The members of the board of directors of nonprofit organizations must be prepared to handle various tasks. The most important is establishing the policies for governance and management that support a nonprofit’s sustainability, and providing financial oversight. They also develop strategic plans and oversee the implementation of those plans. In certain circumstances, they can be held personally responsible for the nonprofit’s liabilities. For example failing to pay withholding tax on employee wages.
In a majority of cases, the board will hire an employee to run the company. The executive director, or CEO, is accountable for hiring, training, and supervising the board and staff. They can also be involved with fundraising activities. The role of the executive director can be a major obstacle for a newly founded nonprofit, and it is often recommended that an experienced board member be the mentor for the first ED/CEO, so they will be able to work with the board to achieve success.
Board members must also ensure that the organization has sufficient funds to implement its programs. This could include personal contributions in fundraising events, as well other philanthropic initiatives. The Board must be knowledgeable of the way that nonprofits present their financial statements and ensure that a clear and efficient system is in place to stop fraud or embezzlement. They must also be able to create and approve an annual budget, and they should monitor how closely the actual expenses correspond to the budget.