By Shouka Rezvani
The nonprofit community has weathered an ongoing cascade of operational, environmental and economic challenges over the past few years including lockdowns, wildfires, protests, and economic upheaval. As we navigate a new set of unknowns with the emerging COVID-19 variants, there is a healthy mix of caution and optimism in the nonprofit sector. Many amazing organizations were forced to cease operations in the past 18 months, while others have emerged stronger than before. Oregon’s nonprofits have long held a significant role in our state’s job market. More than 21,000 registered nonprofits pay billions in payroll and account for about 10% of the state’s total employment. From single employee endeavors to sophisticated international operations, they support every industry and cause imaginable throughout our rural and urban communities.
We are in a new cultural and economic environment and it is a great time to get involved with a board as a director, an advisor, or a committee member. Donors want to see more diversity and inclusion in staff and leadership. Competition for grants continues to increase. State and federal aid is uncertain. As always, funding is a top priority, but vital and effective governance is a close second. Organizations across the spectrum are actively looking for board members to bring diverse viewpoints, fresh perspectives, and expertise to realign their operations, outreach, and services to meet the evolving needs of the community. The pandemic has changed so much about how nonprofits approach service delivery. Organizations have had to shed outdated operational habits and embrace new modes of fundraising to survive.
What hasn’t changed are the federal and state laws governing nonprofits. Even in these unusual times, board members have fundamental duties and are obligated to adhere to legal requirements. Their role is to steward a nonprofit by actively participating in the governance of the organization, fulfilling fiduciary duties, staying informed, and keeping the nonprofit’s mission at the forefront of its activities. As a board member you have the opportunity to serve the community, make meaningful connections, amplify a mission that you are passionate about, and share your expertise. Before you commit to a board, ask yourself these questions to gauge whether you will be a good fit.
1. Why are you seeking a board role?
Examine your motivations for joining a board. Are you committed to the cause, or just enhancing your resume? These are not mutually exclusive motivations, but you need to ensure that your primary driver is benefitting the nonprofit. Joining a board involves commitment and dedication, and without that your experience will not be fulfilling.
2. What are the organization's expectations with respect to your service?
If you are expecting a counseling role and you are asked to participate in fundraising, will you be motivated? Having a clear understanding of the type of board you are joining will help set expectations. Ask the organization what their expectations are for the role you are assuming in terms of expertise, time commitment, donation or fundraising expectations, and the duration of service. The nonprofit should be able to explain their hopes and expectations, and hopefully they align with yours.
3. Is the organization committed to diverse leadership and staffing?
A nonprofit should be keeping in mind that diverse perspectives add to its strength and resiliency, especially (but not only) if the organization serves a diverse community. Diversity can come in many forms, from race to age to gender identity to professional background to experience. Is the organizational leadership committed to diversity? If not, why not? Asking about the current board composition may also provide you with relevant information about the people with whom you might be spending a lot of time if you elect to join the board.
4. Do you understand your liability as a director?
Generally, volunteer directors have limited liability for acting as such. That said, there are some key things you might want to confirm that an organization has in place. These include Directors and Officers (D&O) liability insurance, Whistleblower and Conflict of Interest policies, and clear governing documents and financial statements. If your organization can't provide you with its governing documents, financials, and such policies, it may not be following them. This creates liability both for you and for the organization.
As a director you will have the fiduciary duty to know generally what the organization is supposed to be doing, and if it is doing it. The website of the Charitable Activities Section of the Oregon Attorney General's office has resources to learn more about your general legal obligations and considerations as a board member. Watch for activities that may need further evaluation—is the organization engaged in lobbying activities? Especially in these politically-charged times, pause to consider whether the organization follows the IRS lobbying restrictions imposed on charities.
5. Is the organization facing any special legal or other challenges currently?
The answers to this question can be eye-opening. If the organization is seeking new board members because all of the previous ones have resigned, there is a lawsuit pending, or a significant public relations gaffe is soon to be revealed, you might want to know in advance. This will allow you to evaluate whether you want to help the organization navigate its troubled times or simply avoid involvement.
At its best, serving a nonprofit organization can be emotionally rewarding. By asking the right questions you can evaluate whether doing so is right for both you and for the organization.
Contact an attorney in our Nonprofit Organizations Practice Group if you have questions on these or other issues.