Best Practices for Non-Profit Directors

Added by Hawley Troxell in Corporate Law, News on November 30, 2011

It can be easy to forget that non-profits are corporations too, and while serving as a director of a non-profit is rewarding, it also presents similar risks to serving as a director of a for-profit. To protect themselves and the corporation, directors of non-profits need to institute practices to ensure the corporation is properly guided in fulfilling the charitable purposes for which it was created and the directors are properly guided in making informed decisions in the best interests of the corporation.

In our role as legal counsel to non-profits we often advise as to “best practices” for their boards. The following is a list of some best practices that directors should consider implementing for their non-profit:

• Actively encourage all directors to attend board meetings and meetings of the committees on which they serve.
• Provide the board and its committees with information that is relevant, accurate, succinct, easy to understand, and free of technical jargon.
• Allow adequate time at board and committee meetings for members to ask questions and discuss issues.
• Allow time for executive sessions of the board on a regular basis.
• Create an atmosphere at board meetings that welcomes questions and does not shrink from challenges, without encouraging irrelevant digression.
• Enforce a board-adopted conflict of interest policy, which includes requiring board members to leave the room during discussions of matters in which they have a conflict.
• Ensure that accurate minutes of all meetings are maintained and take the time to read each set of minutes before they are sent out to board members.
• Distribute minutes promptly to board and committee members, including those not present at the meeting.
• Ensure that minutes are filed and accessible for future reference and in the event of litigation or a regulatory investigation.
• Create a document describing general expectations for board members (such as regular attendance at board meetings, adequate preparation for meetings, constructive participation in board discussions, disclosure of conflicts of interest, etc.) which is approved by the board, and periodically redistributed to each board member and discussed at board meetings.
• Include discussion of board member duties and rights and the potential for liability in board member orientation meetings and materials, and review such matters periodically at board and committee meetings or retreats or special educational sessions.
• Encourage board member attendance at director training programs offered by outside groups.

If you would like more information about this topic, or other legal issues, please contact us at 208.344.6000 or email corporate@hawleytroxell.com.