It doesn’t matter if your company is commercial (for profit), an S or C Corporation or LLC, a partnership, or a nonprofit it requires clear direction and oversight. This is usually provided by the board of directors or trustees.
Boards of both for-profit and non-profit organisations share the same responsibility. They are responsible for selecting and evaluating a CEO, preparing operating plans, allocating and securing finances, ensuring that the policies are in line with ethical and legal requirements and advancing the mission of the organization. Nonprofits also have the responsibility of pursuing tax-exempt status as well as meeting all legal requirements.
A well-functioning board requires participation from committed individuals with different skills, expertise and connections to ensure a financially sound future. For-profit and nonprofit boards should proactively recruit and reach out to candidates who meet the criteria instead of waiting for prospective members to approach them. develop a simplified process for screening interviewing, deciding and making decisions, and consider the diversity of the candidates (gender, socio-economic background, race, religion, nationality) as a key factor to consider.
Boards of nonprofit and for-profit organizations generally have standing committees that assist them in their various management and governance obligations including audit and compensation (or human resources), governance & nominating, and executive. Other committees are focused on an industry or type such as science and technology, collections and visitors engagement, quality and regulation or public affairs and social responsibility. Board members are expected to disclose potential conflicts of interest, and not vote or debate on issues under their control.
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