United States: Risks And Rewards Of Serving On A Nonprofit Board: Things To Think About Before You Say "Yes"

Studies have found adding women to corporate Boards of Directors improves corporate governance. Although still a minority on public company Boards, women are well represented on nonprofit Boards, where they build strong relationships and business and leadership skills. Nonprofit Boards especially seek out women with legal and financial backgrounds. But a word of caution before you say "yes": Understand your responsibilities and risks as well as the rewards.

Know Your Responsibilities

In many respects, service on a nonprofit Board parallels service on a corporate Board. A director is required to act as a prudent person (duty of care), to faithfully pursue the interests of the organization rather than any personal or other interests (duty of loyalty) and to further the organization's mission (duty of obedience). Specific responsibilities may include supervision and compensation of senior management (and succession planning), monitoring finances, approval of the budget, strategic planning, and formulating short-term and long-term goals that further the mission. The smaller the nonprofit, the greater the likelihood that the Board members will be expected to "roll up their sleeves" and take a hands-on role. Service on the Board's audit and executive compensation committees requires specialized skills and oversight.

Understand the Challenges

Just as a corporate Board must reassess budgets during times of financial uncertainty, a nonprofit Board has comparable challenges as charitable giving declines during these times while the need for services increases. Ancillary legal issues arise. For example, any reduction in staff requires compliance with employment laws. Although rare, nonprofit corporations may file bankruptcy. In at least one case, when a nonprofit failed to qualify for tax exempt status, donors who were denied a tax deduction for donations formed a class of creditors in the organization's bankruptcy. In that case, the judge was unsympathetic to the requests of Board members for releases from liability under the organization's plan of reorganization.

Do Your Due Diligence

Due diligence is always recommended. Ensure that you support (or better yet are passionate about) the mission. Insurance protecting the organization, as well as indemnification and insurance to protect the Board members, should be sufficient to cover foreseeable risks. Review the financial statements, understand any litigation or potential claims against the organization or its Board, and ask about any financial, managerial or legal difficulties, both current and historical. Most importantly, inquire specifically about expected levels of personal financial support of the nonprofit and its fundraising expectations of you. Nonprofit Boards depend on financial and fundraising commitments from Board members, with approximately 68% requiring personal contributions and 40% providing a "suggested" minimum donation.

Involve Your Employer

Individuals should disclose to their employer their interest in joining a nonprofit Board to keep open lines of communication and check for any conflicts of interest, and also because the information may be required by the employer's D&O insurance carrier.

Fortunately, many employers encourage employees to take leadership roles within nonprofit organizations, and may provide matching donations and other forms of support.

Watch for Conflicts of Interest

Know the organization's conflict of interest policies, watch for potential conflicts of interest, and disclose conflicts or abstain from Board decisions when appropriate. Conflicts can arise if the Board member, a family member or an employer has business dealings with the organization or receives other benefits. Professional conduct rules can also apply. For example, a Texas attorney serving on a nonprofit Board should not participate in a decision that would violate obligations to her client, or have a material adverse effect on the representation of any client of the nonprofit organization whose interests are adverse to her client. An attorney Board member should provide legal advice only in areas of professional competence.

In the boardroom, preserving legal privilege may depend upon whether a communication was offered in the capacity of board member or as legal counsel to the nonprofit—and whether the meeting minutes clarify the difference.

Understand Risks Created by Volunteers

As a result of increased litigation, many nonprofits have stringent screening for prospective volunteers and supervision for volunteers to protect the volunteer as well as the nonprofit. Volunteer policies include screening (i.e., criminal, credit, motor vehicle and child protective services records), written procedures (such as a volunteer handbook), training and, if necessary, dismissal of volunteers who exceed authority or act improperly. Nonprofit Board members have been targets in lawsuits alleging negligent screening and supervision of volunteers.

Monitor Legal Risks and Protections

Nonprofits face their share of compliance requirements in such areas as fundraising, internet use, tax exemptions and employment. On a positive note, the federal Volunteer Protection Act of 1997 protects volunteers from liability for unintentional harm they cause while volunteering, although certain types of claims are excluded, such as claims against the volunteer by the nonprofit, sexual harassment, or the volunteer's operation of a motor vehicle. Coupled with a suitable D&O policy, volunteer laws provide some comfort.

Rewards of Service

Studies show that helping others makes us happy, a fundamental reward of nonprofit service. Service on a nonprofit Board offers other benefits. "Giving back" through board service provides a common ground for strong friendships and broader community involvement, as well as business relationships. Leadership skills developed on nonprofit Boards translate well into business settings.

Broader Impact

A final statistic and comment: Women comprise 45% of nonprofit Boards but only 17% of corporate Boards. This gap suggests that nonprofit organizations can serve a valuable role in identifying and training women Board members. The experience and impact of women who serve on nonprofit Boards steadily increases the pool of business and professional women well qualified to join corporate Boards.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions