Due Diligence

I recently gave a lecture at a seminar series sponsored by my alma mater.  The topic was “A Guide for Potential Board Members:  Due Diligence.”  The room was overflowing with folks eager to learn more about the benefits of serving on a board and the benefits that they could bring to a given nonprofit.   I typically poll the audience informally before I start my presentation, and was very surprised to learn that most of the them had given very little thought as to what the nonprofit should bring to them.

I know they were surprised to learn that volunteering their time on a board is a two-way street, and that they should do due diligence to learn the following:

  • why am I being recruited?
  • how long is my term?
  • what is the work style of this board? Is it a “working” board where I will be expected to fulfill a role that might be done by paid staff in a larger organization? Is it an advisory board, where one gives input but not much else? Perhaps it’s a blend of oversight and hands-on.
  • how and where are meetings held? Are they on site? Across the country, or virtual? How often does the board meet? How is business conducted between meetings? How much time will I be expected to devote to board business?
  • is there a cost associated with attending meetings? Are board members reimbursed for travel expenses? Is there an honorarium?
  • is there an expectation of a specific donation to the organization? Will I be expected to be engaged directly in fundraising?
  • is the organization financially healthy? Is the organization willing to disclose all of its financial information?
  • is there adequate Directors and Officers (D&O) insurance to protect board members in case of a lawsuit or other disaster?
  • does the organization have a good training program for new directors?
  • how formal or informal is the board? Check that against your own preferences and needs.

I also wanted to let them know about the “board member’s Bill of Rights.”

As a board member, you have the right to:

  • full and proper training
  • full disclosure before voting on any issue.
  • a safe and secure environment in which to conduct meetings.
  • to insist that the organization engage outside expertise when needed.
  • that the organization carry sufficient general liability and directors and officer insurance to ensure that the organization and the directors are indemnified against risk.

What should you do if you feel uncomfortable or feel that your rights are being violated? “Resign. If you find yourself on a board that is clearly not a good fit, resign — or at the very least, do not renew your term. It’s better than banging your head against the wall.”

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