What Is the Purpose of a Non-Profit Board?

Non Profit Board of Directors

Jan 05

There are a number of misconceptions about the purpose of an executive board in a non-profit organization. Many people assume that non-profit boards do not need the same level of attention as those of for-profit organizations. The truth is, however, that a board of directors is equally important in all sectors. Without the oversight of the executive board, a non-profit organization would struggle to fulfill its most basic goals.

Below we’ve outlined the actual duties of a board of directors for a non-profit.

Draft key corporate strategic aims and corporate policies. The executive board is responsible for monitoring and anticipating all the opportunities and challenges of an organization. Such planning can have a significant impact on the future of the company, and without the board’s support, company management will be constantly putting out fires instead of moving forward.

Oversee the overall health of the organization. The board of directors is responsible for the fundamental elements of an organization, including the business model, structure, integrity, and financial health. This does not include making day-to-day decisions and getting approvals: those duties belong to the manager.

Steward existing resources. It is the board’s job to oversee the use of all existing resources so that the organization can fulfill its long-term objectives. The board evaluates general operations, staffing, and budget cycles. This includes budget forecasting that will help to secure investments and build future capital.

Evaluate new initiatives. The executive board reviews the feasibility of new projects and evaluates if moving forward would be a good idea or not. This includes a certain level of risk assessment.

Authorize important transactions. Board members collectively authorize any and all important transactions within the organization, such as a transfer of resources within an organizational partnership.

Oversee company management. Similar to a for-profit corporation, non-profit boards have the power to oversee company management and make decisions about leadership within the organization.

In both for-profit and non-profit organizations, executives are limited in their interactions with the board. Each board elects its own manager, called the chair, to run the meetings, set agendas, manage member participation and responsibilities, and receive reports from executives, out-sourced professionals, and independent consultants. It’s important that the board of directors has time to review certain items away from company executives so that the board can maintain the organization’s best interests as a whole.

Ultimately the board of directors is the engine of a non-profit organization, and it must be well maintained in order for the organization to realize its mission.

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