The Legal Side of Boards & Regulations

As someone who once ran a non-profit Board, and also worked for a non-profit and had a Board to report to, I know firsthand how complex these relationships can be, and how fraught with peril they are for managers. Most executive directors focus their time and attention on reporting on their financials — progress against goals, fundraising, ticket sales, and otherwise. Yet, too few managers pay enough attention to some of the more fundamental things that go into a Board relationship.

  1. Fiduciary responsibility — do you (and your Board members) understand exactly what they are personally liable for? Do you have Board liability insurance and do you know what it covers? Do they?
  2. Decision-making? Do you know what decisions must be made at the Board level, and what oversight you are required to provide your Board for other decisions?
  3. Regulations — are you aware of all the governmental regulations that go into soliciting, collecting, and reporting on your philanthropic activities?

With regard to #3, there’s a terrific, if not a bit dense article in The Non-Profit Times entitled Operation(s): 5 Things That Are Making Regulators Buzz that provides an excellent overview of these items. This is not only worth reading, it’s worth memorizing and probably distributing to your Board. We live in an amazing country that provides a nearly unfettered access to raising money, but it’s up to us to do this properly and professionally.

Unfortunately, some Board members approach being on a non-profit Board as something akin to a paid social club with benefits. It’s your job as a leader and manager to make sure your Board members are aware of their responsibilities, their liabilities, and most importantly that they are (and your organization is) compliant with all laws surrounding the operation of your organization.

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