The role of board of directors cannot be ignored because it governs a charity as a body. It is upon the board of directors to manage the organization’s affairs as per the fiduciary duties laid down by the non-profit corporation law. With the key role of these director’s being stewardship, being loyal and being caring along with deliverance of duties with trust is an essential.
The duty delivered with due care involves the board acting with proper judgment based upon informed decisions and common sense. The directors need to competently utilize their power keeping the charity’s interest at heart. This means that that they must participate actively and enquire reasonably. To participate actively the board must remain current in terms of performance and dealings of a charity. Consequently the directors’ should attend meetings and evaluate reports that the senior management has submitted. Directors need to be individuals with a capability of making decisions with regard to issues affecting the charity.
Loyalty is also one of the crucial aspects of the duties delivered by the board of directors. The role performed by the board of directors in this case is to deliver loyalty that is undivided and acting keeping in view the organization’s interest. It is not guaranteed that directors will personally benefit from the information that they gain through their positions. When a director achieves benefits that are undeserved, he is penalized by IRS. Charities are advised to have policies that are written to avoid conflicts of interests.
The next duty of the board of directors is towards obedience. The directors are expected to obey federal and state laws related to charity when conducting their business. Others that are included are IRS regulations together with requirements for income tax filings, state registration regulations and charitable gaming laws.
The organization’s effectiveness and health is the responsibility of the board. The main duties here include establishment of policies and objectives, approval of strategic plans, management of financial resources and selection and evaluation of senior staff. It is also the role of the board to enhance the public image of the charity and to evaluate its own performance. Among the important tasks of these boards is selection of the CEO whose responsibility involves supervision of the organization’s daily operations.
It is upon the board to maintain corporate records. In addition, they would also be required to amend bylaws of the charity whenever needed. Minutes of meetings of regularly scheduled and annual general meetings need to be maintained.
In terms of liability, board members that are volunteers are protected by the law through what is termed as qualified liability. When they violate the role of board of directors, no one can take them to court. However, in many states, protection is only offered when the legal status of the organization has been appropriately maintained by the board. Such a board also ought to have complied with every legal requirement. When the federal tax law has been violated by a charity organization, the directors may assume professional liability through IRS.