A non-profit founder may pay themselves a fair salary for the work they do running the organization. Likewise, they can compensate full-time and part-time employees for the work they do. Non-profit founders earn money for running the organizations they founded.

Ever wondered whether you should use “nonprofit” or “non-profit”? If you’re in the U.S. or Canada, the answer is: non-profit. With the hyphen.

What is a nonprofit organization? A nonprofit organization is one that qualifies for tax-exempt status by the IRS because its mission and purpose are to further a social cause and provide a public benefit. Nonprofit organizations include hospitals, universities, national charities and foundations.

When determining the nonprofit status of an organization, begin by using the IRS Select Check database. The IRS provides an Exempt Organization List on its website. You can also ask the nonprofit for proof of their status. To determine the exempt status of a nonprofit, try to gather as much information as you can.

Yes, a nonprofit organization may create a subsidiary with either a for-profit or a nonprofit structure. In some situations creating a subsidiary may make sense.

A nonprofit is a corporation and, just like its for-profit cousins, nonprofit corporations exist independently of the people who founded them. It is a legal requirement for a nonprofit to have a board of directors. The state in which your nonprofit incorporates has standards for nonprofit boards.

In California, the Nonprofit Public Benefit Corporation Law (the “NPBC Law”) requires such corporations to have the following officers: A president or a chair of the board; A secretary; and. A treasurer or a chief financial officer.

A nonprofit corporation has no owners (shareholders) whatsoever. Nonprofit corporations do not declare shares of stock when established. In fact, some states refer to nonprofit corporations as non-stock corporations.

Yes. A single individual may simultaneously serve as President, Secretary and Treasurer. This is common in small corporations.

Specifically, Directors can be held personally liable based on three fiduciary duties: the duty of care, the duty of loyalty, and the duty of obedience. Fortunately, however, Directors can only be held responsible for breaches of fiduciary duties if the breach is due to recklessness or willful misconduct.

Independent foundations are the most likely to appoint the CEO as a voting member of the board. While it is legal for the paid CEO to serve concurrently as a voting board director or trustee of a charity, state laws differ.

Top 15 Non-profit Board Governance Mistakes

• Failing to Understand Fiduciary Duties.
• Failing to Provide Effective Oversight.
• Deference to the Executive Committee, Board Chair or the Organization’s Founder.
• Micro-managing Staff.
• Avoiding The Hard Questions.
• Insufficient Conflict Management.
• Lack of Awareness of Laws Governing Tax-Exempts.

The basics Just as for any corporation, the board of directors of a nonprofit has three primary legal duties known as the “duty of care,” “duty of loyalty,” and “duty of obedience.”

The board is responsible for hiring, evaluating, and, if needed, firing the executive director (ED). Though not illegal, the board should not be involved in hiring, evaluating or firing any other employee.

5 Essential Qualities of an Effective Board Member

• Dedicated and Committed. Being a board member requires a high level of dedication and commitment to responsibilities that extends beyond attending board meetings regularly.
• Able to lead and influence others.
• Straightforward and impartial.
• Knowledgeable and an insatiable learner.
• Values discretion and confidentiality.

Honesty, integrity, independent decision-making and objectivity are personal qualities that Forbes considers necessary for board members to possess in order to properly fulfill their responsibilities. Serving on a board of directors is a major commitment that should not be undertaken lightly.

Essentially it is the role of the board of directors to hire the CEO or general manager of the business and assess the overall direction and strategy of the business. The CEO or general manager is responsible for hiring all of the other employees and overseeing the day-to-day operation of the business.

The personal qualities of board members are critical to your board’s successful operation. Integrity, competence, insight, dedication and effectiveness are vital.

An effective board of directors provides adequate oversight and keeps the organization moving in the right direction with proper leadership. Organizations can assess a board member’s effectiveness can by evaluating six key characteristics: skills, qualifications, tenure, independence, diversity, and technology.

$300,000 to $500,000

Great boards are those that know what information they need to make decisions, and insist on getting it in the right format, and at the right time. They ensure that the senior management team develops a robust reporting framework, and make sure information presented is accurate, complete, focused and understandable.

Solutions

1. Conduct a strategy workshop.
2. Develop / review a board charter.
3. Develop / review a governance policy.
4. Develop a constitution.
5. Develop a director handbook.
6. Establish a governance policy framework.
7. Improve management skills.
8. Improve our board papers.

5 Tips for Dealing with Difficult Board Members

1. Confront the issue head on…. and in person.
2. Focus on the organization not the person. Ask yourself what will allow you to best meet your organization’s mission and ask your board member to do the same.
3. Use specific examples.
4. Use “I-messages.”
5. Listen.

Here are eight things you should know about the intricate art of building a board of directors:

1. Look beyond your investors.
2. Find a chairman who’s been there.
3. Be transparent and keep communication channels open.
4. Size up your board’s size.
5. Plan for the long run.
6. Avoid applicants actively seeking board seats.