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© David Gray, CFP®, CDFA

It can be very flattering to be asked to serve on the Board of Trustees of a nonprofit organization. Ideally it indicates a belief in your values, integrity, and your interest in providing leadership in your community. It may also mean that you’ve achieved some measure of financial security (or at least you’ve created that impression to the outside world).

But it is absolutely imperative for you to understand that you are being asked to serve on a Board, not "join" in the same way you might "join a club." This is an important distinction and is often confused. Joining a Board and joining a club have a few similarities, both will cost you money, both have some measure of exclusivity, and some clubs may expect you to provide some service or volunteer your time. But there the similarities end. The big difference is that while most people join a club for some personal benefit, joining a Board means (or should mean) putting the needs of the organization ahead of your own.

Serving on a nonprofit Board is a role that has specific legal responsibilities. In its essence, nonprofit status has been granted to the organization because the mission of the organization serves some beneficial societal purpose. It is the Board’s job to ensure, on behalf of the community, that the organization is true to its mission and managed responsibility. This doesn’t mean that the Board "manages" the organization but rather provides oversight to ensure that management is doing its job. In smaller organizations the tasks and roles of staff and Board may intersect, but this in no way absolves the Board members of responsibility for proper oversight.

The service that Board members are expected to provide at first may seem vague. The good news is that Board work can be broken into three specific areas, Governance, Fundraising and Advocacy. We’ll look at each of these to give you sense of what might be required of you as a Board member, saving Governance for last. The reason for this is that Governance is perhaps the most controversial and misunderstood job of Board members. Governance is controversial because the failure to Govern has been much in the news of late as scandals of one kind and another have tarnished the entire nonprofit sector. Misunderstood because having an opinion about how things should be managed is not the same as providing appropriate oversight.

But let’s start with what might be the easiest job to grasp, fundraising.


Board members are often aware that they have a "fiduciary responsibility" toward the organization. Being a fiduciary means putting the needs of others (in this case the organization) ahead of your own. Typically this means the Board has oversight for the budget, seeing that the organization is spending money in service of the mission of the organization. It also means ensuring that there are adequate resources.

So what is adequate? In addition to ensuring the budget makes sense, that expenses are in line with income, the Board also has to work toward ensuring that the income goals can be met. The first opportunity to do this is when the budget is being developed and voted on. If the organization is projecting a big increase in income you should know what factors will make that possible. Is there new fundraising staff in place? Has a specific donor stepped forward? Is someone expecting you to write a big check? Or is the fundraising number thrown into the budget because that’s what is needed in order to make things balance? Speak up if it seems that the income goals are unrealistic. Don’t let the organization commit to spending money it cannot reasonably expect to have.

Think of your personal finances and ask yourself how you would respond if your mate decided to run out and buy a bigger house in the vague hopes that more income might show up so that you could afford it? Not likely many of us would accept that scenario without serious discussion and a revision in the plans of our profligate mate.

Assuming the number is realistic the next question is what are you going to do about it? Many Boards set specific Give-or-Get policies for their Trustees. Ask about this before you join and be very specific. Every Board member should be making a personal donation of some level, find out what this is. The reason every Board member must give is that other potential donors, including foundations and corporations, want to know that the Board is committed and involved. If the Give-or-Get number for each Board member is $1000 ask what that includes, a personal donation of $100 and your friends and family giving another $900?

Perhaps the organization gets money from your employer as a grant. Is that counted toward your Give-or-Get? Is buying a raffle ticket or a gala dinner seat counted toward that number? You’d be amazed at what some Board members consider to be donated support to the organization. Board members of Performing Arts groups should certainly be expected to attend performances, but should the purchase of tickets count toward a donation? The IRS says "no" because value was received by the purchaser.

So now that you have asked what constitutes your Give-or-Get and you know how much of this should be personal giving, what do you do? The basic truth of fundraising is that people give to people. They may or may not feel as passionately about your cause as you do, but they are likely to support the cause you care about if you ask them. How do you ask them? The best way to ask them is to sit down with them face to face and ask. Be direct. People will say no if they can’t do what you ask. Many people feel that this approach is awkward and embarrassing. It need not be. Practice your "ask." Sit down with other Board members or the staffer responsible for fundraising and work on the approach.

"Jim, as you’ve heard by now, I feel very strongly that our community needs this organization and I’ve donated $500 to it this year. I really would like to count on your support. Can you support this at the same level I do?"

When Jim squirms in discomfort and says something about how much he gives to the Boy Scouts you can follow-up with, "Okay Jim, I know you have other causes you feel strongly about too… what level of support can I count on this year? $250?"

If you just cannot imagine doing something like this, there are alternatives. Perhaps you can host a cocktail party in your home where a brief presentation can be made by the staff and you can then talk about how important the organization is to you. You don’t need everyone to bring a checkbook, they can complete pledge forms on the spot.

A common assumption among inexperienced Board members is that Corporate and Foundation money is abundant, easy to get, and yours for the asking. Certainly your contacts with these entities can be very useful to the organization. But the reality is that money is scarce and there is no "easy" money waiting to be plucked from corporate or foundation coffers. Just because you passionately believe a local corporation should support your group doesn’t mean they think so. In many cases they have giving guidelines that reflect their priorities which may not necessarily include giving to the local community. The reality is that many companies concentrate their giving in the fields from which they profit. In New Jersey there are numerous pharmaceutical companies and many New Jersey nonprofits seek their funding. But many pharmaceuticals focus their giving in health related fields and all the whining in the world isn’t going to free up that money for historical preservation.

Likewise, Foundations are inundated with requests for funding and have their guidelines as to what they will fund. Don’t think you are going to change those guidelines.

And in all such cases decisions tend to be slow and deliberate. Don’t expect a quick answer. Seldom are organizations capable of making quick decisions when it relates to grants.

When it comes to fundraising don’t be afraid to expose your ignorance. In addition to seeking training from the staff or more experienced Board members, there are often workshops and training sessions sponsored by nonprofit service organizations and foundations. Ask the staff for some guidance and they’ll find training opportunities for you. You can also look in the workshop listings in the Chronicle of Philanthropy, the biweekly bible of the nonprofit world.

Simply put, if you cannot ask people for money under any circumstances, you should be very up front about this before you accept the role of Board member. If you don’t have wealthy friends or are new in town, you can still serve successfully, just be honest with the organization about your strengths and weaknesses. For some Boards, the inability to Give-or-Get may be a good reason not to serve. Don’t be shy about this. Be honest and save yourself and the organization an embarrassing situation. You might be much happier working in a volunteer capacity without serving on the Board.


Being an advocate for your organization is similar to being an ambassador. Your job is to seek advantage for your nonprofit. But before setting out to advocate for your organization it is important to know two things, what your organization does, and what the advocacy priorities are for the organization.

First, what are the programs? You can’t do a very effective job of "selling" the organization to your friends and colleagues if you can’t explain what it is that the organization does. If you feel that there is too much for you to grasp or explain cogently, then proper advocacy might be creating opportunities for the appropriate staff to come speak to your friends and colleagues.

Before you, or the staff go before a group be clear about what you want to achieve. Sometimes you need to raise money but other times your goal may be "friendraising." It’s okay to have these goals overlap but be realistic about the results you are going to achieve. When I started out in sales I was sent to staff the booth at a conference. I told my manager that I was going to get the business card of everyone who attended the meeting. My Manager reminded me that not everyone at the conference would be a worthwhile client and he told me to be happy if I left the meeting with two or three real leads that might result in business. I would suggest the same kind of realistic goals for advocacy. Not everyone will get inspired by the same passion that ignites you. Finding a few close friends for the organization who might turn into supporters is a perfectly adequate goal.

The second element of advocacy is to make sure you know what the current message is that the organization needs to convey. If the stated advocacy goal for the coming year is an increase in government funding for homeless shelters, it isn’t helpful for you to be out pushing a different agenda. Know what the message is and how you and the staff can support each other in spreading the word.

Another key facet of advocacy is seeking opportunities for your organization. Here too there is room for misunderstanding and miscommunication. Ask why you are being invited to serve on the Board. Perhaps the Board has assumed that you’ll be able to provide connections that you can’t, won’t or shouldn’t deliver. For example, you might serve on the Board of another organization that this new Board perceives as potentially supportive. But if you can’t deliver that support, or feel that it would create a conflict of interest, be honest about that. You don’t want to serve on a Board where folks are assuming you will deliver something you won’t.

So how can you advocate? Certainly letters to friends and colleagues can help. Arranging speaking opportunities to discuss the organization either for yourself or the appropriate staffer can help. This may mean seeking media exposure to put forward the agenda of your organization, such as increasing the awareness of an upcoming event. Connections to reporters or other media outlets can help. Interceding in the political arena can be beneficial. Creating opportunities for your organization can be useful. However, be careful not to commit the organization without letting the staff take the lead.

What you should not do is make any financial commitments on behalf of the organization. Nor should you commit the time of the staff beyond the phone call you’ll make to the appropriate person to see if a lead or idea is something that should be followed up on. Don’t take it personally if the answer turns out to be no. What you see as a "no-brainer" may not make sense given other operating realities of the organization about which you may know very little.

Another important aspect of being an ambassador is keeping your negativity and criticism focused internally while maintaining your unwavering support externally. There are, no doubt, dozens of U.S. Ambassadors around the world who dislike elements of American policy, but they do not voice this in the countries where they represent the US. Rather, they bring their concerns home to the State Department and the Administration (and then promptly start looking for new jobs).

Dissent and debate are perfectly legitimate elements of Board membership, but should be saved for Board meetings, not when you represent the organization to the outside world. You don’t have to like or even support every decision. The key question is whether you believe the organization is being true to its mission in an effective and honest way. If so, you should have no trouble advocating on its behalf. If there are plans, policies or staff in place that you cannot support, then leave the Board.

The best way to be an effective advocate is to ask how you can help and look at what the leading advocates for the organization are doing. Can you do what they do? Can you help them do what they do more effectively?


In its broadest definition Governance encompasses your legal responsibilities for overseeing the nonprofit organization. Nonprofit status is granted because the organization serves some public benefit. Because of this, the organization has been exempted from paying corporate income tax on earnings and can also seek donations that (within various IRS guidelines) are tax deductible to the donor. There are rules imposed by the IRS and there are also rules about charitable organizations at the state level. Nonprofits of even modest scale are required to submit IRS form 990 detailing their finances even though they are exempt from corporate taxation. (Tax exempt status does not mean that no taxes are paid, nonprofits are required to pay all taxes related to payroll.)

In the commercial arena legislation has been passed to improve corporate oversight and to further empower (or require) greater independence by the Boards overseeing those corporations (the Sarbanes-Oxley bill which was named for the legislators who championed it.) There is much interest in applying similar rules in the nonprofit arena. Why? Because there have been incidents of abuse where nonprofit boards have either failed to provide appropriate oversight, or simply neglected to prevent abuses of the nonprofit system.

The Board is entrusted with ensuring that nonprofit status is right and appropriate for the organization. You are acting much like an elected official who is charged with representing the views of a broad swath of the public. Can you hold your head high and proclaim that things are being done with the highest moral purpose or are you terrified that Eliot Spitzer (Attorney General of the State of New York) or the local equivalent is going to come pounding on your door?

Putting the interests of the organization ahead of your own shouldn’t be that complicated. But it can be shocking to see what happens. Many people cannot see that their well-intentioned involvement often puts their interests ahead of the organizations’. There are a number of ways to avoid this problem. Most Boards have a conflict of interest policy and require full disclosure. However, signing a form that says you have a conflict and you’ve disclosed it should no longer be good enough given the scandals that have shaken trust in the entire nonprofit sector. Where a Board member has a direct financial relationship to the organization (such as being its landlord, ad agency, insurance broker, legal counsel, graphic designer, investment advisor, etc) the other Board members should seek competing bids and document that the provider with the conflict is the best provider for the organization, or ask that person to step off the Board. This is not "firing" a Board member and should not imply any disgrace whatsoever. It just means that sometimes the best way to serve an organization you care about is to not serve on the Board.

The Board is ultimately responsible for the personnel policies of the organization. You need not be fluent in the subtleties of employment law (though you should seek such competent advice as necessary). But if there are conflicts related to personnel, be vigilant. Rumors of employee problems need to be tactfully addressed. Situations where both partners in a couple are working for the organization (or one of them serves on the Board) need to be discussed. Have legitimate grievance procedures in place. It can be awkward or unseemly but it’s better to have thought through the situation before a crisis arises.

You need to understand the finances. Too many boards get a financially savvy individual to serve as treasurer and assume this resolves all financial questions. This isn’t good enough. You have a responsibility to know what is happening in your name. Many people don’t want to expose their ignorance in front of the Board, or in front of a committee. Educate yourself, have a meeting with the staffers responsible for the budget and ask them to walk you through it so that you have a better understanding of where the money is coming from and where it is going. Each state, and different funders, have their own requirements relating to the need for an outside independent audit. If there is an audit, make sure you understand it. If there isn’t, even more reason to be sure you understand the financials.

Ask lots of questions. Don’t assume everything is okay because someone says so, know for yourself. Look for red flags. Has the endowment gone down? Are payables way up? What is the credit situation? Is the organization maxed out on its loans? Is there talk of securing more loans? Are there ambitious increases in fundraising projected with no clear plan on how this is going to be achieved?

Ask to see the cash flow. A common mistake in nonprofits is to pass a balanced budget, one where income appears to be equal to expenses, and assume that means a year of smooth sailing. If expenses happen early in the fiscal year and income comes in late the organization may not survive, even though the budget appears to balance at the last day of the fiscal year. Likewise, unexpected changes in income or expenses could alter the cash flow picture so that even the sound plan presented at the start of the year might fall apart.

All this is not to imply that good surprises can’t or won’t happen. Enjoy them and celebrate them when they occur. Just don’t count on them. That would be much like spending more money than you earn in the hopes that you’ll win the lottery. It could happen but you’re better off not spending that money until you actually get it.

Another big issue in the nonprofit arena is executive compensation. There is no hard and fast rule as to what represents fair compensation for a nonprofit leader but the Board must be able to show that some process was used to establish the pay scale. The most obvious way to do this is to look at what similar positions in other nonprofits pay. You can do this by reviewing tax returns of comparable organizations on services such as Guidestar (www.guidestar.org). You can also look at similar commercial positions, though this would only apply where there was true similarity. For example, it might be very relevant to know the pay scale of a for-profit hospital’s leadership to help determine the pay for the director of a nonprofit hospital. You would be hard pressed to determine the pay for the artistic director of a theater by looking at the commercial world.

Governance, in many ways, is defining what you will do for an organization. If it is a small nonprofit it may require much more hands on involvement from the Board, even making costumes or sitting behind a reception desk, for others it may mean attending Board meetings and being prepared to debate major policy issues (and everyone is giving money).

Be sensitive to the potential overlap between Board and Staff responsibilities. In general, smaller, younger organizations will rely on Board members for various types of help and expertise in very hands-on ways that would be considered completely inappropriate at larger more mature organizations. Learn the culture of the Board. Is it formal, using Roberts Rules of Order to guide all meetings, or is it informal and more free flowing? Does this culture serve the organization well or is it time for a change? Make sure you understand what the organization is doing and have faith in the people doing it. That is the essence of Governance.


While it is rare, nonprofits and their Boards can be the subject of legal action, for example as result of the termination of a disgruntled employee.  Before you join the Board make sure there Directors and Officer Insurance coverage in place.  This coverage usually covers the expenses related to such claims.  Likewise, your homeowners coverage (or excess liability) coverage might also offer some protection.  Call your insurer and find out.


The key to having a successful experience as a Board member is to honestly examine why you are interested in serving the organization and why you are being asked to serve. Don’t leave questions about expectations on either side unanswered. If the Board is expecting you to deliver entrée to a particular community that you have no particular connection to, be honest. Likewise, if you think you have skill sets that might serve the organization, don’t be shy about letting the organization know. Boards are not private clubs but rather representatives of society overseeing the organization for the public good.

One of the most important things you can do to ensure a successful experience as a Board member is to be clear about what you will do, given your time, interest and financial realities, and what the organization is expecting of you. Clarify these things from the start and you will go a long way to avoiding misunderstanding and frustration down the road.

Do your research. Learn about the organization, its history, current management and financial condition before you join the Board. It will make you wiser about serving in the first place and make you a better informed Board member in the long run.

Ideally you will serve because you feel passionately about the mission of the organization, you want to help secure funds for that mission, you want to tell the world about that mission and you want to ensure that the staff carries out the mission successfully.

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David Gray is a Certified Financial Planner®, Certified Divorce Financial Analyst™ and President of Finance Arts, LLC, a consulting firm serving the nonprofit community. He has served as a Compliance Officer in the brokerage industry as well as Executive Director of a mid-sized nonprofit Arts organization. He can be reached at www.FinanceArts.com.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER and federally registered CFP (with flame logo), which it awards to individuals who successfully complete initial and ongoing certification requirements.