Set up a NonProfit Board of Directors

Establishing your NonProfit Board of Directors is one of the necessary tasks that should not be overlooked in its importance to the success of your Organization- both during the filing period and into the future.

Your NonProfit Bylaws will stipulate who will serve on your Board; often this will be the Officers of your NonProfit Organization and any additional Directors as your Bylaws stipulate. There are some very simple guidelines to follow when forming your NonProfit Board of Directors and they are outlined here:

  • Start with a minimum of 3 Directors. While some states allow you to establish a NonProfit Board of Directors with less than 3 persons serving, it is in almost all cases most desirable to have a minimum of 3 different persons serving on your NonProfit Board at all times.
  • Select Directors who bring positive qualifications to the NonProfit Board of Directors. It’s logical to fill the roles of the Directors on your NonProfit Board with persons who have some educational, occupational, or some other experience that makes them a good fit to do serve on your specific Nonprofit Board and in the duty they are performing. For instance, if you are establishing a NonProfit Board of Directors and considering the Organization’s Treasurer, it’s a plus for the strength of the NonProfit Board to select someone with accounting or bookkeeping experience.
  • Limit Family Relationships on the NonProfit Board of Directors. While there is not a hard and fast I.R.S. rule excluding a second or third person related by family or marriage serving on the same NonProfit Board of Directors at the same time, the I.R.S. suggests to new applicants that they prefer non-familial Boards of Directors. The reason for this is logical- the voting control of any NonProfit Board of Directors is best without strong influences like blocks of family members. Your NonProfit Board of Directors is likely to look much different in 5 or 10 years than it does at conception, and the more you establish good rules for that NonProfit Board of Directors eligibility, the more likely the NonProfit Organization will be able to function effectively in future generations of the Board.
  • Leave Control of the NonProfit Board in the hands of uncompensated Directors. Similar to the obvious benefit of having non-family members in a controlling majority, a NonProfit Board of Directors is stronger where the Directors who are not receiving compensation for services performed for the Organization hold a majority of votes. It is understood that the management of your Organization may require and benefit by providing compensation for some Directors, but generally it is favorable to balance those paid Director votes against a greater number of Directors who are not receiving any compensation from the NonProfit Organization.

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