QUESTION:  Are there any rules governing how the board of directors should be composed?

ANSWER:  For the most part, the law does not contain rules of this nature.  The IRS suggests that “governing boards should be composed of persons who are informed and active in overseeing the charities’ operations and finances.”  The IRS further suggests that “governing boards should include individuals not only knowledgeable and passionate about the organizations programs, but also those with expertise in critical areas involving accounting, finance, compensation, and ethics.” These are, however, merely suggestions from the IRS and the unique circumstances of different organizations may merit different approaches to board composition.  For the most part, the federal tax law is silent on the composition of a board of directors of a nonprofit organization.

Tags: board of directors, ethics, governing boards, IRS