Importance of a Board of Directors

There’s a lot of information that goes into a business, and you certainly want to make sure that you’re following all of your State and Federal rules and regulations.  There are a number of steps that you’ll need to go through before you get it off the ground.  Plus you’ll want to seriously think through the entire process of how things will work before you launch.  While you may be really excited about getting your new venture off the ground; the key here is taking the time do to it right.  Slow things down, do your research, and get all of your documents and contracts prepared before you push forward.  The more prepared, methodical, and clear you are in the process the easier it will be to get things going in the beginning.

If you’re building a non-profit make sure to operate it as one.  Nonprofit organizations do not have owners, private business have owners.  Nonprofits have founders. As a founder of a nonprofit you are not allowed to profit or benefit from the net earnings of the organization.  However, you can make money in various other ways including receiving compensation from the nonprofit.  It’s a good idea to make sure you clearly understand all of the rules and regulations pertaining to nonprofits and operations before starting out. Many sports clubs and leagues operate as non-profits.

Aside from the various documents you’ll need to fill out at the Federal, State, and Local level you’ll want to think though the type of people and number that you want on your board. Remember, your board members are volunteers and they need to be aware of and held accountable for their responsibilities. Each board member should fill a need or a role that will benefit the organization.  If the board is too small you’ll overwork your board, while a board that is too big doesn’t give everyone a chance to actively participate.  We all know that person we work with who doesn’t bring value to a project but takes credit.  Avoid that as much as possible. The goal of the board is to enhance the overall mission and operation of the organization. That means they need to get work done.

Each member should have a vested interest (not monetarily, or conflict of interest) in some manner, and be actively working to further the purpose of the organization.  A board that produces nothing is a waste of time, and time is running out to get your venture off the ground and growing.  You can’t afford that, so be very particular about the type of people you who will greatly influence all aspects of your organization. Look for people who have expertise that you need. They should have a passion for what you’re doing and be able to clearly articulate that passion to potential donors, etc. There should be clear job descriptions for each board member, and it should outline the requirements needed to remain a board member.

It’s fairly common practice to have term limits, and to stagger those term limits so new board members can benefit from their veteran counterparts.  To clarify, a board member plays a different role in the organization, and should be different from an employee.  The job of the board should be to ensure that the organization is properly managing its resources, and responsibilities, while actively helping to secure its financial well-being.  While a manager will focus on running the day to day operations of the organization, the board helps manage the bigger picture (goals, mission, etc.) of the organization and make sure it’s achieving those ends.

If you’re going this route take your time. Truly think through the process as much as possible and seek out advice and counsel. Whoever is on the board will have a huge impact on your organization for years to come. It’s possible that you have the resources available to you through your local government agencies to help you through the process of forming your nonprofit and board.  Don’t be afraid to ask the questions, and make sure you set your new organization up to focus on growth.