Nonprofit Board Resources

Nonprofit Operations
Written By Sarah Vogl

501(C)(3) nonprofit boards are required by law to have a board of directors.

The board of directors is legally responsible for the organization. 

The board of directors provides financial oversight, ensures compliance with legal obligations and provides input on the direction of the organization.

History of Nonprofits

    • 1917 Revenue Act allowed taxpayers to deduct charitable contributions

    • 1936 corporations allowed to deduct charitable contributions

    • 1969 501(c)(3) designation created

New Mexico Statutes

Legal Requirements

    • Minimum of three board members

    • Articles of Incorporation (filed with the NM Secretary of State)

    • Bylaws

    • IRS letter of determination for tax exempt status

    • 501(c)(3) must register with the NM Tax and Revenue Department

    • Maintain board minutes and policy decisions

    • Annual reporting requirements: IRS 990, NM-COROS

Duties of Board Members

    • Duty of Care

      • Behave as a reasonably prudent person would

    • Duty of Loyalty

      • Avoid Conflicts of Interest

    • Duty to Manage Accounts

      • Provide financial oversight

    • Duty of Compliance

      • Ensure organization adheres to regulations and reporting requirements of all governing bodies

Key Responsibilities

    • Active participation

    • Planning and goal setting

    • Support the Executive Director/CEO

    • Ongoing board development

    • Fundraising and resource development

    • Enhance public standing of the organization

    • Determine and support the mission

    • Create policy

    • Financial oversight

    • Compliance with legal obligations

Bylaws

    • Bylaws are the policies of the board

    • The board operates within the bylaws

    • Review bylaws every year or every other year to ensure that the bylaws incorporate any substantive changes and keep pace with technology

Executive Committee

    • Is made up of the officers of the board

    • Need to have an odd number, if there are an even number of officers, the board can nominate an additional committee member (process must be in the bylaws)

    • Deals with emergencies and confidential issues

    • Will take action, if necessary, and the full board will ratify the action at the next regular board meeting

    • Can vote as representing the full board in emergencies, but the action must be ratified by the full board at the next board meeting

    • Keeps minutes of their meetings; the minutes are only kept confidential with respect to HR issues

Nominating Committee

    • Tracks board member and officer terms

    • Reviews current board composition for skill sets and demographics

    • Identifies needs or gaps in the board composition

    • Gathers potential names and checks references of candidates

    • Meets with candidates individually to review board job description, commitment to serve, and conflict of interest statement

    • Makes recommendations to the full board for consideration

D & O Liability Insurance — Directors and Offices (D&O) Liability Insurance

    • Boards are legally responsible for the actions of an organization

    • Organizations often have D&O insurance to protect the organization and board members in case of a law suit

    • The amount of insurance depends on the work of the organization and the vulnerability of the clients or constituents

Additional Resources

Sarah Vogl https://sarahvogl.com
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