What are my responsibilities as a board or committee member?

When you are nominated for or invited to join a Board or Committee of a not-for-profit organisation, ask these questions before you accept.

• What qualifications and experience do I have? What specific contribution can I make to the governance of this organisation?
• What is the purpose of the organisation and are its values compatible with mine?
• What is the likely time commitment?
• How effective is the organisation and the staff?
• Is there a personal financial liability, either real or potential?
• Will I get paid for my time and trouble?
• Is being a trustee different from a member of a Board or committee?

Qualifications and experience

Boards should include people with a range of experience. It may be in:

• the service delivery or particular specialisation of the organisation
• financial management
• legal and compliance issues
• human resources
• general management
• strategic planning
• policy development
• external (community and/or government) relationships
• monitoring
• evaluation and assessment

Some of these skills and competencies may be contributed by staff or be able to be outsourced. Nevertheless, members of boards need to have at least a basic knowledge of each, and preferably a detailed knowledge of one or more.

Think about what you can bring to the particular mix of board members in the not-for-profit organisation.

Purpose and Values

Effective board members develop end maintain a personal commitment to the organisation and its cause. You must be comfortable with the values and priorities of the organisation, whatever its focus.

You must also feel that you will be able to work with other members of the board toward a common goal without the complications that come from negative personal relationships or past acquaintance or involvement.

Time commitment

Most people who are invited to join a board or committee already have other time commitments arising from employment, family, and/or other community involvements including sports and church membership.

It is unwise to take on a further commitment if you do not have the time to fulfil it properly. The organisation will suffer harm in the long term.

Board membership normally includes:

• attending regular meetings (daytime, or evening)
• reviewing and considering agenda items before each meeting
• reviewing minutes following the meetings
• sub-committee meetings
• possible public engagements and meetings
• representing the organisation at consultations with local or national authorities
• being available to the Chief Executive for consultation and advice, and so on.
  

This list is not exclusive, and the requirements of every board differ.

Organisational effectiveness

It is easier to govern an effective organisation than one that is not.

Where there are staff members who are competent and efficient, and who work well as a team, the issues that the board will need to resolve are much less complex than they are in a dysfunctional situation where individual relationships are poor, or where the people for whom the organisation exists are poorly served or dissatisfied with the quality or quantity of work done by the organisation.

Personal financial liability

Members of a board may be personally liable financially if the organisation acts in a way that is not allowed by its constitution. This includes potential costs or penalties for non-compliance with statutory requirements, or for permitting the organisation to trade while it is insolvent or unable to pay its debts.

Personal financial liability is normally less when the organisation is an incorporated entity.

It is possible to insure against many of the risks (director and officer indemnity insurance). The cost of this insurance is usually a personal cost to each director or board member, but may be paid by the organisation in some circumstances.

Some not-for-profit organisations invite significant donors to join the board. In such cases, there is probably an expectation that financial contributions will continue.

Payment

Payment of board members depends entirely on the organisation concerned.

Most not-for-profits will reimburse direct expenses involved in attending meetings (fares, meals and accommodation) on the basis of actual and reasonable costs.

Payments for time or services are honoraria (See tax section)

It is unlikely that you will be paid for your time. Payment for the time involved normally requires special authority in the constitutional document or in the legislation under which the organisation works.

Where an organisation does not pay a board member for normal board activities, it may pay for any special or specialised services provided. These payments should be detailed in the notes attached to the annual financial statements.

Take care that payments made to a professional firm are distinguished from payments made to a member of the firm who is a member of the board.

Trustee

Being a trustee can be materially different from being a board member due to the personal liability:

• as an  equitable obligation liabilities are generally enforceable against individual trustees personally, although the trustees are usually entitled to be reimbursed from the trust where it has sufficient funds to do so.
• If the trust is incorporated, transactions will be carried out in the name of the organisation, and title to property will be held the same way.

If the trust is not incorporated, then transactions and titles may well be in individual names. This has particular problems when trustees change as titles may need to be altered to reflect the change. Anybody accepting a trusteeship should make sure that there are no liabilities for past actions that will fall on the new trustee. Similarly, when retiring as trustee, care should be taken to see that liabilities are properly terminated.     

Organisations offering trustee advice

• United Kingdom Charities Commission CC3 Responsibilities of Charity Trustees
• New Zealand Trustees Association

Links

General governance links

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