Training for Board Members: Part 2 – Legal Responsibilities
Posted on August 7th, 2009.There is considerable disagreement on how boards of directors should function. For a religious nonprofit organization, the board of directors is (or should be) the critical body that determines the entity’s programs and investments and provides management guidance. The role of the officers and employees is important, but the board of directors has the responsibility to frame the organization’s overall policy directions and objectives. The governing board has the ultimate responsibility for the organization’s activities—and can be a prime target when matters of liability arise.
One of the main responsibilities of board members is to maintain financial accountability and effective oversight of the organization they serve. Board members act as trustees of the organization’s assets and must exercise due diligence to see that the organization is well managed and that its financial situation remains sound. Fiduciary duty requires board members to stay objective, unselfish, responsible, honest, trustworthy, and efficient. Board members, as stewards of public trust, must always act for the good of the organization, rather than for their personal benefit. They need to exercise reasonable care in all decision making, without placing the organization under unnecessary risk.
It is important to remember, however, that individual board members have responsibilities but not personal authority over the organization. Since members have no individual authority to make organizational decisions, the board collectively is responsible for:
1) Developing and maintaining the organization’s mission;
2) Maintaining the organization’s tax-exempt status and (if applicable) its ability to attract charitable contributions;
3) Protecting the organization’s resources and approving the budget;
4) Hiring and evaluating the chief executive, and generally overseeing the organization’s management; and
5) Supporting any fundraising that the organization undertakes.
Tags: board of directors, church, due diligence, fiduciary, Governance, liability, nonprofit, oversight, reasonable care
I am glad to know what legal role the board plays within a church. Is there a guideline for how large a church needs to be to have a board? I only ask because I know of a large congregation that discovered its Senior Pastor was being unethical and it was difficult for the church to handle letting him go. The main difficulty was that no one understood exactly what needed to be done to effectively do this and not have it be a huge negative for the church. The church was not board led. Which leads to my next question, can a church adopt a board at any time?
posted on August 20th, 2009 at 10:35 am by Sarah