The ABCs of Nonprofit Finances
Nonprofit Finance For Board Members
So you have been nominated to sit on a nonprofit board. Do you know a board’s responsibility? What are the financial responsibilities of board members? Let’s first start with the legal duties.
Legal Duties
Three primary legal duties are known as the “duty of care,” “duty of loyalty,” and “duty of obedience.
Duty of Care: Take care of the nonprofit by ensuring prudent use of all assets, including facility, people, and goodwill;
Duty of Loyalty: Ensure that the nonprofit’s activities and transactions are, first and foremost, advancing its mission; Recognize and disclose conflicts of interest; Make decisions that are in the best interest of the nonprofit corporation; not in the best interest of the individual board member (or any other individual or for-profit entity).
Duty of Obedience: Ensure that the nonprofit obeys applicable laws and regulations; follows its own bylaws; and that the nonprofit adheres to its stated corporate purposes/mission.
Duties
Evaluate Executive Director’s performance
Raise money for the nonprofit
Advocate for the nonprofit
Understand the nonprofit’s financial position
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Keeping Accounting Simple
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