By: Benjamin Takis
A successful and well-run nonprofit depends on a strong Board of Directors, and the primary vehicle for Board involvement is the Board of Directors meeting. Yet many nonprofits give little thought to how their Board meetings are conducted and documented. This article reviews some best practices for properly running a nonprofit Board of Directors meetings.
The Directors on the Board must be given adequate notice of upcoming meetings. Procedures for giving notice are usually specified under state nonprofit corporation law and in the organization's Articles of Incorporation and Bylaws. In addition, Directors should receive in advance of the meeting an agenda listing the items to be discussed, along with copies of any materials to be reviewed at the meeting, such as minutes from the prior meeting, amendments to governing documents, financial records, and proposed budgets.
Special care should be taken with respect to financial information presented to the Board. Whenever possible, an organization should consult an accounting firm with expertise in nonprofits to make sure its financial reports are accurate and reported in a way that is easily understood by Directors who may not have a background in finance.
Whether conducted by phone or in person, Board meetings should begin with the taking of attendance and a determination that a minimum "quorum" of Directors is present to allow the meeting to proceed. The precise quorum requirements are generally set forth under state nonprofit corporation law and in the organization's Articles of Incorporation and Bylaws. Next, the Board generally addresses other official items such as the approval of minutes from the last meeting and voting on formal resolutions, before moving on to discuss strategic, fundraising, and other matters.
Try not to let the Board get swept up into lengthy discussions without clearly resolving formal decisions. When the momentum of group discussion takes over, it can be hard to tell what the Board has decided and what it hasn't. Following simple parliamentary procedures is helpful, such as requiring that each decision to be made via a vote on a formal motion made by one Director and seconded by another. This ensures that everybody in the meeting knows exactly what the Board has decided.
"Executive Session," in which one or more Board members discuss a matter in private without a written record, should be used sparingly, and for purposes of discussion only. All formal Board decisions should be documented under regular meeting procedures rather than made during private conversations.
The final steps of any Board meeting are to draft and adopt the meeting minutes. This is a crucial, and often misunderstood process. In the event of an Internal Revenue Service audit or any legal controversy, the minutes will be scrutinized to determine the facts of the situation.
Organizations must be wary of including too few details or too many details in the minutes. The minutes need not (and should not) be a transcript of every statement made during the meeting. The key is to strike the right balance.
At a minimum, the minutes should include essential details like the date, time, and location of the meeting, a list of the individuals present, each decision or motion approved by the Board (including copies of any documents adopted or approved at the meeting), and the votes for and against each decision or motion. The minutes should also summarize the general gist of the matters discussed by the Board. Sometimes it is advisable to include a more detailed record of the Board discussions, but this should be done strategically, when necessary to demonstrate that the Board has complied with the law and satisfied its fiduciary duties. Some situations that usually warrant extra detail in the minutes include the setting of officer compensation, the consideration of conflict of interest transactions, the authorization of committees, and the exercise of due diligence for major business transactions.
Once drafted, the minutes should be circulated to the Board and formally approved (usually at the next Board meeting). The official approved draft of the minutes should be signed by the organization's secretary and kept in the corporate record book.