; transporting students, etc.
  • Acts and omissions, such as failure to warn of a danger, defamation, failing to perform an act or service, etc.
  • Breaches of duty, particularly with regard to board members’ fiduciary duties.
  • Employment, such as discrimination, wrongful discharge, other personnel actions. (Most claims against nonprofits derive from employment matters.)
  • Finances, such as mishandling or misappropriation of funds.
  • People, volunteers, clients, contractors, the public, etc.
  • Disasters, natural or otherwise.

Insurable risks include:

  • Loss of assets
  • Injury
  • Interruption of service
  • Litigation

Unininsurable risks include:

  • Loss of audience or membership.
  • Loss of funding, such as cuts to state budget, or termination of a grant.
  • Social or scientific changes that eliminate the need for a service (e.g., March of Dimes).
  • Increased competition.

A key component of every nonprofit’s risk management program is insurance. Join us for a presentation by Jeffrey Pelletier, Commercial Account Executive with the Sylvia Group, as he explains the particular insurance needs of nonprofits on Wednesday, February 24, at 6:00 pm, at the Legal Center for Nonprofits, located inside the Inter-Church Council House at 412 County Street, New Bedford, MA. Cost to attend is $10 per person. Pre-registration is recommended. Call (508) 264-5996 or email to Linnea@LegalCenterforNonprofits.org for more information or to pre-register.

 

Customized Board Training Available

Does your Board of Directors need a refresher on tax-exempt/nonprofit topics like fiduciary duties, the role & responsibilities of boards, best practices for board meetings, or another topic of particular interest to your nonprofit organization?

Contact us for more information about affordable customized trainings for your board delivered at your location.

Popular program returns

Board Meeting Basics
November 18, 6:00-7:30 pm

“Are all nonprofit boards like this?”

“Is our board typical?”

“Is this how a nonprofit board is supposed to run?”

“What about Robert’s Rules?”

Find out about best practices for boards of directors of small nonprofits at the next program of the Legal Center for Nonprofits, Board Meeting Basics, on Wednesday evening, November 18, at 6:00 pm.

Admission is $10 per person, payable at the door. Off-street parking is available. The Legal Center for Nonprofits is located inside the Inter-Church Council House, 412 County St, New Bedford. Call (508) 264-5996 or email Linnea@LegalCenterforNonprofits.org for more information or to preregister.

 

 

Top 10 Tips for End-of-the-Year Fundraising

Wednesday, November 4 at 6:00-8:00 pm

Lee Blake and Kristen Sarkarati will offer their Top 10 Tips to maximize your fundraising results as we head into the end-of-the-year fundraising season. Find out how to get the best return on your fundraising strategies for this year’s Giving Tuesday (December 1), polish your Annual Appeal to make it better than ever, plus more ideas to capitalize on the generous spirit of the fast-approaching holiday season.

Lee Blake is well known for her work with many local nonprofit organizations, including the New Bedford Historical Society and the New Bedford Education Foundation. She is an experienced board member and grant-writer. Kristen Sarkarati is the owner of Blue Skies Consulting, specializing in fundraising and communications, where she has crafted dozens of highly successful annual appeals over the years for a variety of non-profit organizations. Both are members of the Board of Directors of the Legal Center for Nonprofits, Inc.

Admission is $10 per person. Program takes place at the Legal Center for Nonprofits, Inc., 412 County Street, New Bedford, MA, located inside the Inter-Church Council house. Off-street parking is available. Pre-registration is encouraged as space is limited. For more information or to pre-register, call (508) 264-5996 or email Linnea@LegalCenterforNonprofits.org.

Annual Reports due to MA Secretary of State

November 1 is the deadline for nonprofit corporations operating in Massachusetts to provide annual reports to the Massachusetts Secretary of the Commonwealth.  The Annual Report filing fee is $15 and checks should be payable to the Commonwealth of Massachusetts.  Download a fillable PDF Annual Report form here.

Organizations that fail to file annual reports for two consecutive years are at risk of having their corporate status revoked by the Secretary’s office.  Reinstating corporate status can be expensive in terms of both money and time, as reinstatement requires the filing of all owed annual reports, along with their filing fees.

The Annual Report form is straightforward.  You must provide the physical address of the nonprofit corporation, the date of the last annual meeting, and the names and residential addresses of the officers and board of directors; if there are too many for the space provided, you can add a second sheet listing the entire board. The expiration date for terms of office (depending on your bylaws, it may be the next annual meeting date) should also be listed.

Nonprofit corporations must have a President, Treasurer, and Secretary (Clerk).  If an officer position is vacant, someone should be appointed to the position in accordance with the organization’s bylaws. If an officer position is blank on the form when submitted, it may be returned to you as incomplete.

The Annual Report may be signed by any officer, but the officer’s name must appear as an officer on the report.