Improve Your Organization
By Evaluating Your Board of Directors

The information contained in this site is of general nature and should not be acted upon in your specific situation without further details and/or professional assistance

As the number of nonprofits skyrockets, so do the challenges your organization faces. To achieve your tax exempt goals, you need to use every available resource. Your board of directors can be a valuable asset. Ask your­self: Is our board of directors a knowledge­able group willing and able to lead our organization through tough and changing times?

Evaluate your board in the following areas and then take appropriate steps to increase its contributions to your nonprofit.


Board responsibilities fall into legal, financial and operational areas, including:

·        Ensuring that your organization’s mission is appropriate, and establishing policies to carry out the organization’s goals, 

·        Guaranteeing that the organization com­plies with its governing instruments, bylaws and other rules,

·        Reviewing financial and operational per­formance, and

·        Hiring and monitoring key personnel.


Board members should regularly attend meetings to stay up-to-date and familiar with:

·        Your mission and governing instruments, such as articles of incorporation and bylaws,

·        Key staff members, 

·        Contractual commitments made in con­nection with revenue-producing activities, and 

·        Your programs and activities.




Board meetings should:

·        Convene regularly (at least quarterly or up to 12 meetings a year is generally advisable),

·        Start and end on time and work from an organized agenda,

·        Defer items not on the agenda or not urgent to the next meeting,

·        Establish committees to work in key areas such as finance, facilities, personnel and long-range planning, and

·        Have written minutes that contain ade­quate detail about discussions, deci­sions and authorizations.


The board is responsible for annually evalu­ating the executive director’s performance.

Another area for board concern is the threat of intermediate sanctions for excessive com­pensation. This threat imposes greater
responsibilities than ever before. You can assess penalties against board members when unreasonable compensation is found.

The safe-harbor provision that avoids a pre­sumption that compensation is unreason­able requires the board to:

·        Be composed of persons who are not related to or controlled by the person receiving compensation,

·        Obtain and rely on comparable data about compensation, and

·        Document the basis for its compensation conclusions.

The board is also responsible for:

·        Developing job requirements for the executive director,

·        Establishing personnel policies,

·        Electing officers and reviewing their per­formance, and

·        Authorizing officers and staff to make contractual commitments, and establish banking and other relationships.



In the area of finance, the board:

·        Assists with developing and approving the budget,

·        Monitors fund development programs (though procedures vary among organi-za­tions), 

·        Reviews financial statements that sum­ma­rize operations and account balances at least quarterly (the treasurer and finance committee will generally review monthly reports), and

·        Contracts independent auditors and responds to any audit findings.

7 Strategies of a Successful
Board of Directors

No. 1. Look at the big picture. An effective board of directors poses questions and acts on the answers before trouble arises. For example, it asks, “What are the objectives of our organization?” “What are the needs we are addressing?” “How can our organization best serve these needs?”

No. 2. Plan with the end in mind. The budget process is an example of this. When carefully prepared, the budget is a tool to track progress and provide an early warning of needed actions.

No. 3. Set priorities. The board should work from an agenda so that it devotes its valuable time to the right issues. Issues that come up at meetings but are not urgent can usually be deferred to allow proper planning.

No. 4. Provide a growth opportunity for staff while working for the organization’s goals. The organization should strive to meet its goals and, at the same time, provide an opportunity for staff growth, development and service.

No. 5. Understand before acting. During a conflict between the board and the staff or committees, each side should first understand the opposing side’s position and underlying reasons. Also, when a request is made, an effective board first seeks to under­stand the situation.

No. 6. Work as a team. The board’s respon­sibilities for legal, accounting, personnel and program matters require a wide spectrum of
skills. The board should be composed of members with skills and interests in each of these areas and should work as a team to accomplish organization objectives.

No. 7. Keep improving. The board should review the mission statement at least annu­ally to determine if it’s still appropriate. An annual retreat can be a powerful way to refresh and energize the board. Outside speakers can sometimes add to a board’s understanding and ability to serve.

Work Together

Use this list as a tool for evaluating your board’s strengths and weaknesses. Then tackle differences while capitalizing on your strengths.

With a strong board willing to work together, your organization will be better able to achieve its goals.



(c)2001-06 Fraser CPA - Last Updated 05/01/2006

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