This article was originally published in our 2021 "Women in the Law" Business Edition.

If you’ve been asked to join the board of trustees of a nonprofit charitable organization, what questions should you ask before you decide whether to accept? If you do, how can you be a good board member? How do you protect yourself from the attendant financial and legal liability? Here’s some guidance on how to approach these important decisions.

Should You Serve?

Before you decide, consider the following:

  • Is this something that you’re truly passionate about? If not, say no.
  • What does the organization need: legal talent on the board? Financial support from donors? A particular skill or expertise? A more diverse board? Do you meet some or all of those needs—and if so, which ones?
  • Are you willing to commit the time and energy necessary to help the organization thrive? If not, say no.
  • Is there a minimum financial contribution expected? If this is not something you can commit to, decline to join. Avoid falling into the trap of thinking you can substitute hard work for an expected financial contribution. Some board members adhere to the philosophy that board members should give (money), get (contributions from others) or get off (the board).
  • Does the organization have directors’ and officers’ liability insurance with a reputable insurer? If you don’t know, ask to see the policy. If you’re told the group has no D-and-O insurance, ask why. And then say no, unless the board chair tells you the board will be getting insurance promptly. While your risk of personal liability as a trustee is quite low, it is not zero.
  • Do the organization’s bylaws provide indemnification for good-faith acts of trustees? If you don’t know, ask. If the answer is no, you know what to do: decline the board’s entreaties.
  • What board committees exist? If you don’t know, ask for a list. Which committees interest you?

If You Say Yes, Commit to the Following:

  • Ask for an orientation to help you better understand the mission and culture of the board. If there is no orientation process for new board members, help create one.
  • Decide which committees interest you and let the board chair know.
  • Show up for meetings.
  • Pay attention at meetings, think clearly and ask good questions.
  • Don’t be obstructionist at meetings, but do ask hard questions as necessary.
  • Make time to understand the finances of the organization, including revenues, expenses, and assets.
  • If you don’t know how to read the financial documents distributed to board members, ask for an explanation.
  • Read the agenda and all relevant materials prior to every meeting.
  • Be a trustee, not a director. Your job is not to micromanage or usurp the role of the chief executive officer but to take a 360-degree view of the organization, set overall policy, and implement the mission.
  • Support the CEO and let her manage the organization properly.
  • Understand the financial expectations if you’re serving on a nonprofit board, and make sure you can commit to those expectations.
  • Disclose any conflicts of interest. The board likely has a conflict-of-interest disclosure form. If it doesn’t, help create one.
  • Maintain confidentiality of all matters discussed during board meetings. That includes when you are conversing with your spouse, significant other, children, or friends.

Mind Your W’s and T’s

What are the essential characteristics of good trustees?

  • Give as many of the “four W’s” as you can: work, wealth, wisdom, and wit.
  • Give as many of the “four “T’s” as you can: time, treasure, talent, and temperament.

Duty Calls

What are your legal and fiduciary responsibilities as a trustee?

  • Adhere to the duty of care—be reasonably informed; participate in decisions in good faith and with the care of a prudent trustee in similar circumstances; be diligent and attentive to the organization’s affairs; and prepare for and attend meetings of the full board and committees.
  • Adhere to the duty of loyalty—act in the best interests of the organization without regard to your own personal or financial interest. Do not usurp an opportunity available to the organization and personally exploit it.
  • Adhere to the duty of obedience—be faithful to the purpose and mission of the organization, oversee compliance with applicable laws, and follow the board’s bylaws and policies.

We Hold These Truths

What are some truisms about all good boards?

  • The board does not intervene in the daily affairs of the organization.
  • The board sets policy; the CEO executes policy.
  • Be a board of trustees, not a board of directors.
  • The board operates at 30,000 feet.
  • Board members exercise their responsibilities by asking good, timely questions, not by running programs or implementing their own policies.

Even Homer Nods

What are some common governance mistakes by boards? In other words, which behaviors should you avoid as a trustee?

  • Failing to understand your fiduciary duties.
  • Failing to provide effective oversight.
  • Micromanaging the CEO, administration, or staff.
  • Avoiding hard questions.
  • Lack of awareness of laws governing tax-exempt organizations.
  • Airing disagreements outside the board room (or Zoom room).
  • Failing to cultivate board diversity.
  • Recruiting board members without due care.
  • Failing to orient, educate, and motivate board members.
  • Failing to document actions of the board appropriately.
  • Failing to review program effectiveness.
  • Failing to evaluate or hold the CEO and leadership team accountable.
  • Failing to evaluate each individual trustee’s performance, as well as that of the board itself.

The New Covid Standards

Are there special rules for boards and individual trustees during a pandemic?

  • Continue to adhere to the fiduciary duties of loyalty, care, and obedience, but ask whether the conventional board structure is serving your organization well in the current environment. If the answer is yes, then continue. If the answer is no, consider reorganizing board committees to oversee and guide the CEO on the most urgent issues and questions.
  • A pandemic makes it even more important for the CEO and board to be partners in communication and decision making.
  • Pandemics and other disasters may call for board involvement beyond that suggested by basic governance principles.
  • Remember than no one size fits all, especially in a crisis like a pandemic.

Conclusion

Board service can be rewarding to the individual trustee and to the organization that needs your talents. Think carefully before deciding to serve; be sure to learn about the organization’s needs and expectations. An honest assessment of your talents, passion, commitment, and willingness to excel as a trustee can be tremendously satisfying personally—and extraordinarily helpful to the organization.

 

Constance H. Baker is managing member of CH Baker Law in Baltimore, Maryland, focusing on health care law and independent school law. She has advised health care clients on medical staff and quality of care issues. She has also been involved in hundreds of peer-review proceedings across all medical specialties, which have required immersion in medical issues and working relationships with physicians and other hospital staff. In addition to her work in health care law, she represents nonprofit pre-K-through-12 independent schools and school associations and advised senior administrators and their boards of directors on regulatory compliance, school operations, corporate governance, and school policies and procedures.