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You've been asked to sit on an NFP Board - what does that mean?

Have you ever wondered what a board actually does? In reality, members of any board are legally bound to do a number of things. Here are just some of the responsibilities that must be fulfilled by the board of any company or organization – including nonprofit (“NFP”) boards.

To Advise and Oversee

The board must advise the company on future actions based on performance and industry trends to strategically progress and ensure the long term viability of the organization. In addition, they must provide management while monitoring the company’s performance and reducing costs when possible. Typically, the board does not overlap duties with the management staff – but sets policies and practices which are implemented by staff.  In the NFP space board members are often more “hands on” and find themselves in the dual role of charting the course and driving the boat!

To Select and Appoint

The board is typically in charge of appointing the chief executive [1] of the organization to carry out the mandate of the organization, if there is one. In a similar capacity, they are also able to terminate this person, if necessary. Finally, the board must also set up compensation and salary for this person and other senior management staff.

Absent employed staff, the board is in charge of making sure that the organization fulfills its mandate on a day to day basis.

To Resource and Finance

The board must approve the annual budget and ensure that resources are available – don’t worry, usually the heavy lifting here is completed by a finance committee that is struck by the board and hopefully consists of a few accountants, controllers or finance minded individuals.

To Represent and Be Accountable

The board must represent the interests of the organizations stakeholders – whether members of a club or shareholders in a company.

The important tasks that boards perform are expected to be carried out with the best interests of the organization in mind.  As a board member, an individual is a fiduciary of the organization and is help to a high standard.

For legal counsel and advice about the role of the board of directors, the Societies Act and bylaw compliance, board governance or assistance with any nonprofit operations contact Nystedt Law for the advice you need.

Janet Nystedt