October 10, 2014; Wall Street Journal
When you’re asked to join a nonprofit board, it can be a heady experience. There’s a nonprofit organization that thinks that you have something to contribute to the organization—hopefully more than your checkbook, though that is often part of the bargain.
Veronica Dagher warns in the Wall Street Journal that you might want to be cautious about that nonprofit board invitation, citing personal and professional risks. For example, a board might be considered negligent if the organization doesn’t properly pay payroll taxes for its employees, says Kirk Hoopingarner, a Chicago-based attorney. He also warns about board members being held personally liable if an employee challenges a firing on allegations of discrimination. He and others suggest that prospective board members should check on the organization’s directors’ and officers’ liability insurance policy. Hoopingarner even suggested that board members might want to purchase their own personal D&O policies to supplement that of the organization.
But board membership requires so much more than just watching out for the board’s or your own personal liability. As a board member, you’re part of the team that is interpreting and shaping the mission of the organization and helping ensure that the staff translates that mission into strategy and action. You’re also an ambassador of the nonprofit in the community, expected to use contacts and networks and community interactions for intelligence gathering, ensuring that the organization is fully aware of everything that it has to be. You’re supposed to be exercising thoughtful judgment to guide the organization and utilizing your community networks and connections to ensure that the nonprofit hears and knows what it should as feedback from donors and constituents.
Too often, board membership is equated with volunteering, but it’s quite different. When you’re asked to join a nonprofit board, you’re asked to govern an organization—and in more ways than financially. Being asked to govern an entity is truly a heady experience, and you should be honored if you’re asked to join. Then, you might want to ask what you bring to the table, what you should expect of yourself as being part of its governing board, and whether you’re up to the challenge. That’s not a matter of D&O insurance, but preparedness to oversee a 501(c) tax-exempt organization on behalf of its community, its constituencies, its clients, and the people of the United States.—Rick Cohen