We want to expand our mission to add various activities — how can we do that and still maintain our tax-exempt status?

By asking this question you have passed the first test of becoming a great risk manager! You are asking whether what you want to do is within the mission. In some cases the mission statement may be broadly worded and no changes will be necessary. Often, however, the existing mission statement is too narrow. Your … Continued

How can we involve the board in risk management?

Board members are often described as being in the crows nest, looking out on the horizon, while the staff leaders are at the ship’s wheel steering it through the sometimes choppy waters, in the right direction. The job in the crow’s nest is to call the crew’s attention to storms brewing on the horizon. Find … Continued

How can I convince my board that they should be involved in fundraising?

If your board doesn’t take its responsibility to fund raise seriously, then your organization is at risk. A board has a legal duty of “due care” that involves ensuring that there are enough resources for the organization now, and in the future. If you can’t get your board to accept the old adage, “give, get … Continued

Do board meetings have to be open to the public?

In some states there are laws known as “Sunshine laws” that require groups to open their meetings to the public, however, these laws generally only apply to governmental or quasi-governmental groups. Unless the nonprofit is a governmental entity, there is no obligation to open board meetings to the public. (“Governmental entities” would include school boards, … Continued

Our board members have served for a long time. What’s the risk?

There are legal risks in failing to re-elect board members when their term has expired. State laws restrict the terms of board service by requiring that nonprofits hold elections, generally annually, or as designated in the organization’s bylaws. State law usually permits board members to be re-elected after their term has expired, however, each nonprofit needs … Continued

What’s the best way to find new board members?

Most board members are recommended by existing board members. It’s best when current board members take the role of identifying their successors seriously. One exercise that can help is to conduct a board self-assessment and determine a “wish list” for expertise and experience that your nonprofit will need in the short and long term. From … Continued

What governance policies should our board be considering?

  In addition to a review of mission, articles of incorporation and bylaws from time to time, the board should consider adopting, as a baseline, the following governance policies: Conflict of Interest policy for board and staff Compensation policy for chief staff officer and key senior staff, including independent contractors/consultants Personnel policies for employees and … Continued

May board members be reimbursed for their expenses?

There are no laws that would prevent a charity from providing compensation to board members for their board service, but the majority of public charities do NOT compensate their board members. More typical is for board members to be reimbursed for reasonable and necessary expenses incurred in connection with their service to the nonprofit as … Continued

What is the role of the audit committee? Do we need one?

The audit function, for those nonprofits that are required to have an independent audit, should be overseen by the board of directors, however, the full board is not needed to do so. Many organizations find that it is most efficient to have a small audit committee in place to recommend the hiring and conduct the … Continued

Should we find a lawyer, accountant or insurance professional to serve on our board?

Every nonprofit thinks they need an insurance professional, a CPA, and a lawyer on their board, but that is not always possible. Even if these professionals served on your board, it might create a conflict of interest for them to represent the nonprofit directly if you also expect them to provide objective professional advice to … Continued

If the organization has not filed its 990 on time, can board members be liable?

It is ultimately the board’s responsibility to ensure that the organization complies with legal requirements, such as the requirement to file an annual return, Form 990, with the IRS. The IRS may impose penalties on the organization for late returns ($20 per day for each day the return is late. The maximum penalty is $10,000 … Continued

Can board members be personally liable?

Board members are generally NOT liable for the debts of the nonprofit organization when the nonprofit is a corporation. (One of the advantages of the corporate form is “limited liability” which results in the fact that the debts of the corporate stay with the corporate and do not travel to those who serve on its … Continued