Q&A #4: Who is in Charge of a Nonprofit Board of Directors?
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- เผยแพร่เมื่อ 28 มิ.ย. 2024
- Did you ever get so frustrated with a front-line worker at an establishment that you went full “Karen” and asked, “Who’s your boss?” Come on, admit it. You know you’ve done it, or at least been sorely tempted to. Well, today we’re going to dive into a version of that questions...” Who’s the boss?”
Nonprofit Questions and Answers... ANSWERED by Founder and CEO of Foundation Group, Greg McRay. Today, Greg answers viewer submitted questions submitted in the TH-cam comments and through our www.501c3.org website. We receive tons of questions, every day, from people all across the country, needing help with their nonprofit compliance. Today, we tackle those issues head on.
Today’s Topic: Who is in charge on a nonprofit board of directors?
GOT A QUESTION?! Let us know in the comments. Your question could be answered in the next installment of Q&A with Greg.
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•VIDEO: Nonprofit Bylaws - The Dos and Don'ts • Nonprofit Bylaws - The...
•VIDEO: Can a Nonprofit Hire a Board Member? (Maybe or Maybe Not!) • Can a Nonprofit Hire a...
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0:00 Introduction
1:05 Question
1:59 Board Structure
2:25 Answer
3:38 Conclusion
GOT A QUESTION?! Let us know in the comments. Your question could be answered in the next installment of Q&A with Greg.
Should your ED be at all meetings or just occasionally? The board requires written reports but what I am finding is the ED seems to take over the meeting and there is a couple of board members that get into chatting back and forth with the ED. Until joining this board I have never worked where a ED was involved. If we had a question it was always directed to the Chair or President and they either answered or turned the question over to the head of that committee.
I'm feeling that the ED controls the meetings and that is not what I considered the way it was. I previously thought the ED was hired to put in place what the board directed. Currently I'm feeling the board is doing what the ED wants not the other way around. I'm at the point of resigning as I'm feeling that as a Board we are not doing what we were elected to do. Our meetings continually run into a couple of hours and personally feel that we have accomplished nothing. The meetings are monopolised by the ED and two other Board members. Our President tries to reign in the babbling but as the rest of us she has a hard time butting in.
Great Q&A Greg, and to spell it out in plain English, there is NO hierarchy within the board of directors. The whole entire board will be held liable in criminal and civil cases if cases should arise. There is NO board treasurer or secretary or any other management position when it comes to the board of directors. The only ceremonial positions are Chairman and Vice Chairman. I would suggest your listeners also read Roberts's Rules of Order and briefly read Sarbanes Oxley on board structure and requirements to be on a board. Also, in conclusion, the aforementioned position of Chairman only breaks a tie when it comes to voting, they normally do NOT vote unless there is a tie and companies should rotate the chair position every 90 days as a recommendation.
Questions: for profit companies, shareholders vote in or out board members. However, for nonprofit organizations, who vote in and out board members? In the case of OPEN AI, who has the power to hire or fire board members?
For nonprofit organizations, where do their profits go? Bonuses to management and employees, reinvest in their business and share among themselves?
Thanks in advance.
The first part of your question hinges on governing structure. In a board-run organization, the board nominates and elects fellow board members. In a member-led nonprofit, members nominate and elect board members who represent them. This is similar to the shareholder scenario you mentioned in business. The bylaws usually spell out how it works in any given nonprofit.
In the nonprofit world, we don't call them "profits", but rather, "surpluses". Generally speaking, surpluses stay in the organization to fund future needs, pay down debt, etc. They don't get distributed to individuals. It's not illegal to reasonably bonus employees, so long as no one on the board is bonusing themselves as an employee AND the bonuses are not beyone reasonable compensation. But, said bonuses need to be built into the budget, not arbitrarily given out because of a surprise surplus.
✅excellent! Thanks!
I have a private non profit that donate what is the 5% rule? and can I give money to families in need directly? and set up a scholarship for a kid with high grades and low finances?
If you have a private foundation, you can satisfy the 5% distribution requirement by giving to other charities or even individuals in need (benevolence). However, don't start handing out scholarships just yet. The IRS requires private foundations that are planning to give scholarships to get pre-approval of the plan from the IRS before you start.
Question: I read that miles drivenwhile volunteering for a nonproft may be reimbursed at a rate which changes every year, as well as other expenses they would write up in a reimbursement request. Does this priveledge have to be in the bylaws and recognized by the board or is it a federal rule that applies to all nonprofits whether the board votes on it or not? Great videos! Thanks!
It is a federal rule, but not in the form of a requirement. Rather, there are rules in place should a nonprofit CHOOSE to reimburse volunteers for expenses, including mileage costs. I don't recommend polluting your bylaws with any of this. It's better to draft a Volunteer Reimbursement Policy as a management document that spells out how your nonprofit will reimburse such volunteer expenses. For what it's worth, the mileage rate for volunteers is 14 cents per mile, and it's been pretty stable there for a while.