All too often in the world of non-profit organizations, an individual becomes a member of a board of directors (or trustees) and attends their first board meeting with little or no substantive background regarding the organization, its mission, their own role and responsibility, and no understanding of their potential liability exposure from serving as a board member. The failure of non-profit organizations to appropriately orient new board members can lead to a poorly informed and even dysfunctional board, which can in turn have disastrous consequences for the organization.
A non-profit organization should ensure that every individual who becomes a member of its board receives an appropriate orientation by the organization prior to attending their first board meeting. The orientation should be a joint effort by both the board and the organization’s management (including counsel) and should, at a minimum, include an overview of the following: the purpose of the organization; its by-laws; the roles and responsibilities of the management team and the board; and a description of the functioning of the various committees of the board.
Ideally, this orientation should include a legal component with particular emphasis on the board’s fiduciary duties to the organization. It is almost inevitable that at some point during an individual’s term as a member of the board, a question will arise regarding their potential liability exposure as a result of their actions or inactions as a member of the board. By having a legal component to the orientation, the organization can, at least in general terms, address this concern. The legal component should include an overview of the statutory protections afforded to board members of non-profit organizations who serve without compensation and should also address the subject of director and officer liability (D & O) insurance.
The orientation should be held separate and apart from the organization’s usual board meetings and all existing board members should be encouraged to attend.
The current economic downturn presents significant challenges to non-profit organizations. A well-planned orientation can be of material benefit in preparing the board to face these challenges.
Become a Fan of The Non-Profit Toolbox on Facebook