Some of your board members have very altruistic reasons for joining your nonprofit’s board. They believe in your mission. They connect with the population you serve. They, a family member, or friend has been the personal recipient of your work. Or, perhaps they’re just selflessly philanthropic, and want to give back, in some way, to their community.

Other board members may have more of a self-interest in your nonprofit. For example, maybe they want to expand their professional network, develop their leadership skills, or grow their personal business.

Whatever the motivation, joining your board shouldn’t be a decision taken lightly. Particularly because, although they’re certainly helping the children, or preserving the environment, or promoting the arts, or saving the animals, they also have very serious legal duties required of them.

According to the National Council of Nonprofits, nonprofit board members must:

  1. Take care of the nonprofit by ensuring prudent use of all assets, including facility, people, and good will; and provide oversight for all activities that advance the nonprofit’s effectiveness and sustainability. (legal “Duty of due care”)
  2. Make decisions in the best interest of the nonprofit corporation; not in his or her self-interest. (legal “Duty of loyalty”)
  3. Ensure that the nonprofit obeys applicable laws and acts in accordance with ethical practices; that the nonprofit adheres to its stated corporate purposes, and that its activities advance its mission. (legal “Duty of obedience”)

To fulfill these important duties, says the Nonprofits Assistance Fund, board members must be able to rely on financial information that is:

  • Accurate
  • Timely
  • In context
  • Appropriate

Does the financial information you provide your board meet all of these criteria?

We recently spoke with one nonprofit CFO who took the necessary steps to make sure he could emphatically answer, “Yes,” to that question.

When Chief Financial Officer of The Atlanta Opera, Paul Deckard, took the financial reins of the nonprofit a few years ago, he says its legacy fund accounting software was outdated and in desperate need of replacing. “Our board wasn’t getting timely financial reports – they were seeing numbers that were 90-plus days old,” says Deckard. “Consequently, board members weren’t getting a clear picture of our current fiscal health, and forget about trying to do any meaningful forecasting.”

He quickly went to work selecting a modern fund accounting system that could provide clarity around the opera’s fiscal condition, which allowed management to monitor the progress of operations in real-time, expand programming, grow its operating budget, produce significant results, and clearly illustrate these accomplishments to the board.

Read all about how The Atlanta Opera was able to provide clarity around its financials, enabling its board members to meet their legal obligations in this nonprofit’s success story.