Topic 3A: Board Structure and Responsibilities

Understanding Nonprofit Board Governance

The board of directors is the governing body responsible for the strategic direction, financial oversight, and legal compliance of a nonprofit organization. Unlike for-profit boards, nonprofit boards have fiduciary duties to the organization’s mission rather than to shareholders. This topic explores board structures, roles, and the critical governance framework that ensures effectiveness and accountability.

What is a Nonprofit Board?

A nonprofit board consists of volunteers (and sometimes paid staff) who collectively hold legal and fiduciary responsibility for the organization. Board members do not own the organization but are stewards of its mission and assets on behalf of the public. The board is accountable to donors, regulators, and the communities the organization serves.

Key Board Responsibilities:

Strategic planning and vision setting
Hiring and evaluating the Executive Director
Financial oversight and budget approval
Legal and regulatory compliance
Risk management and crisis response
Fundraising and resource development
Monitoring organizational performance
Ensuring mission alignment in all decisions

Common Board Structures

Traditional Board Structure

Most nonprofits use a hierarchical board structure with distinct officer positions:

Board Chair (President)

Presides over board meetings and annual meeting
Represents the organization to external stakeholders
Works closely with the Executive Director
Serves on the Executive Committee
Time commitment: 10-15 hours/month or more

Vice Chair

Assumes Chair duties if needed
Often oversees specific committee or area
Ensures succession planning
Time commitment: 8-12 hours/month

Treasurer

Oversees financial management
Chairs Finance Committee (if separate)
Reviews monthly financial statements
Ensures compliance with financial policies
Time commitment: 8-12 hours/month

Secretary

Maintains meeting records and minutes
Ensures governance procedures followed
Maintains corporate records
Time commitment: 5-8 hours/month

Committee Structure

Most boards operate through committees that handle specific governance areas:

Executive Committee (required in many bylaws)

Includes Chair, Vice Chair, Treasurer, Secretary
Meets between full board meetings
Makes time-sensitive decisions
Size: 4-6 members
Typical meeting frequency: Monthly

Finance/Audit Committee

Oversees financial statements and audits
Develops financial policies
Reviews major expenditures
Monitors cash flow and reserves
Size: 3-5 members (includes Treasurer)
Typical meeting frequency: Monthly or quarterly

Development/Fundraising Committee

Identifies funding sources
Plans fundraising events and campaigns
Solicits individual donors
Evaluates grants and foundation relationships
Size: 5-8 members
Typical meeting frequency: Monthly

Program/Mission Committee

Governance Committee

Manages board recruitment and orientation
Evaluates board performance
Develops governance policies
Manages board succession planning
Size: 3-4 members
Typical meeting frequency: Quarterly

Board Size and Composition

Ideal Board Size:

Small nonprofits (budget <$500K): 5-7 members
Mid-size nonprofits (budget $500K-$2M): 8-12 members
Large nonprofits (budget >$2M): 12-20 members

Benefits of optimal sizing:

Facilitates meaningful participation
Improves meeting effectiveness
Reduces scheduling conflicts
Increases personal accountability

Desired Board Diversity:

Demographic diversity (race, ethnicity, gender, age)
Experiential diversity (business, nonprofit, legal, accounting, marketing)
Sectoral diversity (individuals from target population, business community, academia)
Geographic diversity (especially for geographically dispersed organizations)

Skill Matrix Approach:
Many boards use a skill matrix to ensure balanced expertise:

Board Member Roles and Responsibilities

Individual Board Member Duties (The “Duty Trinity”)

1. Duty of Care
Board members must:

Attend board and committee meetings regularly
Review materials before meetings
Ask informed questions and participate in decisions
Acquire knowledge about the organization
Understand financial statements
Monitor organization activities

Example: A board member reviews the quarterly financial report before the meeting, notes a 25% increase in office expenses, and asks for an explanation during the meeting.

2. Duty of Loyalty
Board members must:

Act in the organization’s best interest, not personal interest
Disclose conflicts of interest
Avoid competing with the organization
Not use organizational resources for personal benefit
Not misappropriate organizational opportunities
Maintain confidentiality of sensitive information

Example: A board member who owns an office supply company must disclose this when the organization bids for supplies, recuse themselves from the vote, and ensure fair pricing compared to other vendors.

3. Duty of Obedience
Board members must:

Know and follow the organization’s bylaws
Comply with applicable laws and regulations
Ensure the organization operates according to its mission
Report illegal or unethical conduct
Maintain proper governance documentation

Example: A board member notices that the organization is using restricted grant funds for unrestricted purposes and reports this violation immediately.

Real-World Board Example: Community Health Alliance

Organization Profile:

Annual budget: $1.2 million
Staff: 8 full-time employees
Service area: 3-county region
Board size: 9 members

Board Structure:

Chair: Maria Rodriguez

Healthcare administrator with 20 years experience
Recruited 2 years ago; strong fundraiser
Meets with Executive Director weekly
Time commitment: 12 hours/month

Vice Chair: David Chen

Business manager; leads governance work
Recruited because of governance expertise
Time commitment: 10 hours/month

Treasurer: Patricia Williams

CPA; owns accounting firm
Reviews financials monthly
Identified that organization was overpaying for insurance (saved $15,000 annually)
Time commitment: 10 hours/month

Secretary: James Brown

Retired teacher; detail-oriented
Maintains board materials and records
Time commitment: 6 hours/month

Program Committee Chair: Sarah Martinez

Direct service provider; represents program perspective
Ensures board understands actual program challenges
Time commitment: 8 hours/month

Board Committees:

Executive Committee: 5 members, meets monthly
Finance Committee: 4 members (Treasurer chairs), meets monthly
Development Committee: 5 members, meets monthly
Program Committee: 4 members, meets quarterly
Governance Committee: 3 members, meets quarterly

Notable Board Achievement: Last year, the board:

Developed 3-year strategic plan
Increased fundraising from $180K to $240K
Improved financial reserves from 30 days to 60 days of expenses
Recruited an Executive Director when previous ED retired
Expanded services to 2 new counties

Board Performance Metrics

Effective boards regularly assess their performance:

Attendance Metrics:

Goal: 80% attendance at full board meetings
Goal: 90% attendance at assigned committee meetings
Track: Unexcused absences exceed 2 per year (grounds for removal)

Engagement Metrics:

Percentage of members making financial contributions
Average gift amount
Fundraising solicitations per member per year
Committee participation rates

Financial Metrics:

Board approves annual operating budget
Board reviews monthly financial statements
Board maintains contingency reserve
Board monitors financial performance vs. budget

Governance Metrics:

Board meets required number of meetings (typically 4-6 annually)
Board reviews conflicts of interest annually
Board has formal board orientation process
Board conducts annual self-evaluation

Board Meeting Best Practices

Meeting Frequency: Most effective boards meet:

6-8 times annually (monthly or every other month)
Executive Committee meets monthly
Committees meet monthly or quarterly based on need

Meeting Length: Effective board meetings:

Last 1.5-2 hours (not exceeding 2 hours)
Start and end on time
Include 10-minute break in long meetings
Focus on governance (not day-to-day operations)

Meeting Content:

Consent agenda (routine approvals): 10 minutes
Executive Director report: 10-15 minutes
Financial update: 10-15 minutes
Strategic discussion/decision items: 60-90 minutes
Committee reports: 15-20 minutes
Executive session (if needed, without staff): 10-15 minutes

Assignment: Analyze Your Board Structure

For a nonprofit you’re familiar with (or research one online):

Map the structure: List all board members and their roles
Document committees: Identify each committee, members, and meeting frequency
Assess composition: Analyze demographic and skill diversity
Evaluate officers: For each officer, describe time commitment and responsibilities
Review duties: Find evidence of the duty of care, loyalty, and obedience being fulfilled
Compare to standards: How does the board structure compare to best practices for an organization of its size?
Identify improvements: What structural changes would strengthen governance?

Your analysis should demonstrate understanding of:

How board structure impacts effectiveness
The relationship between board size and mission
Why diversity matters for nonprofit governance
How board committees distribute work and expertise
The legal and ethical responsibilities of board members