PERSONAL FINANCE: Considerations when invited to join a nonprofit board

Editors note: In the economy of the Berkshires, nonprofit organizations play a major role.  Board membership offers opportunities for investment of your time, your expertise, and your money.  In this first of two articles, Rob Clarfeld, CPA, CFP®  and Great Barrington resident with extensive experience in helping people achieve their financial goals, explores what you should consider before you join a nonprofit board.

Nonprofit organizations deliver vital programs and services to the community.  The scope of nonprofits includes practically every aspect along the continuum of human existence including the arts, education, funding scientific research, the environment, every aspect of charity and almost anything else you can think of that improves the quality of life for all of us.  In short, nonprofits make the world a better place.  Contributing your time and energy by volunteering to nonprofit organizations is immensely rewarding on many levels.  I’ve done so throughout my adult life and I’ve encouraged others to do the same.

Sometimes, you may be invited to assist with the management of a nonprofit by being asked to join its board of directors.  While certainly an honor and often a flattering acknowledgment of your contribution to the organization, the decision to join a board should not be taken lightly.  Besides being deeply committed to the organization’s core mission, you should consider the following prior to accepting a board appointment.

Why are you attracted to this organization?

Often, there will be several considerations that may attract you to an organization.  You may really like the work they do and have an affinity for the population they serve.  You may have enjoyed volunteering and have made friends among the staff and directors.  Perhaps there may be indirect benefits to joining the board such as: networking opportunities with other directors that may be helpful to your business; productively filling your schedule during retirement; the prestige that often comes with directorships, to name just a few.  All are reasons to consider when deciding whether to join a board.

While there are many valid considerations for committing you time and energies to an organization, ultimately, you decision should be driven primarily by your love and respect for the organization’s work – that’s the main box that needs to be checked off.  Once you move past this hurdle, the other attributes will make serving as a director that much more fun.

Why does the organization view you as an attractive potential director?

I like to bifurcate this question into the generic and the specific – that is, what qualities do organizations seek when recruiting any potential director; and what are the qualities they seek that pertain specifically to you.

Nonprofit boards want directors who fulfill at least one of “the three W’s” – work, wealth, and wisdom. Very few organizations have an abundance of staff, and even fewer employees in management positions.  They’ve come to rely on their directors to expend significant time and energy.  Another truism is that most organizations rely on their boards to “give or get” donations to fulfill their missions.    When joining a board, you should expect to put in hours of work and either (or both) contribute money or fundraise within your business, social and personal networks.  It is important to discuss the extent of both the “work” and “wealth” commitments upfront so expectations are established and mutually agreed upon.

The third W – “wisdom” — can be a bit trickier.  While a prospective director should possess a reasonable understanding of the nature and operations of the organization, it is common for a board to seek directors whose “wisdom” relates to an expertise that is of specific value to its core mission. For example, a medical or research nonprofit may seek physicians and scientists; a theater may seek people from the arts; social services may seek social workers and psychologists, and so on.  Conversely, almost all nonprofits seek attorneys, accountants, and engineers (if the organization has a physical plant) as these areas are major board responsibilities. However, even when a nonprofit is seeking a director to fulfill a specific need, it is important to bear in mind that an invitation to a prospective director is rarely limited to just “wisdom” alone.

Ongoing Expectations

A successful directorship, as with most successful professional relationships, is built upon meeting the other party’s expectations.  A new director is expected to put in hours of effort learning as much as possible about the organization, and his or her expected responsibilities, in order to be able to make relevant contributions.  This means upfront and ongoing discussions with the organization’s staff, management and your fellow directors.  You’ll need to read and understand the board’s minutes; learn about the organization’s ongoing projects; and become a student of organizational responsibilities.  For the latter, there are online resources that are helpful – my favorites are boardsource.org and guidestar.org.

Directors have legal and professional obligations to fulfill. You are expected to be a good citizen in the boardroom and to make every effort to attend meetings, arrive well prepared, and play well with others.  Before you accept a board appointment, you need to understand exactly what you are signing up for.

After reviewing the substance of the mutual attraction, appropriate fit and the responsibilities in connection with joining a nonprofit board, you are ready to seriously consider the board’s offer to join.  But before doing so, as with joining any organization, you should do your due diligence prior to accepting a directorship.  In my next article, I’ll recommend legal, financial and reputational considerations that you should delve into prior to making the commitment to join a nonprofit board.