So your best friend, business partner or mother-in-law just asked you to join a Board of Directors for a non-profit organization. "It's nothing but a few meetings" they promise. But as you probably suspected, its a little more involved than that. Being on a Board is certainly a great way to give back to your community, to meet great business connections, or even build your resume. But if you didn't ask these uncomfortable questions before joining a Board of Directors, you could be in for some scary surprises.
An inextricable part of nonprofit development is centered around the strength of the Board of Directors. Non-profit organizations put a lot of resources into identifying, recruiting and cultivating potential Board members. But the individuals on the other end of the transaction often find themselves without guidance when it comes to vetting Non-profit organizations. While Charity Navigator, Guidestar and GiveWell give us glimpses into the financial standing of the organization, it's hard to know what is relevant, what isn't, and what could give us better perspective before taking the leap.
Sometimes it's a bit uncomfortable being on the other end of the transaction, you feel alternately flattered and pressured. You want to contribute to the community, your sense of altruism is nagging at you, and aside from a few meetings, what's at stake, right? Wrong. Your time is valuable, but there's way more at stake than you might realize. So before you take the leap, here are 13 questions you should ask (and the answers you are looking for.)
1. Can I see your most recent financials including a budget, profit & loss statement and 990's?
This is basic, but it's something anyone with a non-financial background may be reticent to ask for. You need these documents - and someone who knows how to read them - to calculate what the financial picture looks like and what your potential risk might be. If an agency refuses to give you this information (unless they are a start-up in the process of creating and building financial statements) this is a big red flag.
2. How many Board members do you currently have? What is the average tenure? Why are you looking for new ones?
We realize this is more than one question, but the intent is the same. Here you want to find out what the composition of their current Board is and what its turnover is. If you are radically out of step with the rest of the Board you need to know, and ask why they are looking outside their ranks.
3. May I see your current insurance coverages including D&O policy, workman's compensation and liability? How are Board members protected against liability?
This one may make you wince, but it's probably one of the most important questions you can ask. Board members are more than talking heads, you have a fiduciary duty to the organization. You want to make sure that programs are adequately insured against risk and that if a situation gets litigious, you are covered against personal loss.
4. Is there any litigation currently pending against the organization? Has there been in the last 36 months?
Another cringe-worthy question, but it's straightforward enough. While you are unlikely to be held responsible for issues that occurred before your tenure, you need to know what the organizational history is in regards to lawsuits. Lawsuits in and of themselves aren't an absolute deal-breaker, but you need to satisfy yourself that this is not an ongoing issue likely to pop up again in the future.
5. Is there someone else in my industry already on the Board of Directors? Will joining your Board benefit me professionally?
A moment of honesty. Board membership also provides professional opportunities for networking and referrals. If this is of importance to you, it's time to ask. How can Board membership help you in your career or profession? Will it build your rolodex? Connect you to the community? Yield potential opportunities?
6. What is the expectation for give/get? Can I see your Board Contract?
Ask. Ask. Ask. If they don't have a Board Contract, why not? What are your expectations for meetings and participation? Are you expected to fundraise? How much? What would be your minimum financial commitment for joining the Board?
7. Can I take a tour or see your program in action?
You'd be surprised how many Board members have not toured the organization recently, and this is an absolute must. You need to see for yourself the programs in action, see the buildings and have an opportunity to speak with staff and/or clients. This needs to happen before you make a commitment, and again on a regular basis after you've joined.
8. Where does the majority of your revenue come from? What would happen if you lost that stream?
A growing number of organizations are more than 70% funded through only one source. This is a difficult situation to be in, especially if that source is through county or federal contracts. This is not unusual. But if this is the case, you absolutely need to ask the next question....
9. What are your current efforts to diversify your funding streams?
So let's say that there is another recession and county support is cut - How will the organization react? What programs would be lost? What efforts is the organization making to diversify funding through individuals, foundations, contracts and earned income opportunities? How long would they be able to survive if this were to happen. No one expects every organization to have an endowment or huge cash reserves, but an awareness - and action - on this issue is vital.
10. What role does the Board play in strategic planning inclusive of programmatic growth?
There's an awful lot that's being asked of you as a Board member, so how truly are you able to participate in the vision and mission of the organization. While technically the Board is a guide and advisor from 10,000 feet, if you don't get any input as to the growth and direction of the organization, then you need to know and be comfortable with that?
11. What is the succession plan?
If the organization is still under the leadership of a Founder or a long-standing Executive Director, what is the plan should something go awry? With the loss of a key individual sometimes momentum is lost and chaos ensues. What is the organization doing to build against that?
12. Why did you spend $88,000 on travel last year? Why is your staff only paid minimum wage?
Go over those financial statements and ask for clarification on items that jump out at you. Now to be clear, we don't encourage these lines of questioning in every Board meeting, and certainly to a limited audience, but the point here is that you need to clarify items that concern you now before you join the Board and not hope they get answered in your tenure. Ask now and make sure you are satisfied with the explanation.
13. How will I be a benefit to the organization?
Lastly, what does the Board expect your contribution to be to the organization's overall growth and strategic plan? Are they counting on your skills and connections? Looking for guidance in your area of expertise? Do they have a big project they envision you leading? This should be a win-win, make sure that expectation is set forth up front.