You have your mission statement, your organization’s name, and a great idea for a nonprofit...You’re almost ready to roll! Except, you are stumped on who should be on your board of directors. Every organization is different, therefore all boards are comprised differently. However, be sure to avoid these common mistakes people make when choosing people to serve on their organization’s board of directors.
- Make sure that the majority of your board is not comprised of family members
The most common mistake people make is comprising their board of all, or a majority of, family members. This is an issue for a number of reasons. Most importantly, it raises major red flags for the IRS when it comes time to review your tax-exemption application. If your board consists of all family members, the IRS is going to assume there is a conflict of interest, primarily with the organization’s finances. While you can certainly still have family members on your board, just be sure that they don’t make up the majority of your board.
- Choose qualified board members
Often, people will comprise their board of directors of a combination of family and friends. While this is not necessarily a bad choice, it is not always the best choice. You should be aiming to fill your board with people to have expertise on a variety of different topics. This might look like recruiting an accountant to serve as your treasurer, or a lawyer to handle the compliance aspects of the organization. Surround yourself and your organization with people who can bring something to the table and provide input that you might not be knowledgeable about.
- Appoint an odd number of people to your board
The final mistake that people commonly make when building their board of directors is having an even number of people serving on their board. This is not considered good board management practice because the board often reaches decisions through voting. If your board has four people, then you will continually have votes ending with a tie, which leads to inefficiency and important decisions not able to be reached.
These mistakes can be easily avoided by putting some research and thought into the creation of your board. To summarize, don’t just pick your friends and family because they are your friends and family, do some research and reach out to people who you feel will be an asset to both the board and the organization, and have an odd number of people serving on your board of directors. Once you’ve got all that down, you’re ready to roll!