Non-profit board member due diligence is a must – on both sides!

A good friend of mine, the CEO of a non-profit organization in Illinois, called me recently to share with me the level of due diligence that she and her staff are putting into board member recruitment and retention.

As a seasoned non-profit professional, she has established a clear board member “list of commandments” and is incredibly diligent in identifying the expertise she desires on the board and then executing a strategy by which she and her management team vet potential board candidates based on their strengths and passion for the organization. I’m thoroughly impressed by her foresight – and agree that more non-profit boards should be this intentional in their selection of board members.

But, there is also a corollary to this conversation: how much due diligence are board member prospects putting into their invitations to serve on non-profit boards? My experience, unfortunately, leads me to believe that not as much due diligence is occurring as should be. Let me explain.

When I’m asked to serve on a non-profit board, there are a few things I evaluate before entering into a formal conversation with the CEO or president.

Number one: Do I have a passion for this organization and its mission? If the answer is “yes!” then I feel comfortable proceeding to the next question. If the answer is “no,” then I step aside to let other passionate community members fill that void.

The second question I always ask: are the non-profit’s financials up-to-snuff? I typically ask for the organization’s 990 form or I source it myself on GuideStar. Important questions to ask before you commit to joining a board:

  • Is the charity financially stable?
  • How diverse is the charity’s sources of funding?
  • Is the non-profit staffed to deliver on its current strategic and financial plan?

If the financials receive a green light, I proceed to the next very important question: is this charity actively fundraising?

If the non-profit is fundraising locally, statewide or nationally – which can be defined by as little as having a “donate” button on their website – my next question is: is the non-profit registered for charitable solicitation registration?

My general belief is that most non-profit board members never ask this question – and it’s a deficit that could make them, as board members, financially liable if the charity is discovered to be soliciting donations without registering! There are 40 states that require charitable solicitation registration, but it’s a little known fact among many board members that the organization’s failure to register can result in board members (and the non-profit) being subjected to fines!

Before you accept the flattering invitation to serve on a non-profit board of directors, make sure to research and ask pertinent questions – including those relating to the organization’s fundraising efforts and charitable solicitation registration. It could save you some money and heartache!

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