For young organisations, setting up a board can be a daunting task. If we banish the idea that board meetings are time-consuming, unproductive and likely to end in power grabs or bickering, then we can start to look at the real benefits of setting up a board. A board of directors can act as an advisory committee and bring a wealth of experience and know-how to young companies, or provide an alternative perspective to established non-profits
Who Can I Choose?
Choosing a board of directors for a nonprofit is an opportunity to expand the skills and expertise available to you. The most important thing to remember is to build a board that is disparate and diverse. We tend to surround ourselves with people who think like us, act like us and even look like us, so it’s important to choose a board of directors from a wider candidate pool. Think about the skills you are lacking and go from there.
What If I Appoint From Within?
Many nonprofits will appoint existing employees and volunteers to board positions, but it’s important to note that accepting a position on the board of directors will have an impact on their employment rights in accordance with UK employment law. This needs to be made clear to employees before they accept a position on the board of directors.
Are There Any Restrictions?
The most important thing to remember is that your board should be made up a diverse set of people who will help to grow your nonprofit. The only restrictions against appointing a member to the board is if they have undischarged bankruptcies or if they have been disqualified from acting as a director. You should also make sure that they can meet the time commitments required.
What Responsibilities do Directors have?
When appointing your board of directors, you must make sure there aren’t any conflicts of interest, as it will be a legal requirement that they avoid in direct or indirect conflicts of interest in future. Directors are responsible for promoting the success of the company and for ensuring the nonprofit is compliant with company law. Appointing a lawyer to your board of directors is an efficient way to ensure compliance.
The Different Kinds Of Board Members
There are different kinds of board members that can make up your board of directors.
A director is a person appointed to sit on the board, and these can either be inside directors or outside directors. An outside director is someone with no connection to the organisation, while an inside director is someone from within the company or someone with previous involvement with the company.
An executive director is someone who sits on the board of directors but is also an executive within the company and is sometimes used as another term for the CEO. when working with nonprofits, you might be more familiar with the terms trustee and advisor.
Trustees are given powers of administration over the company. In terms of nonprofits, a trustee is an unpaid volunteer who acts as a legal guardian and carries out fiduciary responsibilities. Advisors offer strategic advice to an organisation. They will help a nonprofit to identify opportunities and risks to ensure growth.