Nonprofit Arts Leaders/Board Members: Ready to Begin? Begin What Exactly?

Part 5. Board Members Need Contracts and Job Descriptions. In This Final Part, Can You Create Responsibilities That Fit Your Company’s Needs (Without Resorting to a 34-Year-Old Handbook)?

A volunteer – a nonprofit board member, for example – is an employee that makes $0 per hour. Like any employee, they are subject to guidance, restrictions, and specific responsibilities and outcomes. Unlike almost all employees, however, any review of their work must be conducted by either a peer (a chair or an executive committee, for example) or worse, a direct report (the executive and artistic director). A board member has no boss, per se, except an amorphous blob called “The Community.”

In a US nonprofit, including arts nonprofits, the state charters the company to receive tax advantages in exchange for performing a public charity in a community. Its board members, as governors of the company, have the state-mandated responsibility to make sure the company does not divert from its intended purpose and enter into a profit-making or profit-shielding fraud.

In 2019, for example, the Donald J. Trump Foundation was ordered by a New York (state) court to pay $2 million to 8 charities and to disburse the remainder of the foundation’s assets ($1.6 million) to those same charities. In addition, it was ordered to close operations. The foundation had been using assets to prop up Trump’s 2016 presidential campaign and massive business debts, potentially as a money-laundering operation led by The Family.

Busted. Makes you wonder, given the defendant, if that money has ever been disbursed. Hmm.

Assuming – and this is just an assumption, mind you – that your organization is not fraudulent, this kind of activity takes no real effort. You’ve identified a need, something that is either hurting (or is destined to hurt) your community. You started a nonprofit to tackle that problem. The community, represented by the members of the board of directors, is in charge of making sure that happens in the best possible way.But the community is not a person. Nor does it choose, assign, or review your board members. This is where it gets a little weird. The chief tasker for your board members is the person who reports to your board members, the executive (and sometimes, the artistic) director.

Shall we dance?

It’s a neat little tango. Or maybe it’s a nursery rhyme? Or maybe you believe the person in charge is the board chair. The problem is: if the person in charge is the board chair, then who assigns tasks to the board chair, especially when that selfsame board chair may only be working a few hours a month for the nonprofit? That is why the responsibility generally falls, even unofficially, to the executive director, who then reports to the board, who reports their tasks to the executive committee, which passes it along to the executive director and staff, which reports to the board that tossed the dog that worried the cat that chased the rat that ate the cheese that lay in the house that Jack built.

When you draw up the board’s responsibilities, use a pencil. As times change and obstacles to success present themselves, a board’s most important responsibilities must accommodate those obstacles in a flash.

And, as in the first 4 parts of this series, ask 4 questions:

1. What do board members to do that staff (including other volunteers) cannot do?
2. Why does the company need a board member to do that task?
3. How can we “hire” the best board member to fill that need?
4. How can we ensure that a board member will be as zealous (not “ambassadorial”) in his or her duties as every other employee is expected to be?

Generally, when you answer these questions, you will find that the most important task is not in governance. Governance, like every democracy, too often uses its power to throw sand in the gears of progress in order to prevent a majority from doing good.

Anyone can govern. Can anyone raise money to benefit the needy to whom your organization is catering? That includes arts organizations, which must break the nasty (and absolutely fatal) habit of raising money so that wealthy people can attend productions and exhibitions.

While not fraudulent – at least it has not been proven fraudulent from a nonprofit perspective – it does break the spirit of the nonprofit, charitable tax exception. In fact, every organization has to agree with that concept. Ticket money, for example, is not tax deductible for the buyer, nor are most food and drink concessions, or swag at the gift shop. But somehow, neither is it considered unrelated business income. The loopholes abound in the general accounting of nonprofit arts organization, to the detriment of the entire nonprofit sector.

Why should a member of the nonprofit sector raise 50% or more of its funding using the same machinery as the for-profit version of the same business – and not be taxed for that income? Is that fair to the nonprofits who raise 100% of funding via donation because there is no “show” to sell?

Is it fair to for-profit competitors?

That said, your board should be responsible for what you need. As in previous parts, don’t just pick an archetype board contract to spell out these responsibilities. It’s been 34 years since “The Ten Basic Responsibilities of Nonprofit Boards” was published.

Look at examples of board contracts, perhaps, but for the sake of your company, build the document yourself. And maybe your board contracts don’t have to be exactly the same for each board member. You get to decide, not “fairness.”

Talk about money. Talk about time. Talk about what your company needs. Talk about conflict-of-interest statements. Talk about diversity, equity, and inclusion – not just because it’s in vogue right now but because it’s the right thing to do. Talk about everything. Don’t leave anything about serving on your board mysterious or unsaid. Just as you would in a job interview.

Talk about when to start. Talk about when to quit. Talk about that moment when your company has been such a success that it can close down. Talk about what happens after that.

Your community has a problem. Use art to fix that problem permanently. Use everyone on your team, especially your board members, to make that happen. That’s why your company exists.

Ready?

The is the last (for now) of a 5-parts-in-5-weeks series on building not just a nonprofit board, but your nonprofit board. Please use the content in any of these articles to make your case to make things more equitable. If you need help, just contact me through LinkedIn or via email.

Part 1: Nonprofit Arts Leaders: Is Your Board Broken? How Would You Know If It?Were?

Part 2: Nonprofit Arts Boards: Putting It Together, Bit by Bit

Part 3: Nonprofit Arts Power: As Long as You’re Measuring, Why Don’t You Use the Proper Tool?

Part 4: Nonprofit Arts Boards and Leaders: When You Finally Succeed, What Then?

. . .

Based in Kirkland, Washington, Alan Harrison is a writer and speaker specializing in nonprofit organizations, strategy, and life politics. His columns appear regularly in major publications and here on LinkedIn. Contact him directly at [email protected]. Alan would be delighted to engage with your board or staff.

Alan is always looking for good opportunities to write and consult for nonprofits that need a hand. And, of course, that elusive Perfect Opportunity?.

If you're interested in meeting him, just shoot him an email. In the meantime, please join the 501 (c) (3) Guru LinkedIn group and add your ideas to the brainstream.