What to consider before you serve on the board of a charity

A friend who works for a charity asks you to serve on their charity’s board. What should you do? Should you automatically say “Yes, when do I start?!” or should you say, “Thank you for the offer, I would like to know more.” The latter is always the best answer, so it gives you time to consider the responsibilities expected of you while serving on a board. Serving on a board for a charity can be demanding but rewarding at the same time. It gives you another way to serve your community while also providing you with useful experiences and skills. However, you should be aware of the responsibilities and obligations to the charity as well as any associated risks with serving.

In that regard, before serving, it is advisable to:

• Closely review the organizational structure of the charity and governing documents such as the bylaws, articles of incorporation, board procedures, conflict of interest policies and the procedures for approving major decisions and transactions
• If employed, determine whether your employer has a board service policy and if there would be a conflict of interest
• Determine if the charity offers errors and omissions coverage for its board. If the charity offers such insurance coverage, consider the limits of the policy
• Review minutes of prior meetings which helps to understand if there is proper governance within the charity and provide insight on how matters are resolved;
• Review financial reports, annual accountings or Treasurer’s reports to better understand income and expenses of the charity
• Inquire if you must have any signatory authority over financial accounts and duties to pay taxes, including but not limited to payroll and property taxes;
• Understand your fiduciary obligations as an officer or director under your state law and the federal tax law under I.R.C. §501(c)(3) for purposes of management of nonprofit and tax-exempt entities
• Understand the expectations, for example, in terms of meeting attendance, review of tax returns, financial statements, budgets or other documents, or other responsibilities, and consider if you will be able to meet those expectations
• Ask what the process is for onboarding or orientation
• What are the fundraising expectations and are you comfortable with them? Sometimes board members are not only required to donate themselves but also reach out to the community for donations

The above checklist can also be used throughout your service on the board. Every board member has fiduciary duties they owe to an organization, such as the duty of care, duty of loyalty and duty of obedience. It is always good practice for all board members to review certain documents, so they are aware of charity’s purposes and responsibilities to be able to properly serve the community.

Each board member owes the charity a duty of care which means that the board members take care of the charity, ensures that there is prudent use of its assets for the charitable purpose the charity was founded to achieve. The duty of loyalty requires the board members to exercise their authority in the interest of the charity and further its mission. They should put the charity’s interest ahead of their own personal and professional interests. Each board member should also comply with the duty of obedience which requires compliance with applicable federal, state, and local laws, adhering to the charity’s governing documents and stay committed to the charity’s mission.

It is also important to understand the ins and outs of the charity to make sure there is no criminal or fraudulent activity that the charity, board members, employees, or other parties are involved in. It is hard to believe that any such activity would occur with a charitable organization, but monitoring of both monetary and non-monetary donations, governmental grants and other funds received by the charitable organization should be accounted for at all times along with holding the board and its members accountable for the services that the charitable organization was meant to provide.

It’s an honor to be asked to serve on a board. But as an officer or director, you should identify your role and responsibilities associated with that role. As always, exercise diligence and follow appropriate procedures.