Four Signs You Need Board Training
Board training is crucial to the health of a nonprofit organization. As the leaders of the organization, a well-informed board of directors sets the foundation for all aspects of the organization. Continual training for these organizational leaders is crucial as governance and corporate management regulations change.
The IRS knows that strong governance leads to strong financials, and they now review the two practices alongside each other when auditing nonprofit organizations. This means that the nonprofit must maintain a healthy working board that understands the importance of all aspects of the organization- not just the main talking points.
While consistent annual board training is our recommended best practice, we know that not every nonprofit organization follows that guideline. Here are four signs that you need to schedule a board training right away, whether you already have annual training in place or not.
1. Board members have a “we’ve always done it this way” mindset
If a board member is using past practices to justify how something is done, it’s time for another round of board training. The IRS continually updates requirements and practices for nonprofits. The correct way of doing something several years ago (or even last year, in some cases) may not be the correct way now.
The IRS has a governance check sheet that is used by agents when auditing organizations. This document can be helpful for nonprofits who want to double check their current governance practices or use it to guide components of board training. Be sure that the training your board receives covers all aspects of this IRS check sheet.
2. Your organization uses grant funding
When you are awarded a grant, you are being trusted to use other people’s funds to serve a common good. Grant programs, whether through the federal government or through private grant-making organizations, require a high level of accountability to ensure the funds are used properly by each organization.
Many grant applications now ask about board training to help ensure proper management of the organization and any funds awarded. Not only do they want to see the date of your most recent board training, but they want to know that your board is receiving training on a regular, ongoing basis.
3. Board members are acting outside their duties or the bylaws
Whether due to the lack of previous training or simply a busy board member who doesn’t remember all the details, a board member who doesn’t understand their duties needs training.
Boards have a fiduciary duty when making decisions for an organization. State law often protects boards from legal repercussions when acting within the scope of their fiduciary duty. However, if a board member doesn’t understand their fiduciary duty or is acting outside of that duty, it creates risk for that individual and the entire organization.
“State law often protects boards from legal repercussions when acting within the scope of their fiduciary duty.”
The bylaws of the organization are considered a legal document and boards must follow them. However, if they are not trained or have forgotten aspects of their training, they may unknowingly be out of compliance with their own bylaws. Board training can help ensure board members understand their duties to the organization and the bylaws.
4. You added new members to your board
Any time a new board member is added, they need board training. Even a seasoned board member who has served in other board roles needs to know specific practices of your organization. We recommend the entire board be trained together when a new member is added to the board. The training serves as a team building exercise and an opportunity for the board to see how it operates as one, as well as a refresher for any long-time board members.
Nonprofit Solutions offers board training programs that cover state and federal law, best practices, and your specific bylaws and policies. We cover it all and customize the training to your board.
Board training is available through other resources, including the Oklahoma Center for Nonprofits. If you are outside of Oklahoma, most states have a center for nonprofits that offer some level of training resources. Your legal counsel is another resource for training.
If you choose a training program that isn’t customized to your specific organization, be sure to take it one step further and review your specific policies and bylaws as a board. The most important thing is that your board is receiving regular training on board governance and best practices. We recommend annual training at minimum and additional training as needed if you see any of these four signs that you need board training. We are here to support you!
