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Governance: FAQs What are the basic roles and responsibilities of nonprofit boards? What are the boards legal responsibilities? Is it required to have board members? How big should the nonprofit board be and how often should they meet? Can board member be held personally liable for the actions or debts of the corporation? Can family member serve on the board? How long should an organization keep board meeting minutes? Can staff person serve on the board? What is the term limit for board membership? Q: What are the Basic Roles and Responsibilities of Nonprofit Boards? A:
“From Ten Basic Responsibilities of Nonprofit Boards, by Richard T. Ingram. © 1996 Board Source formerly National Center for Nonprofit Boards (NCNB)” Q: What are the board legal responsibilities? A. Summary: The board is ultimately responsible
for the performance of the organization in all areas of its work.
Q: Is it required to have board members? A: Yes, most nonprofits are corporation, which mean they are legal entities distinct from the individuals who founded them. Like their for-profit counterparts nonprofit corporations are governed by board of directors with legal and ethical responsibilities that cannot be delegated. Even organizations operating with few or no staff are required to have a board of directors in place. Q:
How big should the nonprofit board be and how often should they
meet? A. Board sizes can vary from three to more than 50 members. A 1996 NCNB survey reported that the size of nonprofit boards average 19 members. The minimum number of directors a Minnesota nonprofit must have is three. Each state has regulations that determine the minimum size of the board, but the optimum number of people who sit on the board should be determined by the needs of the organization. The survey also reported having meetings between nine and 12 times each year. As with the size of your board, the number of board meetings each year should be determined by the work that needs to be accomplished. A: Yes, as long as the organization’s bylaws allow compensation of board members. Most often, bylaws will restrict payment to directors to reasonable reimbursements. Q: Can board members be held personally liable for the actions or debts of the corporation? A: Yes. Directors can avoid personal liability in an incorporated organization as long as they continue to act in the best interests of the organization. Purchasing D&O insurance can further protect the assets of board members and volunteers. Q: Can family member serve on the board? A: There is no law forbidding family members from serving on the same board, but it is wise for organizations to address the issue in bylaws or board policies. MCN recommends a board consist of at least 7 unrelated persons. Q: How long should an organization keep board meeting minutes? A: MCN recommends keeping board meeting minutes until the dissolution of the organization. Minnesota law requires minutes to be kept and made available for at least 6 years. Q: Can staff person serve on the board? A: Yes, there is no law prohibiting staff from serving on a board. However, MCN recommends that no more than one staff person serve as a voting member of the board and should not serve as the chair or treasurer. Most often this staff person is the executive director. Q: What is the term limit for board membership? A: Term limits for board membership should be specified in the organization’s bylaws. The statutory limit for a board term is 10 years. Q: Why purchase Directors & Officers (D&O) Insurance? Doesn't General Liability Insurance cover the board of directors? A: General Liability insurance provides coverage for "negligent" acts. If an organization, its employees or volunteers (including board members) negligently cause someone "bodily injury, personal injury or property damage" General Liability insurance typically provides coverage. Claims by employees usually are excluded under General Liability so that they cannot sue employers for bodily injury or employment-related claims. Example of a General Liability claim: A client trips and breaks a leg because of a faulty stairway at the nonprofit's office. Coverage for bodily injury claims by employees is provided by Workers Compensation. Coverage for employment-related claims is typically provided under D & O insurance. D&O insurance generally provides nonprofits with coverage for employment related claims. Directors & Officers provides coverage for "intentional" actions taken by an organization’s board of directors or management and someone else thinks these actions are wrong. For example, in employment-related cases, the board affirmatively adopts personnel policies that are intentionally carried out by management. These are intentional, willful actions that may result in some type of damage other than bodily injury. Example of a Directors & Officers claim: An employee is terminated and alleges age discrimination. |
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Principles and Practices
Click on the links below to jump to the different sections of The Principles and Practices for Nonprofit Excellence.
- Introduction
- The Principles
- Role in Society
- Fundraising
- Strategic Alliances
- Evaluation
- Advice for Users
- The Origins of the Principles and Practices
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Principles and Practices
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