One of the prerequisites to incorporating as a nonprofit organization is to name the members of the board of directors. Effective boards include people who have influence, affluence and expertise which will be of value to the organization. The board members are considered liable for the fiscal and moral operations of the organization and are also expected to be the governing body.
Nonprofit organizations provide cultural, social or religious services to the public. Because their purposes are to benefit the public instead of making a profit, the state and the Internal Revenue Service gives them some important perks and exemptions. However, the organization must document its decisions and operate ethically, legally, and in a financially responsible way. The entity responsible for setting the policy and making strategic decisions to govern the organization is its board of directors. The board meets together on a regular basis which is spelled out in the bylaws and happens at least once a year. It is required that nonprofit organization boards keep a book of minutes in which the various decisions are recorded. In the event that the Internal Revenue Service ever audits the group, the book of board minutes will be read and the decisions recorded there will be compared to the ledgers.
Individual board members may be held fiscally liable for the debts incurred by a nonprofit organization or as the parties named in a lawsuit against the organization. Many nonprofit organizations protect the personal assets of their board members by purchasing board liability insurance. It is considered wisdom not to have a husband and wife sit on the same nonprofit board of directors because each board member carries individual liability for the organization.
While fiduciary responsibility and governance are required duties of nonprofit board members, a typical expectation is to be involved in fund-raising for the organization. Many nonprofit organizations set fund-raising goals for their board members. Because the attributes of affluence and influence are typical of board members, they can introduce the organization to other wealthy members of the community and accompany the development director or the board president on meetings to request donations from their contacts.
Another usual expectation placed by nonprofit organizations on individual board members is that they make significant personal donations to the organization. While the word "significant" is a subjective measurement, that each board member donates to the organization is important. Many grant applications specifically ask for the level of board donor participation, expecting to learn that there is 100 percent participation.
Board members are also expected to give time and/or expertise to the organization. This is why organizations often recruit lawyers, accountants, or subject matter experts to serve on the board. Not only do the board members serve on board committees, they also often contribute to the actual hands-on work of the organization as volunteers.