Beyond Absence: The Unwavering Responsibilities of Nonprofit Directors
Giselle Ayala Mateus
Business Transactions | Trademark, Copyright & Licensing | Advertising Law | Transactional & Litigation Practice
As part of my continuing commitment to contribute to giving back and to keep myself in shape in terms of my legal skills, I am providing pro bono outside legal counsel to a not-for-profit. This hands-on experience has deepened my insights into the practical dynamics of this kind of corporate structure. In delving further into these dynamics, one issue has caught my attention, the imperative need for individuals in leadership roles to have a comprehensive understanding of the full scope and critical importance of their responsibilities. In this blog, I will refer specifically to the role of directors.
Within the sphere of nonprofit leadership, the position of a director carries significant weight. They lead the way and set the example for everyone else working to achieve the organization's mission. Who gets to be a director? Usually, it's the people who started the nonprofit. Often, these are groups of friends or coworkers who want to make a difference in society. However, many of these founders don't fully understand how important their role is.
The director’s responsibilities extend far beyond just attending board meetings; it is a commitment that demands dedication, active participation, and a profound sense of responsibility. Therefore, the act of not showing up is not only misconduct but also a disservice to the organization and its mission.
Who can be a director?
Nonprofit corporation directors don't need special certifications or training. Under the law, a not-for-profit corporation must be managed by its board of directors, who must be at least eighteen years old, and in some cases at least sixteen. In addition to age, any other qualifications must be stated on the certificate of incorporation or the by-laws.
As qualifications are determined by the non-profit corporation itself, there is a significant risk of compliance failure. To mitigate this, non-profits are closely monitored by the Office of the Attorney General. However, supervision alone may prove ineffective.
No-show is a lack of commitment to the mission.
Directors serve as the stewards of a nonprofit’s mission, where simply attending meetings does not suffice. They bear a crucial responsibility to participate and to proactively contribute to the realization of the organization’s objectives and purpose. As custodians of the mission, directors are entrusted with guiding the nonprofit toward its goals, ensuring that its actions and choices are consistent with its foundational principles and aspirations.
No-show may result in a breach of fiduciary duties.
Directors in not-for-profit organizations are bound by essential fiduciary duties:
-????????? The Duty of Care, which requires actions analogous to those of an ordinarily prudent person in similar circumstances. Directors must take proactive steps to keep themselves informed about the not-for-profit operations, achievements, and challenges. It is not enough to review corporate materials or reports, they are also responsible for being present in those spaces where discussion and communication take place. Directors who don’t show up are in no position to make informed and prudent decisions.
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-????????? The Duty of Loyalty, which mandates acting in good faith, putting the interests of the organization first, avoiding conflicts of interest, and making decisions with independence. The performance of these duties requires the director to take an active role in the management and decision-making process.
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Strategic decisions require communication.
Directors play a fundamental role in shaping the strategic direction of a nonprofit organization. Their active involvement ensures the inclusion of critical insights and perspectives in decision-making processes. In other words, strategic decisions can only be based on the information that directors share and evaluate together, making sure that any strategy is aligned with the organization’s mission and goals.
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Showing up improves corporate governance.
Directors play a key role in establishing and maintaining effective governance structures within a nonprofit organization. Their consistent attendance and active involvement are crucial for the development and enforcement of policies that safeguard the organization’s integrity. This includes the responsibility to discuss and approve critical policies such as conflict of interest and non-discrimination policies. The careful consideration and endorsement of these policies by directors is essential to fostering transparency, accountability, and ethical conduct within the organization.
Community representation and showing up.
Directors assume a role as the public face of the nonprofit, acting as ambassadors who represent the organization to the community at large. When directors fail to show up, whether at community events, meetings, or other engagements, it results in a tangible diminishment of the organization’s presence and influence. This absence can impact the nonprofit’s ability to effectively engage with supporters, cultivate partnerships, and connect with the broader community.
Risk management is a hands-on process.
When a not-for-profit director fails to show up, it creates a leadership gap that can seriously affect risk management. Directors are usually the ones who lead the organization in identifying and responding to potential risks. Without their presence, there's no one to guide the team through challenging situations or to make sure that risks are being managed properly. This absence can lead to a lack of direction, causing confusion and potentially increasing the organization's exposure to risks.
In conclusion, the duties of directors within a not-for-profit organization cannot be overstated. Directors play a critical role in shaping the vision and determining the path that the organization will take. Without their active, fervent engagement and commitment to the cause, a not-for-profit could find itself in limbo, unable to reach the ambitious goals it sets out to achieve. Therefore, nonprofits must have directors committed to going the extra mile for them.
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Sources:
National Council of Nonprofits. Board Roles and Responsibilities
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BoardSource. The Guide to Board Member Roles and Responsibilities.
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The Bridgespan Group. From Principles to Practices: Structuring Your Decision-Making Process