Board roles & responsibilities

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Legal & Financial Responsibilities of Nonprofit Board Members

Legal & Financial Responsibilities of Nonprofit BoardYour board of directors provides governance to your organization. Members

 

Being asked or elected to serve on a board can be a huge honor, but it also comes with great legal and fiscalRelating to finances or financial matters. responsibilities.

LEGAL DUTIES

Let’s start with three of the major legal duties:

  • Duty of care: This means that board members are expected to actively participate in making decisions, resolving issues, and participate in planning.
  • Duty of loyalty: Board members must put the interests of the nonprofit ahead of their own personal and professional interests. This means that even merely potential conflicts of interest must be avoided. (Your nonprofit MUST have a Conflict of Interest Policy that each board member signs.)
  • Duty of obedience: Compliance with all local, state, and federal regulations and laws applicable to the nonprofit is an essential responsibility for board members.

Additionally, these three major legal duties ensure the organization is committed and stays true to its stated mission.

 https://www.gordonfischerlawfirm.com/legal-financial-responsibilities-nonprofit-board-members/

Board Members Engaging Volunteers

BOARDYour board of directors provides governance to your organization. MEMBERS: engaging volunteers.

In this article you will learn about volunteering on a board of directors

A group of people who are legally charged to oversee the operations of a non‐profit organization. There are a number of different types of boards, including:

Working Board: Board members attend to strategic matters in addition to working with staff to carry out the mission; usually characteristic of newly established organization or ones driven by volunteers (also known as an Operational Board or Management Board).

Membership (Representative) Board: There is a clear link between the board and the service users, with board members being clients and employers at the same time.

Policy Board: This model distinguishes between the board and Executive Director role. The Executive Director provides operational leadership in managing the organization to fulfil its mission, while the board focuses primarily on strategic matters and ensuring responsiveness to community stakeholders.

Collective Board: Board members and staff share equal responsibility in deciding upon strategic matters and carrying them out. They emphasize equality and power sharing.

Corporate or Entrepreneurial Board: There is an emphasis on innovation, with a focus on efficiency and effectiveness measures that push the organization to achieve a maximum result on its investments.

Institutional Board: When the organization is very mature, with all the systems in place to run efficiently and effectively, the Institutional Board tends to exist primarily to raise funds.

, and the role and reponsiblities you will play. Non-profit organizations rely on strong leadership

When referring to an ‘organization’s leadership’, we mean the board, ED and senior management.

to drive change and achieve their missions.

Nearly all non-profits in Canada are led by a volunteer board of directors. The role of boards varies from organization to organization. Usually the board of directors gives leadership and guides the strategic direction of an organization. Boards govern non-profits on behalf of their members, while corporate boards govern on behalf of shareholders.

If you’re interested in volunteering on a board, first consider your skills, interests and experience. Board members should know an organization’s history and mission. And they should understand the board’s role before joining.

Responsibility and liability of volunteer board members

Board members have legal obligations, but many are unaware of them. Board members are liable for their decisions and work with the board. This liability holds true for all non-profit organizations.

Directors are responsible for representing the interests of the organization. When directing the affairs of an organization, the board must act within the law. As a trustee, a board member must follow three basic principles

Accepted bases of action or conduct. For the Organizational Standards Initiative, our guiding principles provide a value‐laden foundation on which our work can be based.

:

  1. Diligence. Act reasonably and in good faith. Consider the best interest of the organization and its members.
  2. Loyalty. Place the interest of the organization first. Don’t use your position to further your personal interests.
  3. Obedience. Act within the scope of the law. Follow the rules and regulations that apply to the organization.

A volunteer director who fails to fulfill these duties may be liable.

Volunteer Canada offers a resource to inform board members of their legal duties. It includes a “prevention checklist” to help reduce liability. Click here< to download a copy of the Directors’ Liability Insurance: A Discussion Paper.

Liability insurance

Some boards choose to get Directors’ and Officers’ Liability Insurance to protect them. Volunteer Canada offers its members< access to an affordable, premium group insurance plan<.

Resources

  • Advocacy on the Agenda: Preparing Voluntary Boards for Public Policy Participation< — Government advocacy is often central to the work of board members. But often, boards of directors have little or no experience engaging in discussions with policy makers. This resource supports boards in their advocacy work.
  • BoardSource< — With more than 20 years’ experience, BoardSource provides leaders with a range of tools to increase their effectiveness and impact.
  • Sector Source: Board Governance< — Sector Source is a project of Imagine Canada< and the legacy of the Nonprofit Library and Risk Management

    Risk management involves examining a situation and 1) identifying what can go wrong, 2) identifying measures to avoid such problems, and 3) if something does go wrong, identifying steps that can be taken to lessen the negative impact. These measures may include the use of policies, procedures, and protections (such as insurance or education). Risks can be related, for example, to financial loss, workplace safety issues including abuse & physical harm or injury, property damage, or loss of reputation.

    and Insurance and Liability Resource Centre. The Board Governance section outlines key processes, policies, and practices to have in place to support board effectiveness.
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© 2019 Volunteer Canada.

 

Non-Profit Leadership Development

NONPROFIT LEADERSHIP

When referring to an ‘organization’s leadership’, we mean the board, ED and senior management.

DEVELOPMENT: THE IMPORTANCE OF LEADERSHIP IN NONPROFIT ORGANIZATIONS

 

In this article you will learn:

1. What is non-profit leadership?

2. The Importance of Leadership Development in nonprofit organizations

3. Core competenciesA set of knowledge, skills and abilities required to perform a job. of successful nonprofit leaders

4. How to develop leadership training in your organization

Leadership can make or break an organization. Leadership in nonprofit organizations presents a specific set of challenges and therefore requires a unique set of skills. Executive mentoring and leadership development training can be key to growing nonprofit core competencies among boardYour board of directors provides governance to your organization. members and volunteers alike. At the end of the day, this type of training can create a team that will better serve an organization and help them meet their goals. Whether you are interested in learning nonprofit leadership skills or exploring options for nonprofit leadership development training, here are some thoughts from Third Sector

Used broadly to define a group or cluster of agencies that share some commonality. Here ‘the sector’ refers to community based agencies that serve immigrants and refugees in Ontario. Other relevant sectors include the broader non‐profit sector (sometimes referred to as the voluntary sector), and the community social services sector.

about the importance of leadership development training in nonprofits.

Leadership and Networks

This report is written for those who run and fund leadership

When referring to an ‘organization’s leadership’, we mean the board, ED and senior management.

programs that develop and support leadership for social change. It shares many examples of how leaders using network strategies are increasing the impact of social change work (p. 3). The report provides examples of leadership models, values

Values are ideals, standards, or qualities considered worthwhile or desirable. See also “principles,” which are often shaped by values.

, skills, and behaviours needed to embrace network strategies, and recommends practical things you can do to develop network capacities (p. 8) and a network mindset (p. 10).

Risk Management A Guide for Non-profit and Charitable Organizations

The objective of this planning guide is to help managers and boardYour board of directors provides governance to your organization. volunteers to better understand the importance of risk management

Risk management involves examining a situation and 1) identifying what can go wrong, 2) identifying measures to avoid such problems, and 3) if something does go wrong, identifying steps that can be taken to lessen the negative impact. These measures may include the use of policies, procedures, and protections (such as insurance or education). Risks can be related, for example, to financial loss, workplace safety issues including abuse & physical harm or injury, property damage, or loss of reputation.

and to learn how to implement risk management policies and procedures into their organization. These practices include obtaining insurance coverage for volunteers; screening volunteers to protect clients

This term is used here to refer to the service-users that organizations work for and with and provide services to. We have chosen to use clients because of its common currency and ease of use, while acknowledging that it may unintentionally connote a particular ideology of patronage or a purely financial transactional relationships between organizations and the people they serve.

from harm; developing board orientation and training materials; developing strong employment practices; and implementing policies and procedures that protect the organization.

 

Bertrand N. and Brown L. (2006) Risk Management A Guide for Non-profit and Charitable Organizations Imagine Canada

 

Diversity in Governance: A Tool Kit for Non-Profit Boards

Diversity in GovernanceRefers to the source of strategic thinking and decisions that shape and direct an organization and its work and where, ultimately, accountability lies. Includes anything related to non‐profit boards as well as strategic leadership issues. for Non-profit Boards is a comprehensive toolkit for board chairs, heads of board governance committees and independent consultants when working with boards on issues around diversity and governance. The resource highlights five sections that will guide you through the steps for increasing diversity on your organization’s board of governance and includes checklist and questionnaires for assessing board diversity. Starting the Conversation (p. 5) Developing a Board Diversity Policy (p. 8) Conducting Board Outreach and Recruitment (p.10) Creating an Effective Board (p. 15) Keeping on Track (p. 19). 

 

Maytree (2007) Diversity in Governance: A Tool Kit for Non-Profit Boards. DiverseCity The Greater Toronto Leadership

When referring to an ‘organization’s leadership’, we mean the board, ED and senior management.

Project 

Case Studies of Social Enterprise in the Ontario Non-Profit Housing Sector

This report highlights the experiences of non-profit housing providers in the development and operation of social enterprises. The report place emphasis to organizations based in Ontario in the hopes that their experiences will educate and inspire the work of others. Social enterprises are challenging and potentially rewarding for the organization and the communities that they serve Social enterprises are something that Ontario’s non-profit providers are increasingly exploring as a way of supplementing their bottom lines and funding new development and additional programming

Social Enterprise in Canada: Structural Options

 

This article adapts for Canadian readers the work of Jim Fruchterman, who discussed structural options for social enterprise from this perspective in the U.S. context. This article considers various structural options for social enterprise from the perspective of a social entrepreneur contemplating a new social venture. It addresses the issues that should be considered before deciding upon social enterprise structure, and describes available social enterprise structures and how different structures will suit different combinations of priorities.

Manwaring. M.S., Valentine. A. and Thomson. M. 2011 Social enterprise in Canada: Structural options
 

Social Enterprise in Canada: Structural Options

 

This article adapts for Canadian readers the work of Jim Fruchterman, who discussed structural options for social enterprise from this perspective in the U.S. context. This article considers various structural options for social enterprise from the perspective of a social entrepreneur contemplating a new social venture. It addresses the issues that should be considered before deciding upon social enterprise structure, and describes available social enterprise structures and how different structures will suit different combinations of priorities.

Manwaring. M.S., Valentine. A. and Thomson. M. 2011 Social enterprise in Canada: Structural options
 

Operating Reserve Policy Toolkit for Non-profit Organizations

This Toolkit was created to provide a resource to help to make a compelling case within the organization for the need to establish an operating reserve, provide factors to take into consideration in determining the size of the operating reserve for their organizations, suggest practices for managing the reserve and reporting its balance, and offer some tools with which to go about drafting a policy to record decisions.  The main body of this document defines an operating reserve, presents the rationale for creating one, and discusses a variety of issues that may affect the policy an organization ultimately creates to establish, build, manage, and maintain its operating reserve.

Sponsored by the National Center for Charitable Statistics, Center on Non-profits and Philanthropy at the Urban Institute, and United Way Worldwide

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